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V.V. Rymalov

__TITLE__ THE WORLD CAPITALIST ECONOMY __TEXTFILE_BORN__ 2007-06-20T19:25:40-0700 __TRANSMARKUP__ "Y. Sverdlov" __SUBTITLE__ Structural Changes: Trends and Problems

Translated
by
H. Campbell Creighton, M. A. (Oxon.)

Progress
Publishers~

Moscow~

[1]

Designed by Vyaclicslav Chernetsov

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English translation from revised Russian edition © Progress
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[2] CONTENTS Page Introduction ...................... 5 Part J Methodological and Historical Premises 1. THE SUBJECT-MATTER OF THE STUDY....... 11 § 1. The Basic Principles of the Analysis....... 11 § 2. The Capitalist Mode of Production and the World Market ..................... 19 § 3. The Role of the Colonial System in the History of the World Capitalist Economy............ 30 2. A CONTRIBUTION TO THE HISTORY OF THE FORMATION, DEVELOPMENT, AND CRISIS OF THE WORLD CAPITALIST ECONOMY................ 36 § 1. The Pre-monopoly Stage of Capitalism...... 36 § 2. The Monopoly Stage of Capitalism......... 40 § 3. The World Capitalist Economy Today....... 49 Part II The Main Trends of Postwar Economic Development 3. THE STRUCTURE AND DYNAMICS OF PRODUCTION . 67 § 1. The Long.term Indicators of Production...... 67 § 2. The Factors and Social Consequences of Economic Growth ..................... 77 § 3. The Basic Branches of Production......... 85 § 4. The Sphere of Consumption of the Social Product ... 92 't. SHIFTS IN THE DISTRIBUTION OF THE PRODUCTIVE FORCES ..."................ .... 103 § 1. Capitalist and Developing Countries........ 105 § 2. The Principal Productive Force of Society .. ... 118 § 3. The Industrial Centres of Capitalism........ 137 § 4. The Agrarian and Raw Material Producing Countries 156 5. THE CYCLIC DEVELOPMENT OF THE WORLD CAPITALIST ECONOMY.................... 179 § 1. The Problem................... 179 § 2. The Postwar I mistrial Cyclo.........., 183 3 Page § 3. Synchronism and Asynchronism in the Evolution of the World Cycle................. 191 § 4. The Capitalist Market and World Cycle....... 198 § 5. Industry in the Modern Cycle........... 20'J § 6. Can We Forecast World Economic Crises?..... 214 Part HI The Industrial and Primary Commodity Base of the World Capitalist Economy G. THE DETERMINING TRENDS IN THE POSTWAR DEVELOPMENT OF MANUFACTURING . . .-...... 225 § 1. General Results................. 225 § 2. The Industrial Countries and Primary Commodity Producers.................... 230 § 3. The Increasing Internationalisation of Production . . 235 7. THE UNEVENNESS AND INSTABILITY OF INDUSTRIAL DEVELOPMENT ................... 244 § 1. Sectoral Structure ................ 244 § 2. Scientific and Technical Progress and Labour Productivity .................... 250 § 3. Changes in Regional Structure........... 255 8. THE PRIMARY COMMODITY SPHERE: STRUCTURE OF PRODUCTION AND INTERNATIONAL CONNECTIONS 267 § 1. Primary Commodities and Manufacturing...... 268 § 2. The Mining Industry and Farm Production..... 272 § 3. The Breakdown of the Traditional Structure of the International Division of Labour.......... 281 9. THE AGGRAVATION OF PRIMARY COMMODITY PROBLEMS AND WORLD PRICES............. 290 § 1. The Historical Background of the Problem..... 292 § 2. Postwar Trends ................. 296 § 3. National and World Prices............ 301 § 4. Monopoly Prices and the Liberated Countries .... 306 § 5. Imperialist Price Policy for Primary Commodities . . 313 CONCLUSION ..................... 323 4 __ALPHA_LVL1__ INTRODUCTION

The decades since the war have been marked by extremely far-reaching changes of world historical significance in all spheres of human affairs. Never before has society experienced such substantial transformations in its socio-- economic and political structure in so short a time. Taking them globally, two dialectically linked trends attract attention first of all.

One is the forming and rapid growth of a world system of socialism through the revolutionary replacement of capitalist and pre-capitalist social relations by socialist ones in a number of countries. The other is the steady deepening of capitalism's contradictions within the contracting limits of the non-socialist world. Both these processes provide objective prerequisites for further development of the general crisis of capitalism, an inherent, decisive factor of which is the crisis of the world capitalist ^'economy.

Since World War! II there have been very substantial changes in this economy compared with earlier stages that have affected very important aspects of the economic affairs and international relations of all the countries of the nonsocialist world that comprise it, though by no means to the same extent. Most of them are occurring directly or indirectly under the influence of comparatively new trends in the economic competition of the two world social systems. These trends in turn inevitably reflect the long-term consequences of the break-up of the colonial system, the ever increasing, extremely contradictory influences of the scientific and technical revolution on the productive forces and structure of social production of the various groups of countries, qualitatively new phenomena as regards internationalisation of their social production and the international division of 5 labour, the mounting struggle of the emancipated countries against neocolonial exploitation, for real equality in international economic relations.

The economic and social instability of the world capitalist system became unusually intense at the end of the period we study, especially as a result of the marked sharpening in the 70s of the energy, raw material, inflation, cyclic, international financial, and other major problems of world capitalist economy. These crisis processes, which had a logical continuation and development in the years following, developed in a complicated, eventful situation of intense struggle between two lines in world politics, viz., on the one hand, that of curbing the arms race, consolidating peace and detente, and defending the sovereign rights and freedoms of nations pursued by world socialism and the whole peaceloving mankind, and, on the other hand, the imperialist line of undermining detente and stepping up the arms race, and policy of threats and interference in others' affairs and suppression of the national liberation struggle.

Capitalism, as was stressed at the 26th Congress of the CPSU, has not, of course, congealed in the present conditions of its general crisis; from the beginning of the 70s through to the early 80s alone, it has experienced three economic recessions in spite of capitalist governments' counter-crisis measures and all their efforts to prevent new slumps in production. Inflation has attained an unprecedented scale in these countries. As the Central Committee's report to the Congress noted:

It is more than obvious that slate regulation of the capitalist economy is ineffective. The measures that bourgeois governments take against inflation foster stagnation of production and growth of unemployment; what they do to contain the critical drop in production lends still greater momentum to inflation.^^1^^

The more that facts are accumulated revealing critical trends in, and specific features of, the growth of the productive forces in the economies of the main groups of countries of world capitalism, the more pressing is it becoming to systematise, generalise, and interpret them in the aggregate and in their inter-relationship. A problem of fundamental _-_-_

~^^1^^ L. I. Brezhnev. Report nf the Central Committee of the CPSU tit the 26th Congress of the Communist Party of the Soviet Union (Novosti Press Agency Publishing House, Moscow, 1981), p 27.

6 importance is arising, viz., whether a complex approach to the tackling of such a broad task is possible at all. For the aggregate of facts on the economic activity of all countries and of all the industries of world capitalism (in their dynamics and interconditioning, and their repeatedly intersecting national and international connections) embraces a truly immense range of matters, each of which plays a far from identical role in the development both of the national states, and the industries and spheres of their economies, taken separately, and of the world economy as a whole.

The answer to this question was first given by Marxism; and it consisted not so much in the discovery of some allembracing method for summarising a vast number of facts and trends as in its bringing out the theoretical and methodological premises of a systems approach to analysis of the inner logic and patterns of the capitalist system's functioning at the various concrete stages of its `self-movement'. Lenin stressed, when speaking of the changes constantly occurring in the capitalist world economy, that the sumtotal of these changes in all their ramifications in the capitalist world economy could not bo grasped even by seventy Marxes. The most important thing is that the laws of these changes have been discovered, that the objective logic of these changes and of their historical development has in its chief and basic features been disclosed.^^1^^ It is its understanding of the objective laws of social development that has enabled Marxist-Leninist economic science to tackle elaboration of the principles of a scientific methodology for analysing capitalism as a world economic system.

The characteristics of the most important stages of the long forming and evolution of this system taken together with the genesis of the capitalist mode of production, the world market, and the aims and methods of colonial exploitation of some countries by others, constitute the main substance of Part I of this book, in which special attention is paid to defining the object of study and the internal contradictions and long-term trends of its development that shape the basic causes of the rise and inevitable deepening of the crisis of the world capitalist economy today. The data adduced will provide the necessary theoretical foundation for bringing ont the themes of the succeeding chapters.

_-_-_

~^^1^^ V. I. Lenin. Materialism and Ernpirio-Criticism. Collected Works, Vol. 14 (Progress Publishers, Moscow, 1962), p 325.

7

The general results and decisive trends of the development of the postwar world capitalist economy are examined in Part II, above all the ecanomic factors and social consequences of the long-term shifts in the structure and dynamics of both the social production and the consumption of all the countries of this economy taken together. Then follows a detailed comparison of two groups of countries (viz., capitalist and developing) in order to bring out the specific character of their postwar development, including the impact of the scientific and technical revolution and break-up of the colonial system on their economies. The trends in the growth of population and manpower have been analysed from the same standpoint, and also the productivity of social labour in the main geographical regions of the non-socialist world. All this has enabled us to attempt a more circumstantial and detailed estimate of the changes that have come to light in the regional structure of the distribution of the leading sectors of social production in both the industrial centres and the agrarian and primary producer periphery of capitalism. The problem of the cyclic movement of the postwar world capitalist economy has a place of fundamental importance in the book. Analysis of it helps clarify many features of the regular intensification in recent decades of the uneven economic growth and structural instability of modern capitalism's international business relations.

The main lines of the intertwining development of the industrial and agrarian and raw material base of the postwar world capitalist economy are analysed in Part III. Study of the changes in the manufacturing industries in capitalist and developing countries that are most significant as regards their socio-economic consequences occupy the foreground. Then the long-term shifts in the dynamics, volume and structure of the production of raw materials and in the movement of prices of industrial items, farm produce and raw materials on the world capitalist market are examined. On that basis a number of objectively operating trends are brought out, in which the essential features of the present stage of the crisis of the imperialist system of international division of labour are being more and more clearly manifested within the framework of the world economic relations of recent years.

It would not be legitimate to appraise all the trends studied in isolation from the decisive patterns of the world 8 revolutionary process of modern times. As Leonid Brezhnev stressed at the 25th Congress of the Communist Party of the Soviet Union:

This is an epoch of radical social change. Socialism's positions arc expanding and growing stronger. The victories of the national liberation movement are opening up now horizons for countries that have won independence. The class struggle of the working people against monopoly oppression, against the exploiting order, is gaining in intensity. The scale of the revolutionary-democratic, anti-imperialist movement is steadily growing. Taken as a whole, this signifies development of the world revolutionary process.^^1^^

This book does not claim, of course, to be an exhaustive analysis of the problems posed; many of them certainly need further study, tidying up, and concretisation. Because of the inadequacy or scrappiness of reliable statistics and general economic data, separate propositions of the themes are reviewed in outline or are advanced tentatively. When the conclusions are based on published work or well-known data the exposition has been compressed to a resume, and references are given to the sources containing the detailed argumentation.

The Russian original appeared in 1978. In the present English edition the author has tried to continue analysis of the problems and trends studied, employing the latest data available to him. On that basis certain amendments have been made, and the conclusions and estimates of the probable outlook for the development of the world capitalist economy have been elaborated and broadened.

_-_-_

~^^1^^ L. I. Brezhnev. Report of the CPRU Central Committee and the Immediate Tasks oj the Party in Home and Foreign Policy. XXVth Congress oj the CPSU (Novosti Press Agency Publishing House, Moscow, 1976), p32.

[9] ~ [10] __NUMERIC_LVL1__ Part I __ALPHA_LVL1__ METHODOLOGICAL AND HIST01CAL PREMISES __NUMERIC_LVL2__ 1 __ALPHA_LVL2__ THE SUBJECT-MATTER OF THE STUDY __ALPHA_LVL3__ § 1. The Basic Principles of the Analysis

The economic content of historical progress is extremely broad and many-sided, but at all stages of mankind's development it has ultimately been determined by the objective needs of increasing the productive forces of society. The growth of production and deepening of the social division of labour stimulated by these needs provide the necessary material preconditions for passing from lower to higher socio-economic formations, and for the succession of one historical epoch by another. As Karl Marx wrote in the preface to the first German edition of Capital, from his standpoint the evolution of the economic formation of society is viewed as a process of natural history.^^1^^

That fundamental theoretical proposition, which made it possible for the first time to put study of the inner logic of social development on a sound scientific basis, was the outcome of the investigation and generalisation of a truly gigantic amount of factual material. Horizons new in principle were thereby opened up for the social sciences, political economy included. At the same time this inference by no means implied denial of the significance of subjective factors for society's progressive movement. It followed that the sole real possibility of a scientific understanding of the role and place of subjective factors in mankind's material and spiritual affairs arises only from study of the objective patterns of the movement of social production. As Marx indicated:

My standpoint ... can less than any other make thn individual responsible for relations whose creature lie socially remains, however much he may subjectively raise himself above them.^^2^^

_-_-_

~^^1^^ See: Karl Marx. Capital, Vol. I. Translated by Samuel Moore and Edward Avclin^ (Progress publishers, Moscow, 1974), p 21,

^^2^^ Ibid.

11

The most important of the tasks facing Marx in his investigation of the then dominant historical formation was study of the laws of capitalist production operating and materialised, as he put it, with iron necessity. By characterising a law as an inner and necessary connection between phenomena, he demonstrated in detail that only the disclosure of that kind of inter-relation, manifested in the form of a tendency, leads to understanding of the objective processes of social development. That conception in turn has to serve as the point of departure for man's mastery of the laws of this development, and for his conscious, purposeful activity. Social activity, moreover, as the founders of MarxismLeninism demonstrated in detail, is decisively mediated by the interaction and struggle of the classes that arise and develop on the basis of the material conditions already created at any given period.

The Marxian principles of appraising the mainsprings of the historical process have a universal character. In other words, they are the initial socio-economic premises of a theoretical analysis of the patterns of social development both of countries taken separately and of mankind as a whole. The fundamental nature of these principles is coming out now with extraordinary clarity, when the world socialist system, and the scientific and technical revolution developing within the context of the productive forces of society as a whole, are having an ever increasing effect on growth of mankind's production capability, and on extension and consolidation of both the economic and the scientific and technical interconnections of the world economy of the present transitional period.^^1^^

It was the discovery and investigation of the patterns of development of social production that first placed study of the productive forces, and of the socio-economic structure of society, on a genuine scientific basis, and made it possible to bring out the inner causes of this development as a process of natural history.

Only the reduction of social relations to production relations and of the latter to the level of the productive forces (Lenin stressed), provided a firm basis for the conception that the _-_-_

~^^1^^ For the scope of the changes thai, have taken place in this economy jn recent decades, see §~3 of the next chapter.

12 development of formations of society is a process of natural history. And it goes without saying thai without such a view there can be no social science.^^1^^

Clarification of the ways capitalism took shape as a world system is an integral component of Marxist-Leninist political economy. Marx, who attached the greatest importance to this system's international economic interconnections, proposed to complete his fundamental work on the anatomy of capitalist society with a comprehensive analysis of matters embracing the international relations of capitalist production and the world market, including world economic crises. In his scheme for subsequent work on Capital, he wrote:

The disposition of material has evidently to he made in such a way that [section] one comprises general abstract definitions, which therefore appertain in some measure to all social formations, but in the sense set forth earlier. Two, the categories which constitute the internal structure of bourgeois society and on which the principal classes are based. Capital, wage-labour, landed property, and their relations to one another. Town and country. The three large social classes; exchange between them. Circulation. The (private) credit system. Three, the State as the epitome of bourgeois society. Analysis of its relations to itself. The `unproductive' classes. Taxes. National debt. Public-credit. Population. Colonies. Emigration. Four, international conditions of production. International division of labour. International exchange. Export and import. Rate of exchange. Five, world market and crises.^^2^^

This task, titanic in its conception, was not completed, especially its concluding points. Nevertheless, in the volumes of Capital already written, and in a number of other works, Marx succeeded in comprehending and defining the initial theoretical premises of the investigation of many decisive aspects of the problems behind the forming of capitalism's world economic connections. Otherwise it would have been impossible to define the place of this formation in sufficient detail in the series of successive exploiter formations. Study of the patterns of these relations makes it possible to analyse the causes of their rise, development, _-_-_

~^^1^^ V. I. Lenin. What the 'Friends of the People' Are and How They Fight the Social Democrats. Collected Works, Vol. 1 (Progress Publishers, Moscow, 1960), pp 140--141.

^^2^^ Karl Marx. A Contribution to the Critique of Political Economy (Progress Publishers, Moseow, 1978), p 214.

13 and flourishing more deeply, and also to bring out with sufficient scientific reliability the irreconcilable contradictions of the capitalist mode of production that predetermine its historically transitional character.

The rapidity of the forming of a world system of capitalism in the last decades of the nineteenth century made it more and more necessary to continue the systems analysis begun by Marx of the interaction of the indissolubly linked domestic and international relations of production. Such an analysis was also essential because of the rise of qualitatively new phenomena in the capitalist system through the change in it from free competition to the domination of monopolies, and the growing over of capitalism into a new, imperialist stage.

At the time, too, political division of the world was completed. A period was established in world politics of the omnipotence of the monopoly capital of the colonial powers, between whom a fierce struggle developed for world hegemony and to redivide the already shared out colonies, semi-- colonies, and spheres of influence. As a result even the most economically backward countries, in which various forms of precapitalist social relations still predominated, were drawn into the maelstrom of the international interconnections of capitalist production.

By the beginning of the twentieth century capital had completed the formation of a world economic system. Investigation of it became a most pressing task of the social sciences, above all of political economy. There arose a need for further development of Marxist economic theory in the light of the new facts; and it is not fortuitous that an all-- embracing description of this economic system in its monopoly stage in fact became the cornerstone of Lenin's theory of imperialism.

In the foreword to his Imperialism, the Highest Stage of Capitalism, written already after the October Socialist Revolution in Russia, Lenin specially stressed that

the main purpose of the book was, and remains, to present, on the basis of the"summarised returns of irrefutable bourgeois statistics, and the admissions of bourgeois scholars of all countries, a composite picture of the world capitalist system in its international relationships at the beginning of the twentieth century--- on the eve of the first world imperialist war.^^1^^

_-_-_

^^1^^ V. I. Lenin. Imperialism, the Highest Stage of Capitalism. Collected Works, Vol. 22 (Progress Publishers, Moscow, 1964), p 189.

14

There was then no broader and more complicated object of study in the economic sciences, and could not be. Its study is comparable, at the very least, to analysis of an object consisting of a host of sub-systems each of which in turn includes a countless number of `cells' that are in constant change and motion.

Any of the sub-systems of the world capitalist economy, or of its component`cells', can and undoubtedly should bo examined separately, taking into account in the main only the inner stimuli of its motion, abstracting from its interaction with the whole. This approach is justified and makes it possible to bring out both the specific features of the given part's development and certain of the concrete manifestations of the general patterns. As regards the capitalist world economy, however, and in general any other macro-economic system, it does not make it possible to characterise the whole object of study as a unity with any, in any way adequate, fullness, and it can lead, moreover, to a garbled representation of its patterns even when one and the same phenomenon is observed in various countries or sectors of the economy.

In studying the capitalist world economy the investigator is faced, in all its acuteness, with the need to single out from a boundless sea of facts and intersecting processes those real tendencies that in their aggregate and interconnection actually determine the whole picture of its development in a given historical situation, and that enable him to judge the main directions of the movement of the world economy, and not partial or superficial events and phenomena, or those specific to the economic situation of separate countries, the diversity of which cannot be taken into consideration by any theory. Lenin drew special attention in Imperialism, the Highest Stage of Capitalism to the point that, in order to characterise the objective economic position of the whole system of capitalism and its international relations,

one must not take examples or isolated data (in view of the extreme complexity of the phenomena of social life it is always possible to select any number of examples or separate data lo prove any proposition), but all the data on the basis of economic life in all the belligerent countries and the whole world.^^1^^

_-_-_

~^^1^^ V. I. Lenin. Imperialism, the Highest Stage of Capitalism. Collected Works, Vol. 22, p 190.

15

The key to theoretical study of the aggregate of the processes that characterise the main trends of development of the capitalist economic system was Marx's discovery of the paramount importance of production. It is in concrete study of the patterns of the movement of social production, and of its class character and inseparable unity with the realm of market relations and of distribution and consumption, that the living soul of Marxist-Leninist political economy consists.

Any economic theory remains sterile or still-born if it is not based on detailed analysis of the facts and arises in isolation from them. It will not be able to explain the real tendencies and, consequently, to discover the objective course of social development. At the same time the concreteness of the study of any economic system, however wide, and even more of such a many-sided one as the capitalist world economy, certainly presupposes clarification and systematisation of the most essential processes in their dynamics, and determination of their hierarchical interdependence. In other words, coucreteness presupposes in this case the need to employ the method of scientific abstraction, i.e. abstraction which, in Lenin's words, reflects nature 'more deeply, truly and completely'.^^1^^ In this connection definition of initial premises of the methodology of a study of the comprehensive development of real economic trends becomes very important.

It is typical of capitalist economics, in contrast to Marxist, to try and put markets and market relations at the centre of its analysis and not production and the class relations immanently inherent in it. The former are looked upon as determinant or self-sufficing, allegedly developing of themselves and exerting a dominant influence on the production process. The idea of the primariness of the sphere of circulation, with very substantial differences in the evaluation of the main moments of the functioning of economic systems of any scale, has dominated capitalist economics throughout its history. True, its original theoretical postulates are now being criticised more and more often by many leading Western economists, people like Samuelson, Galbraith, Myrdal, Erhard, Leontief, Balassa, and Tinbergen.

_-_-_

~^^1^^ V. I. Lenin. Conspectus of Hegel's Book 'The Science of Logic'. Collected Works, Vol. 38 (Progress Publishers, Moscow, 1970), p 171.

16

Still, tliis idea has continued in fact to permeate capitalist literature in one form or another since World War 11, whether it deals witJi capitalism's internal or world economic problems. In their detailed work on the growth of the international economy, Kenwood and Lougheed declare the central sphere of their study to be that of circulation, since, as they write:

the exchange ol goods and services is the means through which independent economic units enter into economic relations with one another and become part of local or national economic community. An exchange passes beyond a country's boundaries, national economic systems become parts of broader regional, continental or world economy.^^1^^

Prof. P. T. Ellsworth stresses, in his textbook, which was widely used in the United States and Great Britain in the 50s and 60s, that the very term 'international economies' indicates 'that it concerns itself with the economic relations between nations'.^^2^^ Such a posing of the matter is quite typical of present-day Western economic literature.

When investigating capitalism's world economic problems, capitalist economists do not, of course, ignore theoretical analysis of the international aspects of the production process, and study many of them very thoroughly, particularly the dynamics of its productive forces, comparations of the level of economic development of various countries and regions, problems of the international division of labour, capital exports, production and technological competition, integrational processes within the various international economic groupings, migration of labour, and so on.

All these processes, however, arc willy-nilly analysed from ideological positions that pursue definite class interests of the capitalists. The world economy is studied mainly from the standpoint of the determining effect of the trends of world supply and demand on production, and of opportunities for effective employment of the market mechanism of state monopoly methods of regulating international economic relations. Objectively the main job of this approach is _-_-_

~^^1^^ A. G. Kenwood and A. L. Lougheed. The Growth oj the International Economy, 1820--1960. An Introductory Text (Allen & Unwin, London, 1971), p 43.

~^^2^^ P. T. Ellsworth. The International Economy (Macmillan, New York, Collicr-Macmillan, London, 1904), p 1.

17 to conceal the antagonistic essence of the international relations of production under capitalism. Capitalist economists' endeavour to survey the world capitalist economy out of the context of its organic link with the patterns of development of the corresponding exploiter relations of production, and to represent it simply as a mechanically formed aggregate of national markets within the context of the international exchange of goods and services, also serves the same purpose. On this basis capitalist political economy has time and again exerted great efforts to revive the gimcrack idea whose essence is that modern capitalism is still ahle to generate adequate conditions for future `harmonious' development of the world economy and in the long run to eradicate its deepest inherent defects and contradictions.

Marxist-Leninist economics considers this matter from fundamentally different theoretical positions. It substantiates in detail the proposition that the world capitalist economy, like a commodity economy of any scale (whether local, regional, or national), includes such inseparably interconnected and jointly subordinated elements as production, markets, and a system of socio-economic relations arising from a corresponding division of labour between economic units and producers. Although market factors of exchange and distribution figure primarily on the surface in capitalism's international economic interconnections, it is not they, however, but the social relations in the production process, that play the basic role when the antagonistic, class nature and decisive trends of development of capitalism's world economic system are investigated.

The capitalist mode of production (Marx wrote) is ... a historical means of developing the material forces of production and creating an appropriate world market and is, at the same time, a continual conflict uetwcen this its historical task and its own corresponding relations of social production.^^1^^

This conclusion has acquired special methodological significance for analysing the deep-seated crisis processes in the modern world capitalist market. It provides an opportunity for a scientific systematising and comprehensive investigation of the objectively operating patterns and irreconcilable _-_-_

~^^1^^ Karl Marx. Capital, Vol. Ill (Progress Publishers, Moscow, 1977), p 250.

18 contradictions of capitalism's international market relations, which stem from the socio-economic nature of this mode of production.

__ALPHA_LVL3__ § 2. The Capitalist Mode of Production
and the World Market

The continuous interaction of the development of production and the world market had already come out in the early stages of the rise of the capitalist social formation, and the determinant place in this interaction, moreover, was taken by capitalist industry. As a result of his thorough investigation of extensive historical data, Marx came to the conclusion that

when in the 16th, and partially still in the 17th century the sudden expansion of commerce and emergence of a new world market overwhelmingly contributed to the fall of the old mode of production and the rise of capitalist production, this was accomplished conversely on the basis of the already existing capitalist mode of production. The world market itself forms the basis for this mode of production. On the other hand, the immanent necessity of this mode of production to produce on an ever-enlarged scale tends to extend the world market continually, so that it is not commerce in this case which revolutionises industry, but industry which constantly revolutionises commerce.^^1^^

Marxist political economy consequently looks upon the rise and development of the world capitalist market as a constituent of a broader process, i.e. the gradual conversion of capitalism into a universal socio-economic system. This methodological approach has enabled it to disclose the unequal character of the division of labour between countries that is inherent in this system, and the exploiter nature of commodity exchange and of capitalist international economic relations in general on the world market, based as they are on private property in the instruments and means of production.

The struggle for foreign markets has always been an urgent economic need for capitalism, since a striving to extend its sphere of influence without limit is inherently characteristic of it, in contrast to previously dominant modes of production. Because of the operation of objective economic laws, _-_-_

~^^1^^ Karl Marx, Capital, Vol. Ill, p 333.

__PRINTERS_P_19_COMMENT__ 2* 19 capitalist enterprise inevitably outgrows the boundaries of the community, region, or country, the economic exclusiveness and isolation of countries being broken down by commodity circulation itself.

As a result, capitalist production becomes inconceivable without foreign trade and world economic relations at a certain stage of its development, which in turn reflects growth of the social division of labour on an international scale. Marx stressed that

capitalist production rests on the value or the transformation of the labour embodied in the product into social labour. But (his is only [possible] on the basis of foreign trade and of the world market. This is at, once the precondition and the result of capitalist production.^^1^^

He expressed the same idea even more succinctly in the formula 'capitalist production does not exist at all without foreign commerce'.^^2^^

All that in no way signifies, of course, that any capitalist enterprise indispensably works for an external market and sends what it produces beyond the local or national economy. At the same time it constantly experiences the effect of the already existing system of international business relations and is drawn into their orbit, if not directly, then indirectly. The capitalist, even the one who is wholly oriented on the home market, is forced to compare his own costs of production with world prices as well as with the market prices in his country. An influence of the same order has to be allowed for when an all-round appraisal is being made of the position of labour power in capitalist countries, including the spheres where its value depends wholly or predominantly on domestic factors of production.^^3^^

Capitalism's international economic interconnections arose later, historically, than its domestic ones, the latter being original and basic. Their level and trend depended to a decisive degree on how far each nation developed its own _-_-_

~^^1^^ Karl Marx. Theories of Surplus-Value, Part III (Progress Publishers, Moscow, 1975), p 253.

~^^2^^ Karl Marx. Capital, Vol. II (Progress Publishers, Moscow, 1974), p 474.

~^^3^^ Marx had already stressed, when studying trends in the movement of national wages, that 'one must never lose sight of the whole market or of the position of the workers in the various countries'. Karl Marx. Wages. In: Karl Marx and Frederick Engcls. Collected Works, Vol. G (Progress Publishers, Moscow, 1976), p 421.

20 productive forces, division of labour, and internal dealings. That, however, does not eliminate the undoubted fact that extension of both the home and foreign market under capitalism represents different aspects of a single process; the boundaries between them are very mobile and arbitrary. As the world market develops the problem of the limits of the home market of each country taken separately proves to lie very tightly bound up with that of extension of its external economic relations.^^1^^ Hence one of the essential principles of Marxian researcli into the development of capitalism in scope and depth is that, when analysing international relations of production (including the capitalist class's colonial policy), it is not important where the boundary between the home and foreign market is drawn;

what is important is that capitalism cannot exist and develop without constantly expanding the sphere of its domination, without colonising new countries and drawing old non-capitalist countries into the whirlpool of world economy.^^2^^

The rise of capitalism's international exploiter relations is inextricably linked with the forming of a system of world economy appropriate to them.

The watershed on this point between Marxian and capitalist science is clear and distinct. Although the creation of this system was completed on the whole under imperialism, it by no means follows that its present-day history can be separated from the preceding history of the development of the capitalist mode of production and that imperialist exploitation of some countries by others begins only with capitalism's transition from free enterprise to the domination of monopolies. Many of the features of the international division of labour typical of the monopoly stage had already arisen and begun to take on a stable, long-term character during the transition of capitalist society to the machine stage of production. They were not brought about by chance, transitional factors but wore caused by deep-seated changes in both the home and external conditions of capitalist reproduction.

_-_-_

~^^1^^ See V. I. Lenin. Once More on the Theory of Realisation. Collected Works, Vol. 4 (Progress Publishers, Moscow, 1904), p 91.

^^2^^ V. I. Lenin. The Development of Gapilalism in Russia. Collected Works, Vol. 3 (Progress Publishers, Moscow, 1972), p 594.

21

The analysis of international economic inter-relationships made in their day by the founders of Marxist political economy indicated that it was large-scale machine industry that prepared the ground for the subsequent formation of a world economy. Machine production, as Marx and Engels pithily put it,

produced world history for the first time, insofar as it made all civilised nations and every individual member of them dependent for the satisfaction of their wants on the whole world, thus destroying the former natural exclusiveness of separate nations.^^1^^

It is through the international division of labour on the world market that the tendency to bring countries together economically, constitutionally inherent in capitalism, is manifested. The kernel of this pattern, however, discovered by Marx, is that this tendency, while progressive in itself, led at the same time, because of capitalist methods and the forms of economic association of the different countries, to consolidation of the division of the world into industrially developed countries, and economically backward agrarian and primary commodity producing countries exploited by them. The antagonism between these two main groups of countries, which are opposite poles of the world capitalist economy, has become one of its main contradictions.^^2^^

This contradiction has become specially acute in the stage of imperialism, and a very important factor in subsequent origin and development of the crisis of the colonial structure of the capitalist economy, a crisis that is irreversible for the monopoly capitalist class. The break-up of the colonial system after World War II, and the marked deepening of the internal contradictions of world capitalism, which are undermining the historically formed foundations of its system of unequal international economic relations, have put on today's agenda, with all urgency, the issue of eliminating the exploiter system of division of labour that completely dominated the world economy in the past.

_-_-_

~^^1^^ Karl Marx and Frederick Engels. The German Ideology. Collected Works, Vol. 5 (Progress Publishers, Moscow, 1976), p 73.

~^^2^^ For more details about the formation of the system of the international division of labour by capital see V. L. Tyaguncnko. Mczhdunarodnoye razdeleniye truda i razvivai/ushchiyesya strany (The International Division of Labour and Developing Countries), Nauka Publishers, Moscow, 1970.

22

It would be wrong to treat this task (which corresponds to the vital interests of all nations without exception) as the need to liquidate the progress already made in the internationalisation of social production. The anti-imperialist struggle for genuine national independence, just like the transition of countries to a higher socio-economic system, does not eliminate the objective need to develop the social (including the international) division of labour, and leads to a change in and perfecting of the forms in which this essentially progressive process is manifested. It is self-evident, Marx wrote to Ludvig Kugelman on 11 July 1868,

that this necessity of the distribution of social labour in definite proportions cannot possibly be done away with by a particular jiirin of social production but can only change the mode of its appearance.^^1^^

The underlying principles of a Marxist-Leninist analysis of the ways and causes of capital's internationalisation of social production have not lost their theoretical value over the years. The topicality of many of them, moreover, is growing, especially in today's situation of the coexistence and opposition of two world social systems and of the natural extension of economic and technical co-operation on the basis of mutual advantage and equal international division of labour.

In this situation capitalist ideologists are trying in every way to prove the `erroneousness', in particular, or at least `obsoleteness' of the Marxist-Leninist political economy's analysis. Above all they endeavour to refute its conclusions about the irreversibility of tendencies toward a steady deepening of capitalism's internal contradictions. But the whole long history of capitalist economics, and of its mistakes, its constant wavering between one conception and another, its fallacies and failures, shows that theories that consider the international market relations of capitalism to be legitimate and that are abstracted from a socio-economic analysis of the production sphere, at best contain superficial analogues of the real trends of development. In the main they bring out the consequences but not the causal connections of this development.

_-_-_

~^^1^^ Karl Marx and Frederick Kngels. Selected Correspondence ( Progress Publishers, Moscow, 1975), p 196.

23

At the same time it would clearly he an oversimplification of things to consider that the theoretical findings of capitalist political economy in the sphere of the world economy's market relations are in general isolated from real analysis of the reproduction processes. In a numher of cases they more or less adequately reflect important features of the backlash of these relations in the production sphere. And this effect determines many of the essential features of the capitalist economy at the various stages of its development.

In the last instance (Engols wrote to Conrad Schmidt on 27 October 1890) production is the decisive factor. But as soon as trade in products becomes independent of production proper, it has a movement of its own, which, although by and large governed by that of production, nevertheless in particulars and within this general dependence again follows laws of its own inherent in the nature of this new' factor; this movement has phases of its own and in its turn reacts on the movement of production.^^1^^

All this calls for close attention to research both into the ways and determinant tendencies in the genesis of the world market and into its place in the process of extended capitalist reproduction. Not only is such research of educational value historically; it is also very necessary for an analysis of current changes in the structure of the world capitalist economy. A systems analysis of its inner and external interconnections in today's international situation cannot be made sufficiently full without detailed allowance for tiie general patterns and long-term trends of development of these interconnections.

Lenin more than once stressed the need to study broad socio-economic phenomena in historical retrospect, since

the most important thing if one is to approach this question scientifically is not to forget the underlying historical connection, to examine every question from the standpoint of how the given phenomenon arose in history and what were the principal stages in its development, and, from the standpoint of its development to examine what it has become today.^^2^^

The next chapter of Part I is devoted to the characteristics of the main stages of the `self-movement' of the capitalist world system in the light of that teivet of Lenin's. Here we _-_-_

~^^1^^ Karl Marx and Frederick Kngels. Selected Correspondence, p 397.

^^2^^ V. I. Lenin. The State. Collected Works, Vol. 29 (Progress Publishers, Moscow, 1905), p 473.

24 must draw attention (simply by way of posing the question) to the most general features in the fundamentally important stages of the process under consideration that make it possible to distinguish the key points of the historically formed interaction of the capitalist market and production.

There were relatively broad trade and financial relations between separate countries and peoples, of course, in the socio-economic formations that preceded capitalism, but it was capitalism that first formed a world market which played a progressive, revolutionary role in the subsequent increase of mankind's productive forces and growth of its social production. Marx, attributing paramount importance to that, wrote that 'the specific task of bourgeois society is the establishment of a world market'.^^1^^ It was with the formation of a world market that the level of development of capitalism began to be marked by the degree of growth both of domestic and of international market relations.

There was a qualitatively new leap in the shaping of these relations associated with the vast increase in trade and colonial expansion of the young European capitalist class. This expansion became a decisive factor in the primitive accumulation of capital. The world market thus created important material preconditions for victory of the capitalist modeof production over the feudal.^^2^^

At that time the merchant capital of European powers undoubtedly prevailed in international economic relations, but its dominance on the world market began to decline as the capitalist mode of production was consolidated in the countries that were the basis of its existence. The subordinating of merchant capital to industrial, natural to the new mode of production, was also manifested then in the realm of international trade. As a result the material conditions were laid for an ever increasing intensification of the action of the mechanism of the economic exploitation of all the countries of the world by a handful of `advanced' countries.^^3^^

_-_-_

~^^1^^ Karl Marx. Letter to Kngels of 8 October 1858. In: Karl Marx and Frederick Engels. Selected Correspondence, p 103.

~^^2^^ See: Karl Marx. Capital, Vol. Ill, pp 332--333.

~^^3^^ When this process is examined from the standpoint of the international capitalist division of labour, one can draw an analogy with the commercial activity of the industrialist who extracts a surplus profit, because of the higher productivity of the labour employed by him (see: Karl Marx. Idem., p 233).

25

And the wider the gap in levels of labour productivity becomes between this handful of advanced countries and the economically backward ones, the greater is the exploitation suffered by the latter on the world market. This pattern was expressed with maximum clarity in the following formula of Marx:

The favoured country recovers more labour in exchange for less labour, although this difference, this excess is pocketed, as in any exchange between labour and capital, by a certain class.^^1^^

In that way, in particular, the main antagonistic contradiction of the capitalist mode of production, i.e. that between its constantly increasing social character and the private capitalist forms of appropriating the results of social labour, thus found expression within the world market.

The putting of capitalism onto the rails of large-scale machine industry during the industrial revolution, which was completed in the second half of the nineteenth century, meant the beginning of a new, higher stage in the development of world economic relations. Large-scale industry in fact shaped the world market of the epoch of mature capitalism. And its dependence on external economic links and the international division of labour in turn also grew immensely. As Karl Marx said in his day:

large-scale industry, detached from the national soil, depends entirely on the world market, on international exchange, on an international division of labour.^^2^^

In this situation the antagonistic contradictions of the world market stemming from the basic economic contradiction of capitalist society, have become an ever more serious obstacle to a further rise of social production. One of the most convincing bits of evidence of that were the world economic crises that were converted into a constitutionally inalienable feature of the whole economic system of capitalism. Years of comparatively rapid industrial boom began to alternate with regular consistency with periods of stagnation and direct destruction of already created productive forces. This cyclicity, determined by the objective laws of capitalist production, was intensified in turn by industry's _-_-_

~^^1^^ Karl Marx. Capital, Vol. III, p 238.

~^^2^^ Karl Marx. The Poverty of Philosophy. In: Karl Marx and Frederick Engols. Collected Works, Vol. (5, p 187.

26 mounting dependence on the foreign market.^^1^^ It was their comprehensive study both of the internal, home factors of the cyclic development of capitalist business and of the international ones that enabled the authors of classical Marxist political economy to draw the conclusion, confirmed by the whole subsequent course of social development, that economic crises would remain, while capitalism existed, one of the incurable ills determining its historically transient character.

For more than a century and a half now, since 1825, capitalism has periodically suffered from cyclic crises. All the attempts of capitalist economists to work up prescriptions to cure this illness without eliminating its basis, namely its exploiter relations of production, have unfailingly proved unsound and bankrupt. The capitalists as a class have demonstrated more and more clearly with the course of time their incapacity to control the productive forces of society rationally not only within the context of the separate national economies but also and especially on the scale of the world economy.

The world cyclic crisis of 1974--75, the greatest since the war, which developed under an unprecedented sharpening of several of modern capitalism's most important world problems, viz. the monetary, energy, raw material, and food crises, was convincing evidence of that indisputable fact in our day. It swept almost all the main centres of capitalism simultaneously and in turn interrupted their economic development.^^2^^ During the crisis the monopoly _-_-_

~^^1^^ In noting this fact, Marx wrote: 'The enormous power, inherent in the factory system, of expanding by jumps, and the dependence of that system on the markets of the world, necessarily beget feverish production, followed by over-filling of the markets, whereupon contraction of the markets brings on crippling of production. The life of modern industry becomes a series of periods of moderate activity, prosperity, overproduction, crisis and stagnation. The uncertainty and instability to which machinery subjects the employment, and consequently the conditions of existence, of the operatives become normal, owing to these periodic changes of the industrial cycle'(Capita/, Vol. I, pp 425--427).

~^^2^^ In the crisis years their aggregate industrial production fell by more than 7 per cent, and the physical volume of turnover on the capitalist market by almost 5 per cent. In 1975 the number of officially registered wholly unemployed alone was more than 50 million, according to the International Labour Organisation (ILO), 17 million in industrially developed countries and 33 million in developing countries. See: ILO. Kmployment, Growth and llasic Needs: A One World Problem (Praeger Publishers, New York, London, 1977), pp 18, 20; UN __NOTE__ Footnote cont. on page 28. 27 capitalists as usual exerted immense efforts to shift its most serious consequences onto the working masses of their own countries and the peoples of the agrarian and primary producer periphery.

As capital internationalises society's productive powers the connection between the reproductive processes of the individual countries (including those that are the epicentres of world crises under the impact of the economy's cyclic movement) is becoming closer and closer. Therefore, when we are determining the objective patterns of capitalism's development, the question of the interaction of the national cycles within the context of a single world cycle (study of which was begun by Karl Marx) is posed in all its acuteness.^^1^^ We shall dwell in detail on the features of the cyclic development of today's world capitalist economy later,^^2^^ here it is necessary to stress the following from the standpoint of the matter we are examining.

Despite the fact that the cyclic synchronousness of the movement of capitalist production and of the world market already lias a history of 150 years, a line of refusing to recognise the general patterns of this movement still clearly dominates capitalist economics. When, however, the course of the world cycle is studied, its development is mainly considered as a kind of arithmetical sum total of the results of cyclic fluctuations within the national economies taken separately. As a result it comes about that the specilic features of national development are, as it were, the sole decisive factor in the shaping of each world cycle. In that case _-_-_ __NOTE__ Footnote cont. from page 27. Statistical Yearbook 1979/80 (United Nations, New York, I'.ISi), p 5; UN Munthly Bullelin of Statistics, 1982, 4; XX.

~^^1^^ The main aspects of this problem at various stages of the long cyclic development of the world capitalist economy have been investigated in a number of similes published in the Soviet economic literature. See E. S. Varga (Kd.). Rkonomicheskiye krizisy (World Economic Crises 1848--1935), (Ogiz, Moscow, 1937); L. A. Mendelssohn. Teoriija i istoriya ekunamiclieskikli krizisov i tsiklov (Theory and History of Economic Crises and Cycles), (Sotsekgiz,Moscow, 1959, 1904); I. I. Kuzminov. Poslei-'oye/ini/ kapilalisticliesky tsikl (Postwar Capitalist Cycle), (Sotsekgiz, Moscow, 1902); A. M. Rumyantsev (Ed.). Sovremennyje tsikly i krizisy (Comtomporary Cycles and Crises), (Mysl Publishers, Moscow, 1907); K. S. Varga. Ekanunricheskiye krizisy (Economic Crises!, Mysl Publishers, Moscow, 1974; N. N. Inozemtsev ct al. (Eds.). ();>. cit.

^^2^^ See Chapter 5.

28 the role of the system of international socio-economic connections and of the internationalisation of social production, which in essence convert these countries into links in a single economic chain, is patently underestimated.^^1^^

Since the beginning of the 70s, it is true, because of the steady exacerbation of modern capitalism's international economic problems, an increasingly negative attitude toward sucli a 'narrowly nationalist' approach to analysis of the main world crisis processes (including its cyclic development) has been traceable in capitalist economic literature.^^2^^ Sometimes, while justly noting the close connection between these processes, and in particular between national overproduction crises, within the context of the capitalist economy, most capitalist economists as usual, however, prefer to identify their prime causes with the processes taking place at any definite moment in the sphere of the international market and political relations. They thus willy-nilly leave aside objective study of the system of international exploiter relations of production that underlies the deep internal contradictions of the world capitalist economy, which are inexorably undermining its main foundations.

The political dependence of most of the countries of the world on the main centres of capitalism has played an extremely important z'ole in the long history of the building up of this system. The structure of its unequal, exploiter relations was also moulded by that dependence in the imperialist stage, the crisis of which developed with particular force in the second half of this century as a consequence of most colonial countries' winning of national independence.

_-_-_

~^^1^^ This undervaluation, it must bo noted, is also observable in individual works by Marxist economists, above all in those in which the cyclic development of national production is studied in isolation from the movement of the world capitalist cycle.

~^^2^^ The contributions of the members of the US National Bureau of Economic Research's First Anniversary Colloquium on problems ol the contemporary cyclic development of capitalism arc evidence of this. See: Victor /arnowitz (Ed.). The, Business Cycle Today. Fiftieth Anniversary Colloquium I (National Bureau of Economic Research, New York, 1972).

29 __ALPHA_LVL3__ § 3. The Role of the Colonial System in the History
of the World Capitalist Economy

The forming and rise of the capitalist mode of production was inseparable from the shaping of the capitalist world system of colonial oppression and unrestrained economic exploitation of some countries by others. The subsequent decline of the capitalist social system was intertwined in turn with the collapse of the colonial powers' political domination, break-up of the colonial system, and the rapid development of a neocdlonial policy by the former metropolitan countries as the crisis of the world capitalist economy deepened.

Relations of dominance and subordination on an international scale had long existed, of course, before the development of the capitalist social system, but the colonial policy of the successive exploiter formations was not identical in its essence and motives. It reflected the differences in principle of the socio-economic nature of the slave-owning, feudal, and capitalist systems. Under the slave-owning and feudal systems the conquest and colonisation of other countries did not in essence disrupt the economic basis of the life of their peoples, or the social structure of their society, and did not lead to any cardinal shifts in the structure of production in the conquered areas.

The most important feature of the colonial expansion of the leading European powers, already when capitalism was being born and winning against feudalism, was a policy of breaking down and liquidating the economic independence of the colonised countries, converting them into economic appendages of the metropolitan countries. The capitalist class reorganised the world in its own image and likeness. The European powers' colonial conquests, which were determined from the time of the great geographical discoveries by an ineradicable striving to capitalise profits, began to take on a new class content, and reflected the economic interests of the rising capitalist class.

However the ideologists of capitalism now try to twist and idealise the reasons for its colonial policy, and to separate its centuries long history from that of the forming and development of the capitalist mode of production, they are unable to disprove the conclusionunimpeachably demonstrated by Marxist political economy that the system of the 30 enslavement and exploitation of some countries by others was the creation of capitalism itself. This system, which took shape during the struggle to build colonial empires, immensely promoted primitive accumulation of capital.^^1^^

The idea behind the capitalists' colonial policy from the very start was that the material wealth expropriated and appropriated by them should he converted into capital only after it had been brought to the metropolis. For the pillaged countries it was nothing, in practice, but pure, uncompensated loss; not only was their economic organism bled white, but in many cases their productive forces were directly destroyed.

The system of international economic relations thus built up favoured the rise of the capitalist mode of production in only relatively few countries at first. As a rule the expansionist policy of the capitalist class of the metropolitan countries entailed economic regression in other areas of the world, disruption of the normal course of historical development, and destruction of the shoots of the new relations of production that had arisen there before the coming of the colonialists. That was one of the objectively inevitable patterns of the dialectic of the forming of capitalism's world economy as a system of exploitation of an immense mass of peoples backward in their social development by capitalist countries.^^2^^

The several centuries long process of the formation of the world economy was only completed at the turn of the _-_-_

~^^1^^ `The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting (if black-skins, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation.' Karl Marx. Capital, Vol. I, p 703.

~^^2^^ As a result the causes of the origin of the over-widening gap between the two main groups of countries constituting this system come to light already with its birth. Under imperialism the gap has reached enormous dimensions. In the middle of the twentieth century the gross social product per capita within the framework of the modern world capitalist economy was around ten limes greater than the corresponding average level of production in all the developing countries of Asia, Africa, and Latin America, and at the end of the 70s more than 13 times as much. A detailed description of the deepening of this gulf in the decades since the war will be given in the following sections.

31 nineteenth and twentieth centuries when the whole world was shared out among a handful of capitalist countries. The simultaneity of the completion of the forming of this economy and the territorial carving up of the world (like the simultaneity of the birth of these processes) was quite natural and regular. But the coincidence in time is also due to a certain vagueness and confusion in the definition of the relation of such very important concepts as the 'colonial system' and the 'world economy'.

In a number of works by Soviet and other Marxist economists, especially in the 30s and 4Us, the world capitalist economy was not treated as a special category of political economy and object of special investigation. It was primarily studied as a consequence of the colonial policy of the imperialist powers. This approach was also reflected iu Soviet textbooks of the time, in which the term 'world capitalist economy' was often employed mainly in connection with formulation of the territorial division of the world as one of the main economic attributes of imperialism (its main features usually being treated, moreover, in chapters, devoted to description of the colonial system).

The collapse of the colonial system in the postwar decades graphically demonstrated the illegitimacy of such an approach. The world capitalist economy continued to exist as well with the break-up of the colonial empires, and to function as a mechanism of the economic exploitation of some countries by others, and as a system uniting the countries of the non-socialist world in a single economic organism in which the international relations of the capitalist mode of production prevailed. In the light of the new facts it naturally became necessary to get a thorough understanding, methodologically, of the interdependence and relationship of these categories. It was not fortuitous, therefore, that by the end of the 50s special sections and themes had already begun to appear in certain studies of the international economic problems of imperialism that treated the significance of the colonial system as one of the most important, but far from determinant, elements of the postwar capitalist economy.

But because of the subsequent completion of the break-up of the colonial system evaluations of that kind also required amendment. The collapse of the last great colonial empire, the Portuguese, at the beginning of the 70s, signified that 32 the world capitalist economy had irrevocably lost one of its former colonial foundations. Its periphery now consists almost wholly of sovereign national states and no longer of rightless colonies and semi-colonies.

As a result, the territorial (political) division of the world has now finally lost its former signiiicance. Its other characteristics, which ultimately governed the development of a broad system of neocolonial dependence of the emancipated countries on the former metropolises, has taken over the dominant role in imperialism's expansionist policy. These characteristics include the struggle for an economic partition of the world and for the export of capital, which were directly linked with the inter-imperialist struggle for a territorial division of the world throughout the world capitalist economy's preceding colonial history.

Many of the forms and methods of neocolonialism stemming from the export of capital and the struggle of monopolistic alliances for an economic partition of the world by no means came about suddenly, and have not simply been the consequence of the hopeless crisis of monopoly capital's traditional colonial policy after World War II. Their sources lie deep in the period when the strategy of territorial conquest and colonial expansion held undivided sway in world economics and politics. As this expansion developed the role of capital exports and of the imperialist struggle for an economic division of the world gradually rose. The significance of the system of political enslavement itself, moreover, as the cementing force uniting extremely heterogeneous countries and territories (as regards level of development), during the moulding of imperialism's world economic relations into a single economic whole, did not remain static.

The colonial system played a leading role in this respect, above all iu the early stages of the formation and development of these relations. But as more and more active forms of dependence of colonies and semi-colonies on the metropolitan countries, and on the whole of backward agrarian countries on industrially developed ones, built up thanks to it, those forms and methods of economic enslavement came to the fore that later also underlay imperialism' s neocoloriialist strategy.

In the concluding stage of the formation of the capitalist economy, when large-scale machine industry developed __PRINTERS_P_33_COMMENT__ 3---0170 33 rapidly within it, the colonial system began to perform a new function compared with the preceding stage, and fostered the drawing of the colonies and semi-colonies into the international division of labour built up by monopoly capital on the basis of this industry. The unprecedented extension in the scale of monopoly capital's external economic expansion led to a final consolidation of both politically rightless countries and sovereign ones in the role of primary commodity appendages of its industrial centres. It was then that the conditions for the economic exploitation of agrarian countries and raw material suppliers, without their direct political enslavement, began to build up particularly rapidly. Under imperialism, Lenin stressed,

economic `annexation' is fully `achievable' without political annexation and is widely practised.^^1^^

At the beginning of the twentieth century there were no more `free' countries, i.e. lands not exploited by the handful of imperialist powers. In those conditions the inter-- imperialist struggle for dependent and semi-colonial countries became extremely tense, and the greatest progress was made in it by the United States of America, the economically strongest capitalist power.^^2^^

The infinitely growing significance of the export of capital from the metropolitan countries to their primary commodity peripheries predetermined the development also of another feature most essential for a description of the world economy in its monopoly stage, and that was the tendency to an acceleration of the capitalist development in economically _-_-_

~^^1^^ V. I. Lenin. A Caricature of Marxism and Imperialist Econoinisin. Collected Works, Vol. 23 (Progress Publishers, Moscow, 1974), p 44.

~^^2^^ Jawaharlal Nehru gave a clear definition of the United States' external economic expansion, bringing out the sources of the noocolonial policy of modern capitalism. Describing its substance, he wrote that one must not imagine 'that the empire of the United Stales is confined to the Philippine Islands. Outwardly that is the only empire they have got, but profiting by the experience and troubles of other imperialist Powers, they have improved on the old methods---This ingenious method is called economic imperialism. The map does not. show it. A country may appear to be free and independent if you consult geography or an atlas. But if you look behind the veil you will find that it is in the grip of another country,or rather of its bankers and big business men. It is this invisible empire that the United Slates of America possesses.' (Gliiiijim's uj World Iliktory, John Day, New York, 1942, pp 478, 479).

34 backward countries. After World War II, as the hulk of the colonies and semi-colonies achieved national sovereignty, this tendency (as will he shown in the following chapters) acquired new, original forms.

The postwar break-up of the colonial empires had a substantial impact on the development of several of the decisive contradictions of the imperialist economy, lint one will by no means get a full idea of the specific nature of those contradictions if one does not take the colonial past into account. Analysis of the long-term trends in the reciprocally conditioned development of the capitalist mode of production, the world market, and the colonial system enables one better to understand and comprehensively evaluate the substance of the structural shifts that have taken place in the world economy, given the steady deepening of the general crisis of capitalism.

__PRINTERS_P_35_COMMENT__ 3* [35] __NUMERIC_LVL2__ 2 __ALPHA_LVL2__ A CONTRIBUTION TO THE HISTORY
OF THE FORMATION, DEVELOPMENT,
AND CRISIS OF THE WORLD CAPITALIST ECONOMY __ALPHA_LVL3__ [introduction.]

The history of the world economic system oi capitalism is inseparable from that of its conversion into a dominant economic formation whose structure is considered by Marxist-Leninist economics as a living, constantly developing organism and not as something mechanically interlocked and therefore admitting of all kinds of arbitrary combinations of the individual social elements. Study of its current trends of development and of its antagonistic contradictions necessarily calls for a determination (albeit very cursory) of the main stages of the passage of international capitalist relations of production from one qualitative state to another.

The objective preconditions of the deepening crisis and decline of the previously all-embracing system of the world capitalist economy were built into the 'genetic code' of capitalism itself. The detailed theoretical analysis of them made in their day by the founders of Marxist-Leninist political economy helps bring out both the general patterns and the specilic features of its long-term line of development in recent decades.

__ALPHA_LVL3__ § 1. The Pre-monopoly Stage of Capitalism

Every new mode of production replacing a preceding one regularly creates broader opportunities for further growtli of the productive forces. The capitalist system made a great stride forward compared with feudalism opening up hitherto unprecedented perspective for the development and internationalisation of social production. The decisive factor marking the start of the capitalist epoch was the decomposition of feudal relations of production and the rise in several 36 European countries from the middle of the sixteenth century of the foundations of capitalist production in the form of various types of manufacture. As a result an economic community of separate countries took shape, and a system of division of labour developed on a national and an international scale, home markets were formed, and exchange grew between them.

The gradual consolidation of the economic positions of capitalism (international ones included) prepared the material, and consequently the socio-political, conditions for bourgeois revolutions in a number of countries in Western Europe. These revolutions, by overthrowing the political superstructure, in turn accelerated the replacement of feudal relations by capitalist ones; at the same time they cleared the road for steady external economic expansion of the European capitalist class.

The thirst to enrich themselves at the expense of other nations constitutionally inherent in all exploiter formations became an urgent economic need in the course of rapidly developing commodity production. It determined the capitalists' need to open up trade routes from Europe to Asia, Africa, and America. The great geographical discoveries were the natural consequence of the unprecedented growth of commodity and money relations in European countries evoked by the development of capitalist production and the corresponding expansion of the national and world markets.

The merchant capitalists had a paramount role in all those processes. The East India Companies---the Dutch (1602-- 1798), English (1600--1858) and French (1664--1770, 1785-- 1793)---wrote bloody pages in the history of capitalism. These great joint-stock trading organisations, with a capital very considerable for their day, promoted the drawing of colonised countries into international trade in every possible way, and converted them into economic appendages of the metropolitan countries.

The formation of capitalism's world socio-economic system thus took two main directions from the very beginning: (1) along the line of development 'in depth', i.e. through the growth of capitalist production and national markets in a comparatively small number of economically advanced countries; (2) along the line of development 'in breadth', above all through expansion of a handful of capitalist countries' colonial domination to newer and newer countries 37 and territories, and the forging of stronger interconnections in the world market.

Capitalism, being a natural stage of historical progress, and raising labour productivity to a higher level, thus inevitably broke up relations of production based on personal dependence. But the capitalist society growing from the womb of feudalism did not eliminate class contradictions; on the contrary, it fostered their further exacerbation both within separate countries and on the international arena. Capitalist production only replaced old classes, old conditions of oppression, and old forms of struggle with new ones. As capitalist manufacture grew an urgent need matured to pass to a larger scale, factory production, which ultimately led to the industrial revolution. Developing in the second half of the eighteenth century, first in Great Britain and later embracing a number of other countries, this revolution was completed about the middle of the nineteenth century. The genesis of the factory system of production employing machine technology, and the vast extension on that basis of the international sphere of the capitalists' class omnipotence through colonial expansion, also meant confirmation of capitalism as the prevailing mode of production.^^1^^

The changes taking place in the productive forces of that time under the action of capitalism were really impressive. In England between 1800 and 1850 industrial consumption of cotton rose more than 14-fold, the mining of coal over fivefold, the smelting of iron by around 12-fold. In France, in the second quarter of the nineteenth century alone, output of coal almost trebled, and the production of iron doubled. The production of industrial goods increased at unprecedented rates in Germany, the USA, and certain other countries. At the same time capitalism's international _-_-_

~^^1^^ Marx and Engels, generalising this development, had already .stressed in 1848: 'The bourgeoisie, during ils rule ot scarce one hundred years, lias created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature's forces to man, machinery, application of chemistry to industry and agriculture!, steam-navigation, railways, electric; telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground---what earlier century had oven a presentiment that such productive forces slumbered in the lap of social labour?' (Karl Marx and Frederick Engels. Manifesto of the Communist Party. CtMectrd Wurlcs, Vol. 6, p 489.)

38 commercial and industrial relations developed rapidly. Because of the application of steam engines in transport there were qualitative shifts in the international lines of communication that linked the overwhelming majority of countries together at that time. World trade rose by nearly 180 per cent in the first half of the nineteenth century.

These changes, however, so impressive for their contemporaries, now seem quite modest. In fact they only prepared the ground for a subsequent rapid increase of capitalist production.^^1^^

Yet it was the transition from manufacture to largescale mechanised industry, accompanied with the development of fundamentally new industries, and the drawing of additional manpower and material resources into production, that ultimately led to formation of the material and technical basis of pre-monopoly capitalism. The essence of the process was succinctly characterised by Lenin:

The progressive historical role of capitalism may be summed up in two brief propositions: increase in the productive forces of social labour, and the socialisation of that labour.^^2^^

Capital could not perform that historical function without internationalising the productive forces and without a struggle to mould a corresponding world economic system. The building of that system, which caused a gradual economic convergence of nations, and a strengthening of their economic relations and of the international division of labour, was an inevitable manifestation of the natural.process of capital's socialisation of labour.

That process, however, did not simply lead to consolidation of the bourgeoisie's class position; its most important consequence was that it objectively prepared the national and international socio-economic conditions for the inevitable transition from capitalism to the next, more advanced social formation which by completely abolishing exploiter relations would open up unlimited scope for a further increase of humanity's productive powers.

_-_-_

~^^1^^ By the middle of the 1850s, for instance, world production of iron did not exceed four million tons, while output of coal was less than 100 million tons. The length of all the railways, the building of which was still in the experimental stage in the 1830s, was 2,500 kilometres in 1835, and had only reached 38,500 km in 1850. The tonnage of the world merchant navy was around nine million net register tons.

~^^2^^ V. I. Lenin. The Development of Capitalism in Russia. Collected Works, Vol. 3, p 596.

39

Together with growth of capitalism in separate countries, and extensioji of its international influence on the world arena, the working class came forward as the main driving force of further historical progress. As Marx wrote:

The bourgeois period of history has to create the material basis of tho new world---on the one hand universal intercourse founded upon the mutual dependency of mankind, and the means of that intercourse; on the other hand the development of the productive powers of man and tho transformation of material production into a scientific domination of natural agencies. Bourgeois industry and commerce create these material conditions of a new world in the same way as geological revolutions have created the surface of the earth.^^1^^

The growth rates of capitalism's productive forces on the basis of large-scale production increased markedly in its main centres in the second half of the nineteenth century. In 1880 the volume of industrial production had almost trebled for the whole world compared with 1850. Important shifts had occurred, or were in the bud, in the very structure of capitalist production as a result of faster growth of the main branches of heavy industry. Iron and steel, mechanical engineering, and the chemical industry began to bo converted into the leading branches of the economy. The system of international division of labour continued to expand rapidly. And the development of transport, in which fundamentally new technique was intensively introduced, played a very essential role in cementing capitalism into a single economic whole.

Pre-monopoly capitalism reached its highest stage by the last quarter of the nineteenth century. Then a stormy process of the rise and growth of monopoly enterprises of a jointstock type---cartels, trusts, and syndicates---began in its main centres. Capitalism began to grow over, as a world social system, into its highest and last stage of historical development.

__ALPHA_LVL3__ § 2. The Monopoly Stage of Capitalism

The building of an all-embracing imperialist system was completed at the turn of the century, when the undivided _-_-_

~^^1^^ Karl Marx. The Future Results of British Rule in India. In: Karl Marx and Frederick Engels. Collected Works, Vol. 12 (Progress Publishers, Moscow, 1979), p 222.

40 sway of monopoly capital was established in the main capitalist countries, and the territorial division of the world between them was fully completed. The main patterns of the functioning of monopoly capitalism began then to determine the decisive lines of development of the world economy and world politics. The concluding stage of the formation of a world economy, which took around two or three decades, belongs roughly to the same period.

The transition irom pro-monopoly capitalism to imperialism was I he result of deep-seated shifts, above all in the productive forces a?id technical basis of society, under the action of the ever accelerating concentration and centralisation of production and capital in its main centres. The development of monopolies inevitably retarded technical progress, but at tho same time the increasing concentration of their economic and financial power opened up hitherto unprecedented opportunities for broader application of those advances of science and engineering in the world economy that helped them increase their profits.

This period was marked by the introduction, especially in heavy industry, of major technical advances that brought into being economically more efficient forms and methods of production. The competitiveness of the monopoly mergers was enhanced and the objective conditions created for a further acceleration of the concentration and integration of production. The technical advances that had a marked effect in changing the structure and accelerating growth of the world capitalist economy included, for example, the invention of new ways of making steel (the Bessemer process in 1855, open hearth process in 1864, and the Thomas, or basic process in 1878). Their introduction by the monopolies of the main capitalist countries made it possible to convert the iron and steel industry into a leading branch of the world economy. Whereas only around 500,000 tons of steel was produced in 1870 in the whole world, production was 12 million tons in 1"890, and already 76 million tons in 1913. World production of pig iron rose to 24 million tons in 1890 and to nearly 80 million tons in 1913.

The development of the engineering and chemical industries also had a considerable impact on the advance of many other branches of the economy. The application of technical advances in production that led to the perfecting of prime movers played a revolutionary role in tin's respect. 41 Among them were the invention of the dynamo (1867), the fonr-stroko internal combustion engine (1877), the steam turbine (rnid-80s), and the Diesel engine (end of the 90s). The new types of engine promoted the development of new forms of transport: the motor car (1885), the Diesel locomotive (1891), and the aeroplane (1903). The application of improved means of transport and communication, which had in fact united all areas and countries of the globe at the beginning of the twentieth century, immeasurably accelerated the forming of the world system of division of labour of the imperialist epoch. In 1913 the length of the world's railways was more than a million kilometres, of which more than 250,000 km had been built in colonial and dependent countries in Asia, Africa, and Latin America. There was also a steep increase in marine freights and ocean transport. The energy base of world capitalism, then based on coal, also grew rapidly. The mining of coal exceeded 1,000 million tons at the beginning of this century. The technical basis of the power industry also broadened considerably. For many decades after Watt's invention of the steam engine capitalism's economic growth was linked with the application of steam, but at the turn of the century the use of electricity was becoming more and more important, which also fostered the introduction of a number of new advances in the field of electrical engineering by the biggest companies: viz., the electric smelting of steel (1877), the electrolytic technique of obtaining non-ferrous metals (end of the 1880s), longdistance transmission of electricity (1891), etc.

The world level of production in manufacturing industry rose by 120 per cent between 1880 and 1900, and by 270 per cent by 1913. World trade in manufactured goods rose by 210 per cent (in constant prices) in the same period, and in primary commodities by 220 cent.^^1^^ By the beginning of this century the lion's share of world industrial output and trade was already concentrated in the hands, or under the full control, of the finance capital of ten imperialist powers, which led in a comparatively short time to establishment of the unlimited domination of imperialist monopolies in international economic and political relations. All that in turn brought about essential modifications in the _-_-_

~^^1^^ League of Nations. Industrialization and Foreign Trade (Geneva, 1945), pp 132--134, 157.

42 pattern of development of the world economy compared with the period of free competition. Since all countries and nations without exception had been drawn into the orbit of imperialist domination, elucidation of this pattern called urgently for theoretical comprehension of the actual changes taking place both in the economies of the main capitalist powers and on a world scale.

It was necessary to get an overall picture of the whole capitalist economy and of the most important trends in its development. Lenin took it on himself to tackle this problem. The concrete, historical analysis of the main tendencies of economic development at the beginning of the century that he made in his book Imperialism, the Highest Stage of Capitalism enabled him to define imperialism as a special stage of capitalism within which monopolies and finance capital had established world domination, the export of capital had acquired salient significance, economic division of the world between alliances of capitalists had begun, and the territorial partition of the world among the capitalist powers had been completed.

This definition of the imperialist stage included its main economic attributes, which at the same time also characterised other very important aspects of the affairs of capitalist society at that time in the realm of politics, social relations, class struggle, ideology, and culture. It was a matter, consequently, of a single chain of socio-economic and political changes that brought to light the very essence of the monopolistic stage of capitalism as a world system rather than of isolated or one-sided attributes In defining this essence, Lenin noted that

on the one hand, finance capital is tho bank capital of a low very big monopolist banks, merged with tho capital of tho monopolist associations of industrialists; and, on the other hand, the division of tho world in tho transition from a colonial policy which has extended without hindrance to territories unseized by any capitalist power, to a colonial policy of monopolist possession of tho territory of the world, which has been completely divided up.^^1^^

The various fornib of monopoly in one country or another, and in the various branches of the capitalist economy had already arisen on the national and world markets, as we _-_-_

~^^1^^ V. I. Lenin, Imperialism, the Highest Stage of Capitalism. Collected Works, Vol. 22, p 266.

43 know, under free competition, but they only acquired a dominant position on a world scale under imperialism. Marx and Engels, in wringing out the deep-sealed tendencies of development and the historical inevitability of the destruction of the capitalist formation, had been able in their day to trace the genesis of capitalist society from its embryonic state to the period when the joint-stock form of monopoly capital began to arise within it.

They could not then foresee, of course, that capitalism would pass to a higher stage of development, but they perceived, with the shrewdness of genius, in the joint-stock form of the `self-movement' of capital a tendency toward monopolisation that sapped the very principle of free competition.^^1^^ At the same time, their studies showed that this tendency, reflecting natural growth of the social character of capitalist production, must promote the creation of new objective conditions for mankind's revolutionary passage to a more progressive social system.

Lenin's theory of imperialism brought together a Marxist analysis of the patterns of capitalism and a study of the qualitatively new processes and phenomena of world development at the beginning of the twentieth century. Elucidation of the economic essence of the new stage of capitalism was the core of this theory. Just as free enterprise was the main trend in the affairs of the world capitalist economy in its early stages of development, so establishment of the domination of finance capital on a world scale was the most important feature of its imperialist stage.

Because the economic basis of capitalism consists in capitalist private ownership of the means of production, a uniting of two contradictory principles---monopoly and competition---is typical of the world economy of imperialism. At the same time it retains a broad spectrum of both pre-monopoly and even pra-capitalist forms of commodity production. Without them it would be inconceivable, since imperialism, as Lenin often stressed, is a kind of superstructure on the old capitalism that is the admitted consequence of the development, expansion, and continuation of the deepest, most fundamental tendencies of capitalism and commodity production in general. That formulation of the problems acquires special significance when we analyse the _-_-_

~^^1^^ Karl Marx. Capital, Vol. I, p 588; Vol. Ill, pp 430--439.

44 structural changes in the world capitalist economy with the collapse of its colonial basis.

The national features of the monopolisation, and consequently, too, of the internalionalisation, of large-scale proel uction and capital in no way rule out the operation in each country of the general patterns that in the aggregate determine the unity of the various features of imperialism's economy and politics. Not all the main characteristics of the highest and last stage of capitalism, moreover, are manifested in each country to the same exten! and in all areas. The possession of colonies, for example, or the export of capital, played a minor role, or did not occur, in the specific conditions of its formation in certain imperialist countries, but the existence of the decisive characteristics---the domination of monopolies and finance capital---was obligatory. The economic attributes of imperialism, taken together, are manifested in their unity in the world capitalist economy.

At the turn of the century this economy was wholly transformed into an antagonistic aggregate of two main groups of countries, imperialist countries on the one hand and the colonies and dependent countries exploited by them on the other hand. In that connection we must remember that some of these characteristics had already begun to be observable in Great Britain in the middle of the nineteenth century.^^1^^ By the end of the century, however, Britain's advantages had largely been forfeited. One country's domination had given way to the monopoly position of several main, competing imperialist powers.

Although the policy of colonial enslavement of other countries in the capitalist system historically became very common, imperialism had nevertheless begun, right at the start, as we showed above, to create qualitatively new conditions for the expansion of finance capital in economically backward countries without their direct political subjugation. The patterns of the division of labour between developed capitalist, countries and economically backward agrarian ones _-_-_

~^^1^^ 'But it has boon a peculiar feature of England that oven in the middle of the nineteenth century she already revealed at least tiro major distinguishing; features of imperialism: (1) vast colonies, and (2) monopoly pro 111 (due to her monopoly position in the world market). In both respects England at that time was an exception among capitalist, countries.' V. t. Lenin. Imperialism and the Split in Socialism. Collected Works, Vol. 23 (Progress Publishers, Moscow, 1974), pp 111-- 112.

45 operating ai that time favoured further consolidation of these conditions.^^1^^

The omnipotence of finance capital in world economics and politics had grown to such an extent then as to enable the leading capitalist countries to convert even individual colonial powers that were lagging in economic development into dependent countries. To some extent this dominance enabled many features of the former structure of the uneven division of labour in the world capitalist economy to be retained subsequently, after the disintegration of the colonial system.

An idea of some of the main trends of development and of the structural changes in the world capitalist economy at the turn of the century is given by the statistics in Table 1, which enable us to characterise in general form the shifts in the productive forces mentioned above over roughly a third of a century during the growing over of pre-monopoly capitalism into monopoly capitalism.

One of the most essential features of world economic relations in the monopoly stage of capitalism is the export of capital. By greatly intensifying the foreign economic expansion of the main capitalist countries, it enabled the monopolies of the imperialist powers to gain a predominant influence in other countries, often with the letter's retention of actual national independence. It also led to the development of the feature noted above, namely the tendency to an accelerated but dependent development of capitalism in colonies and other economically backward countries.

The colonial policy of the monopoly capitalists continued, at the same time, to pursue the goal of maintaining survivals of pre-capitalist social structures in agrarian countries and raw-material suppliers (especially as regards their agrarian relations) as a social prop for their dominance and source of extra superprofit. The intertwining of pre-capitalist forms of production with monopoly forms and methods of exploitation intensified the contradictions of the world economic _-_-_

~^^1^^ See, for example, A. I. Levkovsky. Nekotoriye osobennusti razviliya kapiializma v Indii do 1947 g. (Certain Features of the Development of Capitalism in India before 1947), Gospel ilizdat, Moscow, 1950; V. L. Tyaguncnko. Voiny i holonii (War and Colonies), Voyonizdat, Moscow, 1957; A. G. Milcikovsky et al. (Eds.), llaspad Hrilanskoi imperil (The Break-up of the British Empire), Nauka Publishers, Moscow, 1964.

46 The Growth of Imperial ism's Colonial System and the of World Economic Development I able 1 Dynamics 1870--1880 i'JOII Colonies i:j III/: imperialist powers Population (millions) 315 T 520 500 2 852 Territory (mil. sq. km. 45 ! Industrial product ion (1880=100) 100 83 The World USA :i Great Britain Germany France Italy Russia 300 590(35.8) 190(14.1) 400(15.7) 230(0.4) 435(2.7) 590(5.5) 100(23.4) 315(32.2) 100(28.7) 150(18.0) 100(15.0) 200(17.0) 100(10.5) 155(7.0) 100(2.4) 100(3.0) 245(2.5) 300(5.0) World production, of selected product* (mill, tons) Coal Pig iron Steel 300 18.5 4.2 750 40.5 29.3 1300 79.2 70.3 Physical volume of irorld trade Manufactures Raw materials 100 100 Length nj railways (000 kilometres) 150* 190" Total Europe America Asia Africa Oceania (Australia and New Zealand) 370 170 175 15 5 5 790 285 400 00 20 25 1105 345 570 110 45 1 187U 2 1!)14 3 The figures in brockets give Hie USA's and oilier countries' percentage share of world production 4 Yearly averages for 18!)G-1!)00 Sources: calculated from V. I. Lenin. Imperialism, tlie Highest Stage of Capitalism. Collected Works, Vol. 22; E. S. Varga (Ed.). World Economic Crises 1848--1935 (Ogiz, Moscow, 1937), pp. 482--484; M. I!. Wolf and V. S. Klupt. Statislicheshi/ tpruvoclmih p<> ehonumichcshoi gcogrnfii stran hapitolisiicheskogo mira ( Statistical Handbook on the Economic Geography of tbo Countries of the Capitalist. World), Sotsekgiz, Leningrad, I!);i7,pp. 22, 23, 48, 74; League of Nations. Industrialization and Foreign Trade, pp 132--134, 157 (estimates rounded off). [47] system, and led to a further increase in tlie unevenness of the development, of its various parts, and of separate countries and regions.

At the same time monopoly capital added to the old methods of capitalists' expansionist policy a struggle for redivision of the already divided world, to take up its raw material resources and profitable spheres for the employment of capital, for new potential markets for their industrial output, and for spheres of monopoly control over economically exploitable areas in general. The inter-imperialist struggle fostered a steep increase in the spasmodic character of the economic development of various countries, which became a most important feature of the functioning of the world capitalist economy over the whole of its subsequent history.

With the transition to the monopoly stage there were also considerable changes in the political and ideological superstructures of capitalist society. The determinant moment of all these changes was a strengthening of reaction all along the line. A period of unrestrained intensification of exploitation and national oppression of all the peoples of the world by the monopoly capitalist powers set in, a period of imperialist struggle for spheres of complete bossing of the show in the world. In these conditions the capitalists as a class finally lost their once progressive role.

In creatively developing the Marxist theory of social development on the basis of a thorough study of this stage of capitalism, Lenin came to the very important conclusion that a fundamentally new historical situation had arisen promoting a further upsurge of the world revolutionary process:

Capitalism has become reactionary; it has developed the forces of production to such a degree that mankind is faced with the alternative of adopting socialism or of experiencing years and oven decades of armed struggle between the `Great' Powers for the artificial preservation of capitalism by means of colonies, monopolies, privileges and national oppression of every kind.^^1^^

The unprecedented sharpening of the contradictions of capitalist development on a global scale created the objective conditions for snapping the single chain of imperialism at its weakest links, initially in a few countries, or one, taken by itself. Imperialism's historical place in relation to capitalism in general was thus defined as a turning point in _-_-_

~^^1^^ V. I. Lenin. Socialism and War. Collected Works, Vol. 21 ( Progress Publishers, Moscow, 1977), pp 301--302.

48 society's affairs, as the eve of a new historical epoch of revolutionary suppression of the capitalist social formation by a socialist one.

__ALPHA_LVL3__ § 3. The World Capitalist Economy Today

The First World War (1914--1918), and the victorious socialist revolution that developed at the end of it in Russia, opened a new chapter in world history. Imperialism's previously all-embracing political and economic system began to break up. Over an area of one-sixth of the world's land surface, with a population then of 120 million, there arose and began to develop a fundamentally new social system. The productive forces of socialism began to be made an integral component of mankind's productive forces.

As a result of the formation of the first socialist state, capitalism could no longer dominate the world economy without limit, as before. An historically inevitable period of coexistence, struggle, and interaction began in the world economy and in world politics between two socio-economic systems based on fundamentally opposite modes of production.

It is well known that imperialism exerted immense efforts in order to block this course of events. After the repeated failure of attempts to strangle the socialist system at birth by force of arms, the monopoly circles of the West took the line of economically and politically isolating the young Soviet Republic, whose economy had suffered enormously from civil war and foreign intervention.

The monopoly capitalists thus endeavoured to reverse the processes in the world economy that expressed the vital needs of a further advance of society's productive forces, but these plans to counteract the objective economic patterns of social development disclosed by Marxist-Leninist political economy also suffered one failure after another. As Lenin remarked:

There is a force more powerful than the wishes, the will and the decisions of any of the governments or classes that are hostile to us. That force is world general economic relations, which compel them to make contact with us.^^1^^

_-_-_

~^^1^^ V. I. Lenin. Ninth All-Russia Congress of Soviets. Collected Works, Vol. 33 (Progress Publishers, Moscow, 1900), p 155.

__PRINTERS_P_49_COMMENT__ 4---0170 49

The forces of world reaction subsequently strove incessantly to put obstacles in the way of the building of a system of mutually advantageous international economic co-- operation of countries with different socio-economic systems. The story of the moulding of this system has been one of consistent, persistent struggle by socialism and all mankind's progressive forces to preserve a world division of labour and develop it on a new basis, and to establish truly equal commercial and economic, scientific and technical, and cultural relations between all countries. Success would have been impossible in that struggle if it had not corresponded to the real interests of nations and of the non-socialist countries, and also if it had not met the requirements of the objectively operating laws of social development, and if it had given a one-sided advantage to the socialist countries. Thus, even between the wars, the basis was laid for intricate, contradictory processes determining the most vital directions of the subsequent crisis development of capitalism's world economic system.

After World War I there was a comparatively rapid restoration and further expansion of production, and of the world economic links broken by the war, within contracted boundaries.^^1^^ But this growth took place on a background of further deepening of imperialism's basic contradictions, a sapping of its colonial foundations, and an intensification of the unevenness in the development of separate regions and countries.

At the same time the socialist mode of production was more and more clearly becoming a constituent part of the global economy of mankind, and was graphically demonstrating its vitality.^^2^^ The international standing of the Soviet Union was strengthened, and its external economic _-_-_

~^^1^^ The capitalist system's physical volume of industrial production had risen in 1929 by 40 per cent on 1913, and the volume of foreign trade by more than 70 per cent. The scale of capital exports also increased considerably (see M. 1!. Wolf and V. S. Klupt. Statistichcsky spravochnik po ekonomiclieskoi geografii kapilalislicheskogo inira ( Statistical Handbook on the Economic, Geography of the Capitalist World), Sotsekgiz, Leningrad, 1937, pp 54, 553.

~^^2^^ In 1932 the volume of the USSR's industrial production was roughly 170 per cent above the level of 1913, 480 per cent in 1937, and 750 per cent in 1940. (See I`miiujshli'mwal .V.V.S'/f. Slatistlchesky sbornik) (The Industry of the USSR. A Statistical Digest), Political, Moscow, 1957, p 9.

50 relations extended, through intergovernmental agreements with several capitalist conn tries, certain former colonies and semi-colonies. The progress made in building socialism in the USSR, and the consolidation of its position on the international arena, where the foundations of a new world social system were being laid, became vital factors in the subsequent aggravation of the general crisis of capitalism.

Growth of capitalism's irreconcilable contradictions continued to play the determinant role in this process. Particularly convincing evidence of that was the world cyclical overproduction crisis of 1929--33, the greatest in scope, duration, and disruptive consequences in capitalism's history, which simultaneously swept the industrially developed countries and their agrarian, raw material periphery. The crisis, which threw the economy of the capitalist world several years back, had a very negative effect as well on the whole system of imperialism's global economic connections. By the end of the 30s the volume of international trade, and also of capitalist industrial production was below the level of 1913. Right up to the beginning of World War 11 the economies of most countries of the capitalist world had still not been able to recover fully from that crisis.^^1^^

At the same time the colonial foundations of the capitalist economy had- been markedly weakened. The successful anti-imperialist struggle of the peoples of the USSR and their achievements on the road of radical socio-economic reforms, stimulated an upsurge of the national liberation movement in many colonies and dependent countries, some of which had managed after World War 1 to win or retain their national independence. A crisis of the all-embracing colonial system began. The colonial powers, it is true, were then still able to avert the break-up of their empires. Without ceasing their struggle to redivide spheres of domination, they endeavoured as before to deprive the countries economically dependent on them of national sovereignty; and to that end imperialism repeatedly unleashed predatory wars (e.g. Italy's aggression against Ethiopia, and Japan's against China).

Characteristically, however, not a single imperialist power could succeed, even in the initial stage of the general crisis _-_-_

^^1^^ League of Nations. Inr/uslrialization and /'oreien Trade PP 94--99, 157.

__PRINTERS_P_51_COMMENT__ 4* 51 of capitalism, in turning any economically backward country into a new colony. While retaining a decisive position in the world economy, linance capital was forced to take into account in its expansionist policy not only the `strength' and `capital' of its imperialist rivals but also of the growing strength of resistance of the peoples of the countries exploited by them, who received every possible support from the iirst socialist country.

World War II, which broke out as a result of the sharp aggravation of all capitalism's contradictions at the end of the 30s, and of the striving of its most aggressive circles to strike a crushing blow against socialism and the national liberation movement, in the final count led to a further deepening of the crisis of the imperialist system, the boundaries of which contracted even further. The socialist mode of production became predominant in a number of countries in Europe and Asia, and a new phase opened in the economic competition of socialism and capitalism.

The antagonism and interaction of the two opposing social systems became a determining feature of today's world economy in the postwar years; in that connection it has become necessary, when studying the structural shifts and fundamental features of the postwar development of capitalism, to take into account at the same time the global tendencies of the growth of production, the more so that the long-term consequences of the scientific and technical revolution that has embraced the leading spheres of the productive activity of human society as a whole are beginning to have a mounting effect on both socialist and capitalist countries, and also on many developing ones.

Analysis of the facts characterising these tendencies indicates that in the period under review mankind's productive forces have attained a height hitherto unprecedented. The international exchange of scientific and technical knowledge and production know-how has reached a fundamentally new level. The infrastructure of world economic relations has also developed rapidly under the impact of the scientific and technical revolution on the basis of a national and international division of labour. On the whole, the volume of the aggregate product of all the countries of the world was more than four times as big at the end of the 70s as at the beginning of the 50s. There was also a marked increase in the main productive forces, viz., manpower (the 52 number of the world's inhabitants rose by almost 75 per cen! in the same period).^^1^^

The list of that kind of quantitative indicators could, of course, be considerably extended, but the figures cited give a graphic idea of the sizable shifts that have occurred in humanity's productive forces in the contemporary historical situation of competition of the two main modes of production and the corresponding two world socio-economic systems, namely the socialist and the capitalist.

As Karl Marx remarked in a letter to P. V. Annenkov (28 December 1846),

tho productive forces are therefore the result of practically applied human energy; but this energy is itself conditioned by the circumstances in which men find themselves.^^2^^

Which of the opposing world social systems has the advantage in creating conditions for growth of the productive forces can be judged from the following facts. On the whole, in the three decades of the 50s through to 80s, the rates of growth of national income and industrial output in the socialist countries belonging to the Council for Mutual Economic Assistance (CMEA) were three time as high as in all the capitalistically developed countries taken together. The countries belonging to CMEA are the most dynamically developing economic community in the world. At the end of the 70s these countries, which have 10.2 per cent of tho world population, produced around one-third of the world's industrial output. In 1968--79 alone the volume of the gross social product in the European members of CMEA increased more than fourfold, while that of all the developed capitalist countries increased by only 140 per cent. A natural consequence of the development of this tendency has been a considerable raising of the role of socialism in the world economy. At the beginning of 1980 the population of _-_-_

~^^1^^ In this period the volume of railway freights increased by 280 per cent throughout the world, the total tonnage of tho world morchantile marine by 430 per cent, sea-borne cargoes more than sevenfold, and air freights almost 40-fold (on international airlines alone more than 70-fold). Total world production of all types of energy correspondingly rose fourfold and generation of electricity more than eightfold ( according to the statistical yearbooks of the United Nations for the relevant years).

^^2^^ Karl Marx and Frederick Engels. Selected Correspondence, p 30.

53 countries not yet broken free from direct, colonial dependence was not more than 0.1 per cent of all mankind.

The turn of the decade to the 80s was marked by further growth of the economic might of the countries of world socialism. As the Central Committee's report to the 26th Congress of the Communist Party of the Soviet Union noted:

Tho past few years have not, been among the most favourable for the national economies of some socialist states. Still, in the past ten years the economic growth rates of the CMEA countries have boen twice those of the developed capitalist countries. Tho CMEA members continued to bo the most dynamically developing group of countries in the world.^^1^^

At the same time the break-up of the colonial system was not limited to emancipation of the colonies, but also included semi-colonial and dependent countries. Throughout the long period of'the imperialist powers' unlimited sway in the world economy the dominant tendency was to convert the latter into rightless colonies; in the postwar years another trend began to predominate, that of converting them into politically independent national states. Imperialism could not suspend the development of this tendency as well. In recent decades the overwhelming majority of semi-colonies and dependent countries, having thrown off foreign and proimperialist regimes, have also in fact broken free of imperialism's system politically, and are no longer its reserve, as they used to be. With the all-round support of the socialist countries and international working-class movement, they are intensifying the anti-imperialist struggle for economic independence. As a result there has been a marked quickening of the growth rates of their economies. The total production of goods and services in the developing countries of Asia, Africa, and Latin America rose more than 320 per cent in the 50s to 80s, industrial output rising by 620 per cent and farm production by nearly 130 per cent.^^2^^

Their position in the world capitalist economy, however, remains extremely difficult and unequal. In spite of the fact that they have three-quarters of the population of the non-socialist world, they produced less than one-fifth of _-_-_

~^^1^^ I,. T. Rro/linov. Ri'[>i>rt ,>! ihr Ci'iitrnl CummiHei- «l the C'PSU In the Sfilli Coi/cms nl Hi,- Comniiinixt Ptirti/ i>l Ijic Surii't I'nion, |.p 11--12.

~^^2^^ Calculated from UN Statistical Yearbook and Mimthlij Bulletin of Statistics for the appropriate years.

54 that world's gross output at the beginning of the 80s. The immense gap in levels of development between them and the group of imperialist powers historically built up under capitalism has continued to widen. In the first postwar years, for example, this gap, in terms of per capita GDP, was characterised by a ratio of 1 : 10, and at the beginning of the 80s by a ratio of more than 1 : 13. In the same period there was a marked reduction of the weight of the former colonial world in the turnover of the world capitalist market. This'matter will be examined in greater detail in Parts II and III.

The capitalist economic system is more and more clearly demonstrating its incapacity to deal with the pressing socioeconomic problems of emancipated countries. The logic of history is convincing their peoples of the lack of perspective of development along the capitalist road.

It is not fortuitous that many of the new national states, including some that are still largely enmeshed in imperialism's world economic relations, are rejecting the capitalist road of development in their constitutions, under pressure of the broad public, and are proclaiming a line of building a socialist society in the long term.^^1^^

Leonid Brezhnev, characterising the significance of the countries liberated from colonial subjection that have taken the road of revolutionary, democratic transformations, and of countries with a socialist orientation in today's world, said that at the 26th Congress of the CPSU:

Development along the progressive road is not, of course, the same from country to country, and proceeds in difficult conditions. But tho main lines are similar. These include gradual elimination of the positions of imperialist monopoly, of the local _-_-_

~^^1^^ These problems have born analysed in depth in a number of Soviet works: R. M. Avakov (Ed.). Ftazvivayushchiycsya strany: zakononiernosti. tendentsii, persprktivi/ (Developing Countries: Patterns, Trends, and Prospects), Mysl Publishers, Moscow, 1974; G. E. Skorov (Ed.). Science, Technology and Economic Grawih in Developing Countries. Translated by Jenifer Warren (Porgamon Press, Oxford, 1978); K. N. Brutonts. Osrobodivsfiii/est/a .itrany v 70-e god;/ (The Emancipated Countries in tho 70s), Polilizdat, Moscow, 1070; N. N. Inozomtsov et al. (Eds.). l\lirt>r»i rrruliilsiaiiiii/ prntsess i sorremennoxt (World Revolutionary Process and Contemporaneity). Naukn Publishers, Moscow, 198(1; R. A. Ulyanovsky. Pre.ient-Daii Problems in Asia and Africa. Theory, Politics, Personalities. Progress Publishers, Moscow, 1981.

55 big bourgeoisie and the feudal elements, and restriction of foreign capital. They include the securing by the people's state of commanding heights in the economy and transition to planned development of the productive forces, and encouragement of the cooperative movement in the countryside. They include enhancing the role of the working masses in social life, and gradually reinforcing the state apparatus with national personnel faithful to the people. They include anti-imperialist foreign policy. Revolutionary parties expressing the interests of the broad mass of the working people are growing stronger there.^^1^^

Monopoly capitalism is really losing its old opportunity to decide the fate of nations even within the shrunken framework of the world capitalist economy. The main point in the people's national liberation struggle at the present stage of the general crisis of capitalism"is that it has been converted in practice into a fight against exploiter relations in general, both feudal and capitalist, in many countries. As Leonid Brezhnev has put it:

It is of exceptional importance that many of the countries that have achieved liberation have rejected the capitalist road of development and adopted a socialist orientation, setting themselves the goal of building a society free from exploitation.^^2^^

And that, without doubt, is a very strong blow to capitalism's positions as a whole as a world social system.

A substantial socio-economic consequence of the collapse of the colonial system is the relative lowering of the role of expatriate capital in the economies of emancipated countries. Before independence almost all their industrial production was in the hands of foreign monopolies and was part of the economy of the imperialist system. Today broad measures have been taken in'many of them both to nationalise expatriate enterprises and establish public control over their activity, and to found their own national industry. There are few summarised, reliable facts in the international statistics on what proportion of industry remains under the direct control of expatriate monopolies, but varrious indirect indicators suggest that a considerable^part of the industrial potential of the developing countries, yielding more than 4 per cent "of gross world industrial output, has already passed out of such control.

_-_-_

~^^1^^ L. I. Brezhnev. Op. cit., p 17.

^^2^^ L. I. Brezhnev. Our Course: Peace and Socialism (Novosti Press Agency Publishing House, Moscow, 1978), p 181.

56

Because of the effect of these tendencies, a further weakening of the imperialist powers' positions in the world economy has become typical of the period of the general crisis of capitalism, which finds expression above all in the obvious undermining of their former hegemony in world industrial production. At the end of the 30s the monopolies of the capitalist countries (including colonies and dependent countries) in practice controlled around nine-tenths of total world industrial production; at the beginning of the 80s only a little more than half of it was under their control.

The facts adduced here primarily bring out one of the decisive trends in the crisis of the imperialist economy, when the basic features and main peculiarities of contemporary world development are beginning to be determined by the working class and its offspring, the world socialist system, and no longer by the monopoly capitalists. The steady strengthening of the economic might of the socialist countries, the advance of the national economies of the new sovereign states, and the rapid development of mutually advantageous international economic relations between them are leading in turn to a marked limitation of the imperialist monopolies' diktat in world economic relations, including those between developing and developed capitalist countries on the world market.^^1^^

Even the most persistent and subtle defenders and propagandists of the capitalist system are unable to deny the tendencies noted above, which are finding wide reflection in international statistics, and which express the main trends in the deepening of the contemporary crisis of the world capitalist economy. An ambivalent approach to these processes is therefore typical of capitalist politicians, economists, and sociologists, who are engaged in apologetics for imperialism. On the one hand, they prefer in every way to evade comparison of the long-term results of the development of the two world economic systems in their interconnections, and strive to avoid a comprehensive socio-economic analysis of these results. While the work of some leading capitalist scholars _-_-_

~^^1^^ For further details sec E. Ye. Obminsky. Kotitseptsiya mezhdunarodnogo ekonomicheskogo pori/adka (The Concept of (he International Economic Order), Mysl Publishers, Moscow, 1977; N. P. Shmelev. Sotsializm i mezhdunarodniije ekunomicheskiye olnosheniija (Socialism and International Economic Relations), Mozhdunarodniyc otnosheniya Publishers, Moscow, 1979.

57 undertakes to examine the dynamics of l4io economic growth of the opposing social systems today, it usually mentions the advances of socialism in passing as something irrelevant for an evaluation of the present-day level and the ensuing outlook for the global development of mankind's productive forces. On the other hand, immense attention is paid in Western capitalist literature to another aspect of this problem, namely, the factors that continue to promote growth of production within the capitalist economy. These factors are usually considered out of context of the processes showing overtaking growth rates in the economy of the world socialist system.

The ideologists of the capitalist system, glossing over its class and other antagonisms in every way, are relying on the development trends of social development in its industrial centres under the impact of the developing scientific and technical revolution. What lack of prospects can there he talk of, they ask, and even more what hopeless crisis of this social system, if capitalism's productive forces still continue to grow, albeit unstably and with sharp fluctuations. The increase in the production capacity of the postwar world capitalist economy is thus advanced as the `weightiest' argument to substantiate the 'historical stability' of capitalism and consequently, as well, the flimsiness of the Marxist-Leninist analysis of the irreconcilable contradictions of its development.

In fact the Marxist-Leninist theory disclosed another causal connection between the growth and internationalisation of social production under capitalism and its historical destinies, than that which its capitalist critics try to ascribe to it. The objective tendencies in the development of the capitalist mode of production are not leading to a stopping of growth of the productive forces, or to their stagnation, but on the contrary are leading to their accelerated advance compared with preceding formations. In the Manifesto of the Communist Party Marx and Engels wrote:

The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society---Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish tho bourgeois epoch i'rom all earlier ones.^^1^^

_-_-_

~^^1^^ Karl Marx and Frederick Engels. Collected Works, Vol. 0, p 487.

58

But does all that mean that, as the productive forces of capitalist society develop, its economic basis is perpetuated and becomes ever firmer and more unshakeable? The founders of Marxism-Leninism, in bringing out the inner contradictory dialectic of that development, demonstrated that it in no way contributes in the end to the consolidation of capitalism. It relentlessly undermines the foundations of this system, and forms the conditions within it necessary, for victory of a more advanced social system. By accelerating growth of the productive forces in its own class interests and internationalising them in every way, the capitalist class itself prepares the material and social conditions for destruction of the social formation created by it.

The transition to monopoly capitalism, while heightening the unevenness and spasmodic character of its development, was marked by a further growth of capitalist production. In describing imperialism as the highest and last stage of capitalism, in which tendencies toward decay and growth of society's productive forces predominated simultaneously, Lenin stressed that:

it would bo a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of tho bourgeoisie and certain countries betray, to a greater or lessor degree, now one and now another of these tendencies. On tho whole, capitalism is growing far more rapidly than before; but this growth is not only becoming more uneven in general, its unovenness also manifests itself, in particular, in tho decay of tho countries which are richest in capital.^^1^^

The very substantial shifts in capitalism's material basis in its imperialist stage graphically confirm the fundamental character of these tenets of Marxist-Leninist theory, which help us better to understand the action of the long-term trends in the world economy that predetermine the features and course of its development in today's transitional period.

As the general crisis of capitalism deepens, the world capitalist economy more and more sharply experiences the effect of the socialist and national liberation revolutions, the mounting militarisation of the economy, and of numerous military shocks and upheavals. The development of _-_-_

~^^1^^ V. 1. Lenin, Imperialism, the Highest Stage of Capitalism. Collected Works, Vol. 22, p 300.

59 production in all the countries of this economy has been repeatedly interrupted or held back by economic crises, but the objectively operating long-term tendency toward growth of society's productive forces has still continued to make itself felt in the stage of imperialism as well (see Table 2). The economies of capitalist countries began to develop at particularly high rates after World War II, as witness the following facts. While the physical volume of industrial production within capitalism's present boundaries increased Table 2 Mean Annual Growth Rales of Industry and International Trade in the World Capitalist Economy (in percentages) Period Industrial International production trade Table 3 Area and Population of the Countries of the Two Social Systems (as percentages of the world totals) 1881--1913 3.8 2.6 1913--1948 1.4 0.4 1948--19(50 4.8 6.5 1960--1973 6.1 8.2 1973--1981 1.9 3.5 by 240 per cent over the 33 years 1880 to 1913, and by (30 per cent during the next thirty five years, during which capitalism twice dragged mankind into world military catastrophe, it rose on the whole by a factor of 4.4 in the postwar period covered by Table 2 (1948--1981). Fundamentally new branches of industry, transport, and communications were developed then under the impact of the scientific and technical revolution. Internationalisation of social production was noticeably broadened and deepened; the physical volume of international trade on the world capitalist market rose nearly eightfold.

The number of working people, and their vanguard the working class, increased on an unprecedented scale in the postwar decades. When Marx and Engels disclosed the very great revolutionary potential of the proletariat in the 60 Manifesto of the Communist Party, there were only around nine million workers in the whole world. At the beginning of the 1980s their numbers had increased nearly 50-fold. The working class has become the leader of the broad masses' light for a revolutionary restructuring of society. And only in that struggle could the new social system arise that is going to replace capitalism.

Capitalism, Lenin said, creates its own grave-digger, itself creates the elements of a new system, yet, at the same time, without a `leap' these individual elements change nothing in ths general state of affairs and do not affect the rule of capital.^^1^^

These qualitative `leaps' that deepen the crisis of capitalism were the socialist revolutions headed by the working class and the national liberation revolutions associated

Non-socialist countries Years Socialist countries , total capitalist countries and their colonies Area 1900 1923 1981 16.0 26.2 100 84.0 73.8 89.0 05.0 23.5 Population 1900 1923 1981 7.7 33.0 100 92.3 07.0 70.0 60.0 17.5 Sources- statistical publications of the League of Nations and United Nations.

Sourcfs: A. Schi^er. Politicliesh(iyft linrta. mira. Sprfirochnih (The Political Map of the World. A Handbook), Politi/.dat, Moscow, I960; UN Monthly Bulletin oi Statistics, 1082.

with them, which altered the political map of the world in a radical way during the decades of the twentieth century (see Table 3).

_-_-_

~^^1^^ V. I. Lonin. Differences in the European Labour Movement. Collected Works, Vol. 16 (Progress Publishers, Moscow, 1907), p 348.

61

The patterns of the general crisis are not introduced into the world capitalist system from outside but are the natural result of its inner development and stem from the antagonistic nature of the capitalist mode of production itself, based on the exploitation of man by man and of some countries by others. The decisive consequence of the structural shifts under review was not a weakening but an unprecedented sharpening of the basic contradiction of capitalism, i.e. the contradiction between the constantly increasing social character of production and the capitalist, exploiter character of the appropriation of social labour. It is on that basis that all the other contradictions of modern capitalism and its world economy continue to develop.

A thorough study of the capitalist economy of his time enabled Karl Marx to conclude that

the historical development of the antagonisms, immanent in a given form of production, is the only way in which that form of production can be dissolved and a new form established.^^1^^

Lenin repeatedly stressed the paramount importance of extending this conclusion of Marx's to analysis of the monopoly stage of capitalism, and pointed out, already at the beginning of the contemporary transitional epoch that:

it would be impossible to put an end to the rule of capitalism if the whole course of economic development in the capitalist countries did not lead up to it.^^2^^

Capitalist economics lias repeatedly tried in this connection to give battle to Marxist-Leninist political economy on the problems of world economic crises, in which, as Engels put it, 'the contradiction between socialised production and capitalist appropriation ends in a violent explosion'.^^3^^

Many capitalist economists have tried with redoubled energy in the postwar period to demonstrate that capitalism would manage to enter a fundamentally new phase of development of the productive forces by means of new methods of economic policy and state-monopoly control, and that _-_-_

~^^1^^ Karl Marx. Capital, Vol. I, n 458.

~^^2^^ V. 1. Lenin. War and Revolution. Collected Works, Vol. 24 (Progress Publishers, Moscow, 19(54), p 417.

~^^3^^ Frederick Engcls. Socialism: Utopian and Scientific. In: Karl Marx and Frederick Engels. Selected Works, Vol. 3 (Progress Publishers, Moscow, 1976), p 142.

62 the former instability and profound contradictions of the cyclic development of its economy would largely lose their force under the action of the capitalist state.

The very facts of capitalist statistics, however, prove that since World War II, and throughout the preceding history of monopoly capitalism, not a single capitalist country has been able to avoid considerable cyclic fluctuations and slumps in its economy. Periods of relatively high growth rates have inevitably alternated with periods of low ones, and sometimes even with an absolute fall in production and trade. The gap between the highest and lowest mean annual growth rates of the gross product was almost fivefold on the whole in the 50s and 60s, and in world industrial production and international trade it was even greater (from---2.5 per cent to -\-Q.5 per cent and from---3 per cent to -\-13 per cent respectively). The three economic slumps suffered by the world capitalist economy in the 70s and early 80s, including that of 1974--75, the deepest since the war, as was brought out iu detail at the 26th Congress of the CPSU, confirmed with all obviousness the irrefutable fact that state-monopoly control of the economy has proved incapable of curbing capitalism's elemental forces.^^1^^

The new phenomena include an immense extension of the role of international monopolies in the economy of modern capitalism. It is their external economic expansion, unprecedented in scale and consequences, that lias largely determined the postwar features of the development of the world capitalist economy considered above.^^2^^ This expansion has acquired such a scale that the leading organs of the capitalist press and international economic organisations write about it with growing alarm. The special study Multinational Corporations in World Development made by UN experts said in particular:

_-_-_

~^^1^^ The dynamics of the cyclic development of modern capitalism's economy since World War II is examined in detail in Chapter 5.

~^^2^^ The international monopolies are often called multinationals in Western economic literature although most of them consist of companies in which the capital of some one country predominates, but which have a network of branches or subsidiaries abroad. A detailed analysis of the influence of international monopolies on the main development trends of world capitalism has been made in the following Soviet monographs: I. D. Ivanov. S/ivreuicniiye inonopolii i Icoiikumilsiya (Contemporary Monopolies and Competition), Mysl Publishers, Moscow, 1980; P. I. Khvoinik. Tendenriex mid I'mspertx in I/iteni/it. ioiial Capitalist Trade. Progress Publishers, Moscow, 1982.

63
in the past quarter of a century the world has witnessed the dramatic development of the multinational corporation into a major phenomenon in international economic relations.^^1^^

The international monopolies, concentrating immense economic might in their hands, had gained control in the 70s of more than a liftli hotli of the production and the distribution of the aggregate social product of capitalist countries, and the lion's share of their direct foreign investments and half of their home and foreign trade. The Soviet economist T. Ya. Belous, basing herself on these facts, has remarked:

The international monopolies, which have developed as a result of the export and international interlocking of capital, are exerting an ever more decisive influence on the processes taking place in the economies and politics of modern capitalism. Their role in the postwar capitalist economy has increased steeply and continues to grow rapidly. No phenomenon of any significance in the economic and political affairs of capitalist countries, and in the whole system of their international relations, can now be fully evaluated and understood without analysing the activity of these monopolies.^^2^^

Among the long-term factors determining the specific features of the development of the postwar world capitalist economy, as we have already remarked, a very material role is played by the scientific and technical revolution developing in the postwar period. Monopoly capital is endeavouring to put its main stake on it in the struggle to consolidate its class positions and to raise the effectiveness of the development rates of production. This revolution, by encouraging growth and internationalisation of capitalism's productive forces, has not simply led at the same time to reproduction on an ever greater scale and to an unprecedented sharpening of all former antagonisms immanent in the capitalist mode of production but has also given rise to new contradictions that are unresolvable for capitalism.

The new phenomena include (1) the ever-growing contradiction between the immense growth possibilities opened up _-_-_

~^^1^^ UN. multinational Corporations in World Development (United Nations, New York, 1973), p 1.

~^^2^^ T. Ya. Belous. International Monopolies. In: N. N. Inozemtsev et al (Eds.). Politicheskaya ekonoinii/a sovremennogo monopolislicheskogti kapitalizma (The Political Economy of Modern Monopoly Capitalism), Vol. 2, Mysl Publishers, Moscow, 1975, p 90.

64 by the scientific and technical revolution and the obstacles that modern capitalism is putting in the way of their employment in the interests of society as a whole; (2) the bundle of contradictions between the social character of production, rapidly increasing under the impact of this revolution, on the one hand, and the state-monopoly forms of controlling technical progress, on the other hand; (3) the rapid deepening (along with further growth of the antagonism between labour and capital in the countries of imperialism) of the gulf between the interests of the overwhelming majority of the nation and those of the financial oligarchy. The unnatural position, in which production complexes often serving more than one country remain the private property of a handful of millionaires and billionaires, is particularly obvious in tin's situation. The need for the replacement of capitalist relations of production by socialist ones is becoming more and more pressing.

The scientific and technical revolution is also furthering the rise of new forms of the manifesting of the unevenness of world capitalism's growth. There has been a marked deepening of the gulf between various countries and groupings in the sphere of scientific research, and in the area of the application of the latest, most effective results of technical progress in the national economy. The U.S. monopolies broke away in this respect after World War II and forged ahead of the leading groups of the other capitalist powers. The 'technical gap' between the major and minor powers grew visibly, and also that between the imperialist countries as a whole and the developing countries.^^1^^

By intensifying the spasmodic character of the economic growth of individual countries, the revolution at the same time inordinately heightened the imbalance of the various spheres of the capitalist economy. The contradictory character of the development of industry and agriculture, of the extraction and manufacturing industries, of the ` _-_-_

~^^1^^ These and oilier very important matters of the impact of the scientific and technical revolution on the world capitalist economy were examined in detail in the first and third sections of the twovolume joint work on I ho political economy of modern monopoly capitalism edited by N. N. Inozemtsev, A. G. Mileikovsky, and V. A. Martynov already referred to in this chapter.

__PRINTERS_P_65_COMMENT__ 5---0170 65 traditional' industries and new ones, is growing. Under imperialism, when scientific and technical advances may be introduced mainly in the most highly monopolised enterprises, considerable changes arc taking place m the industrial structure of postwar capitalism. A number of the succeeding chapters will be devoted to analysing all these problems.

[66] __NUMERIC_LVL1__ Part II __ALPHA_LVL1__ THE MAIN TRENDS
OF POSTWAR ECONOMIC DEVELOPMENT __NUMERIC_LVL2__ 3 __ALPHA_LVL2__ THE STRUCTURE AND DYNAMICS OF PRODUCTION __ALPHA_LVL3__ §1. The Long-term Indicators of Production

The world economic relations of our day are no longer governed solely by the patterns of capitalism, but it does not follow from that historically undisputable fact that it is no longer necessary or is less urgent, in a situation of the growing interaction and opposition on the international arena of countries with different socio-economic systems, to study the specific features of the postwar development of the capitalist world economy on the basis of the laws peculiar to that mode of production. The need to elucidate the course of, and outlook for, the global interaction of the two opposing systems emphasises the necessity of such a study all the more. As Engels remarked:

The reciprocal action excludes any absolute primary or absolute secondary; but it is just as much a double-sided process which from its very nature can be regarded from two different standpoints; to be understood in its totality it must oven be investigated from both standpoints one after the other before the total result can be arrived at.^^1^^

There is no doubt that there is no generalising indicator that might be used to evaluate the whole complexity and contradictoriness of the economic development of all the countries and main industries that comprise the world capitalist economy, and that there cannot be. Nevertheless there are still general tables in the international statistics that make it possible to bring out the predominant trends and dynamics of this development. Each of them is, as it were, a gigantic resultant of millions and millions of singular 'vectors of forces'. In the first place they include such indicators as the gross domestic product (GDP), gross _-_-_

~^^1^^ Frederick Engels. Dialectics uj Nature (Progress Publishers, Moscow, 1974), p 167.

__PRINTERS_P_67_COMMENT__ 5* 67 national product (GNP), and national income, calculated by UN statisticians for separate countries and for the world capitalist economy as a whole. Their calculations primarily characterise the main results of the economic development of countries over a long period of time. Since they more or less adequately reflect the quantitative parameters of the dynamics of the main sectors of the economy, they can be taken as a point of departure for a systems analysis of this development. But each of the consolidated indicators has its own specific features that must be kept in mind right from the start of a study of the total, combined rates of growth and structure of production of the countries of the non-socialist world.

The term 'gross domestic product' reflects the end result of the yearly process of reproduction of separate countries or groups of countries, and represents the value of all the __PARAGRAPH_PAUSE__ Fig. 1 Diagram of the components of GDP, GNP, and national income GROSS DOMESTIC PRODUCT DEPRECIATION' FUNr GROSS NATIONAL PRODUCT 099-1.jpg BALANCE OF PROFITS FROM OVERSEAS CAPITAL INVESTMENTS NATIONAL INCOME __PARAGRAPH_CONT__ output produced in them minus the value of the intermediate products (raw materials, semi-finished products, ancillary materials, etc.) employed in the process. The gross national product differs from the GDP in being calculated from the results of the country's world economic activity on the basis of the export of capital. In other words, the GNP also includes the difference (balance) between the profits obtained by the entrepreneurs of the country from their investments abroad and the profits of foreign companies in that country.

68

The term 'national income' defines the newly created value directly at the disposal of each country; it is equal to the GNP less depreciation allowances (see Fig. 1).

The need will repeatedly arise as we proceed to turn to an analysis of the socio-economic substance of the presentday international relations of capitalist production, including those associated with the existing differences in the level of GNP between individual countries and groups of countries. But it would obviously be more correct, in an initial description of the long-term tendencies of development of the productive forces for the whole capitalist economy, to base ourselves on statistics on the dynamics and structure of the gross domestic product that exclude the intersecting flows of profit from some countries to others.^^1^^

It does not follow, however, that the total data on the GDP of the capitalist world do not reflect the results of the development of the international relations of production. On the contrary, they also take in the results of each country's world business activity. They reflect the immense influence these relations have on domestic economic processes. The economy of any country drawn into the orbit of the corresponding system of international division of labour turns out to depend both on the patterns of that system's development and on the current state of the world market.

The statistical agencies of the United Nations have done much to create a single system of national accounts, i.e. a system consisting of quantitative indicators characterising the world economy's leading directions of postwar development. The UN statistics make it possible to elucidate most fully the scale and dynamics of the movement of the principal components of the gross domestic product of nonsocialist countries since the beginning of the 1950s. At the same time they offer possibilities for calculations that give some idea as well of the more long-term trends in preceding periods.

_-_-_

~^^1^^ In the countries that arc the principal exporters of capital (which usually have an active balance of income from foreign investments) the GNP should bo larger than the GDP, and that of importers of capital (which do not have big foreign investments) smaller. At the same time the GNP of developed capitalist countries reflects the results of reciprocal flows of profits, i.e. the results of the monopolies' long struggle to win prolilable spheres of investment in oilier countries of the capitalist economy.

69

It is expedient to begin study of the main trends of postwar development from the time when the worst consequences of the war were behind and the volume of material production and scale of international economic ties had risen on the whole above the prewar level. One can take that time to be the turn of the decade of the 40s and 50s.^^1^^ It was then that many of the most important features of the economic structure of world capitalism's production and of today's crisis of its international ties began to arise and take shape. The trends and problems considered in this part of the book cover throe decades, the 50s, 60s, and 70s. They can also be taken as the basis for analysing longer periods, including an estimate of their probable trends of development in coming years.

What, on the whole, were the changes in the level of the productive power of world capitalism that can be noted in this period? If we start with 1950, then, by the end of the period under review, the GDP had increased by 240 per cent within capitalism's contemporary boundaries. International trade grew much faster. At the same time the manpower of world capitalism was growing steadily; its population increased in the period under review by nearly 1,400 million (roughly 200 million in capitalist countries and 1,200 million in developing countries). As a result the level of the mean per capita GDP of all these countries at the beginning of the 80s was a bit less than double that at the beginning of the 50s (see Fig. 2. Here and from now on figures are given in 1975 prices, unless otherwise stated).

These maximally integrated and averaged figures are only, of course, the extreme reference points that still give a very general picture of the scale of the enlargement of the volume and internationalisation of social production within the postwar capitalist world economy. Behind them are not only shifts of scale but also real structural changes in the main sectors of the economy and in various groups of countries of the non-socialist world. Facts of that kind necessarily call for further refinement and evaluation. Above all they blur over such integral features of capitalism as the intermittent cyclicity and unevenness of development, which _-_-_

~^^1^^ By 1050 the volume of imhislrial product ion of the non-socialist world had increased by 50 per cent compared with I lie prewar year of 1037, the physical volume of international trade by more than 70 per cent, and farm production by a sixth (1034--38---100).

70 are also clearly traceable in its specific postwar conditions. An attempt will be made later at a comprehensive description of the most important factors governing the specific features of the postwar cyclic development of capitalist economy; that, however, in no way eliminates the need to clarify long-term trends that transcend the limits of any one economic cycle. What line has prevailed on the whole in __PARAGRAPH_PAUSE__ F i g. 2 Dynamics of the GDP, international trade, and population growth of the countries of the world capitalist economy -700-1 099-2.jpg 1981* -5DO-- -400-- -300-- -200-- -100 TOO * Estimated ** Dynamics of the physical volume of exports Sources: UN Statistical Yearbook; Monthly IJulletin of Statistics for the relevant years. __PARAGRAPH_CONT__ these tendencies? That to a slowing down or that to an acceleration of the growth of social production and of the international division of labour?

71

It is extremely difficult to determine this line because of the sharp, spontaneous fluctuations of capitalism's market conditions, the intensification of its economic and political instability (including that due to the break-up of the colonial system), and the unsatisfactory degree of theoretical development of the problems of the specific character of the periodisation of the contemporary world capitalist economic cycle. Furthermore, the temporal framework of the postwar period is still too limited for broad, far-reaching generalisations. Nevertheless the available quantitative estimates of the long-term trends allow us to attempt a concrete study of this problem which is so vital for describing both the postwar results and the outlook for the further development of the productive forces.

The spontaneous rises and falls of the mean annual growth rates of production and trade, which absorb a truly infinite number of every kind of cyclic and non-cyclic fluctuations of the economic conditions of various countries, are an integral feature of the capitalist world economy. In the final account it explains one of the main causes dooming capitalist economics to a lack of prospects in its search for theoretical principles for modelling and forecasting both the long-term and the short-term trends of capitalist development. This lack of prospects stands out the more clearly the less the contradictory character of production and market relations is taken into account and the less attention is paid to the law-governed inevitability of an alternation of cyclic booms and slumps in the world capitalist economy discovered by Marxist-Leninist political economy.

Nevertheless, with the sharp aggravation of the general crisis of capitalism, the job of clarifying and modelling the patterns of capitalism's `self-movement' is in fact becoming particularly urgent. It is no accident that capitalist economists have been exerting more and more efforts of late to find some approach to coping with this problem. In addition, however, to quests for methods of controlling crisis processes in the economy, which pose great danger for the whole social system of modern capitalism, another social imperative is being fulfilled, that of concealing its antagonistic contradictions and of finding ways for a future `harmonising' of its development.

As we have already stressed, the amplitude of the fluctuations of the mean annual growth rates of GDP and trade in 72 the capitalist economy became very considerable in the postwar decades (see § 3 of Chapter 2). As the time parameters have merged the degree of fluctuation, of course, has been smoothed out. When the characteristic curves of the resultant indicators are compared for different postwar periods, it is useful to employ as long a time interval as possible. But it is, then, also of no little importance to have a definition, however approximate, into what phase of the world economic cycle the initial and concluding years of the period being analysed fall, for if the beginning of the period relates to the lowest phase of the cycle and the final one to the highest, the rates will be overstated compared with a period whose beginning and end relate to one and the same phase. Conversely, if the starting point of the interval relates to the phase of cyclic boom and its final point to the phase of the next economic crisis, then the mean annual rates will prove to be correspondingly rather understated.

Comparison of the dynamics of economic growth in the first two postwar decades considered in Table 4 indicates that __PARAGRAPH_PAUSE__ Table 4 Growth Rates of GDP and International Trade in 1950--81 and Estimated Growth to 1990 Mean Annual Growth Kates Variants of Grow 111 to 1990§ Period GDP Trade* GDI' Trade 11)60 = 100 1970 = 100 11)00=100 1970 = 100 1950--60 4.3 5.8 350 210 610 290 1960--70 5.0 7.8 370 220 720 340 1970--81 3.4* 5.2 320 200 580 270 including 1973--81 2.7+ 3.5 300 180 500 240 1960--73 5.1 8.2 370 230 740 350 1960--81 4.0+ 6.4 340 210 630 300 * Estimated »Estimates based on the assumption that the mean growth rates for the appropriate years will remain in the 80s Physical volume of exports Sources: calculated from UN Yearbook of National Accounts Statistics, Statistical Yearbook, and Monthly Bulletin of Statistics for the relevant years. __PARAGRAPH_CONT__ the GDP of the non-socialist world rose by 50 per cent in 1950--60 and by 63 per cent in 1960--70. The physical volume 73 of turnover on the world capitalist market increased respectively by 76 and 111 per cent in the same years. In other words, the rates of these most highly integrated indicators of the development of world capitalist economy in the 60s were rather higher than those of the preceding decade. The difference is not so great that we can conclude that there was a substantial increase in them, nevertheless a certain growth is traceable. In any case, even allowing for all the conventionality of the breakdown of the postwar period into decades, there would be no grounds for considering that the general long-term trend of economic growth in that period revealed a tendency to a marked fall. We must also allow here for the movement of the world economic cycle; at the turn of the 60s and 70s there was a crisis fall in the growth rates of capitalist production, while the preceding decade had been completed by a boom phase.

The picture changed substantially, however, in the 70s and early 80s. There was a clear deterioration of the conditions for further development of the reproduction process on a world scale. After a brief upswing in 1972--73 the capitalist economy was hit by the deepest cyclic crisis of the postwar years, which led, in combination with a very considerable disturbance of its energy, raw material, and monetary and financial relations, to a significant slowing down of the physical volume of production and trade and then to an absolute fall. In consequence the mean annual index of GDP fell in the first half of the 70s to a level unprecedented in the postwar period. There was also a decline in the growth rates of international trade. (These points will be considered in more detail in Chapter 5.)

Although economic growth rates later rose somewhat, the consequences of the world crisis of the mid-70s had a restraining effect on the long-term dynamics of the further growth of capitalism's productive forces. The position was further intensified by the effect of the next crisis that involved most of the leading capitalist countries at the turn to the 80s. The compilers of the UN World Economic Survey for 1979-- 80, summing up the situation, remarked:

There is evidence that the developed market economies, without having fully recovered from the 1974--1975 recession, are now entering a new downswing in the business cycle. Among tho major industrialised countries, the deceleration of growth in 1979 was concentrated mainly in the United Kingdom of Great Britain and Northern Ireland and tho United States of America, 74 but signs of weakness emerged in other countries as well in the second half of the year, and a more widespread slowdown is expected in 1980.^^1^^

Their forecast was justified. At the start of the current decade, the capitalist business world was hit by another cyclic crisis. As a result the aggregate growth rates of GDP were around 2.6 per cent in 1973--81 against 5.1 per cent in 1960-- 73, i.e. were nearly halved, while the growth rates of the physical volume of their international trade were down by more than a half.

It would be wrong, however, to conclude from these figures that the phases of cyclic revival and upswing no longer have any essential influence on the course of capitalism's economic development, and that we must expect protracted stagnation or complete obstruction of its productive forces. Even if we assume that the mean annual rates of development in the 80s will not exceed those of 1973--81, the volume of capitalist countries' gross production should be 80 per cent above the level of 1970 at the beginning of the next decade, and of international trade 140 per cent higher. In other words, world capitalism's total production of goods and services will be roughly 200 per cent above the 1960 level, and foreign trade 400 per cent higher. If economic development rates reach the mean postwar level, then these indicators will be somewhat higher (see Table 4).

A need inevitably arises, when estimating the long-term tendencies of postwar economic development, to compare them with some prolonged results of the preceding growth of the productive forces. As regards aggregate production we cannot judge the real scale of general economic growth at the turn of the century with any high degree of reliability because of the weak development of international statistics. But the available estimates provide the basis to some extent for certain conclusions. The English economist Angus Maddison has calculated that the annual growth rate of the total output of the leading capitalist countries of Western Europe and North America averaged around 2.7 per cent in 1870-- 1913. The highest growth rates were shown by the USA (4.3 per cent) and Canada (3.8 per cent).^^2^^ The Soviet _-_-_

~^^1^^ UN World Kcinunnic Surrey, 1979--1980, Ni'w York, 1980, p 16.

~^^2^^ Angus Mnddison. Kconomlc Growth in the West (The Twentieth Century Fund, Now York, Allen & Unwin, London, 1964), p 28.

75 economists Bolotin and Kudrov have calculated that the aggregate GDP of all the countries of the world capitalist economy (within its present boundaries) had risen hy 120 per cent hy the beginning of the 1950s compared with 1913.^^1^^ At the same time the physical volume of world trade increased by 44 per cent.^^2^^ From that it follows that the mean annual growth rate of GDP was around 2.1 per cent, and of trade 1 per cent.

These indicators, however, also cover periods of a sharp disturbance of the whole course of capitalist reproduction during the two world wars. The highest GDP growth rates in the interwar period were achieved in 1920--29 when they averaged 3.4 per cent. The lowest growth rate occurred on the eve of World War II (0.8 per cent in 1930--38), when world capitalism was hit by the great over-production crisis of 1929--33 and later began to experience a new cyclic fall in production in 1937--38. On the whole the mean annual indicator of GDP growth in the interwar years and the first decades after World War II was 3.3 per cent, and that of international trade 4.5 per cent.

For all their extremely generalised character and lack of full comparability, these data give us the chance, all the same, to draw the following conclusions. On the long-term plane the mean growth rates of the capitalist economy were higher in the postwar years, for all their periodic falls during cyclic crises, than in the interwar years; over the greater part of the postwar period, moreover, right to the end of the 60s, they had a certain tendency to accelerate, and this tendency was by no means exclusively a feature of the period under review. It was forcing its way through against opposing, blind patterns of the capitalist mode of production throughout its preceding history and so predetermined the inevitability of a progressive aggravation of its contradictions.^^3^^

_-_-_

~^^1^^ See B. Bolotin and V. Kudrov. Some Indicators of the Economic Development of Non-Socialist Countries (1913--1970). Mirovaya ekonornika i mezhdunarodnye otnosheniya, 1972, 3:155 (Table 2).

^^2^^ UNCTAD. Handbook uj International Trade and Development Statistics 1972 (United Nations, New York, 1972), p 43.

~^^3^^ This conclusion can bo based more precisely on the indicators of the growth of the most powerful and dynamic sphere of production, namely industry. The mean annual growth rates of the capitalist world's industrial production were roughly 2.8 per cent in 1860--90, and 3.7 per cent in 1890--1913. The highest rates in the interwar period were reached in the 1920s (above 4,5 per cent), and the lowest in the 30s (around 0.1 per cent). In the 1950s the corresponding aggregate indicator was 4.0 per cent, in the 60s 5.8 percent, and in the 70s-early __NOTE__ Footnote cont. on page 77. 76

Lenin stressed that capitalism grew faster as a whole in the monopoly stage than earlier, although its growth was generally becoming more uneven.^^1^^ The facts bringing out the scale and long-term rates of its development in the postwar decades indicate that Lenin's proposition is also fully applicable to the conditions of the general crisis of capitalism. They indicate that, in spite of considerable cyclic fluctuations and increasing instability, the productive forces have grown more rapidly on the whole within its shrunken boundaries in the second half of the twentieth century than in its first half and in the second half of the nineteenth. This development, however, has not led, and cannot lead either, to consolidation of monopoly capital's positions or to an attenuation of the crisis processes in the world capitalist economy.

__ALPHA_LVL3__ § 2. The Factors and Social Consequences
of Economic Growth

A multitude of the most various factors in the concrete conditions of the separate countries have determined the specific nature of the changes in aggregate rates of economic growth in the postwar capitalist world compared with preceding stages, but when we look at this capitalist economy as an integral socio-economic system, the most essential of the bundle of long-term processes operating in it and reciprocally affecting each other can be distinguished. Those of them that decisively reflect the features of its present-day development and are at the same time furthering a deepening of its antagonistic contradictions are becoming of primary importance.

These processes above all include the scientific and technical revolution, which, based on the major theoretical discoveries in science of recent decades, is objectively not the achievement of any one separate country or group of countries, but is the result of the creative activity of all mankind penetrating deeper and deeper into the innermost secrets of nature. The immense potentialities of this revolution can _-_-_ __NOTE__ Footnote cont. from page 76. 80s about 3.3 per cent. See E. S. Varga (Ed.). World Economic Crises 1848--1935 (Ogiz, Moscow, 1937), pp 482--484; UN Yearbook of National Accounts Statistics 1969 (United Nations, New York, 1970), p 158; Statistical Yearbook, 1979/80 (United Nations, New York, 1981), p 8; UN Monthly Bulletin of Statistics, 1982, 5:XVI.

~^^1^^ See V. I. Lenin. Imperialism, the Highest Stage of Capitalism. Collected Works, Vol. 22, (Progress Publishers, Moscow, 1964), p 300.

77 only be most fully realised under socialism, in which science is being converted into a true productive force. State-- monopoly capitalism in turn is striving in every way to put the results of the revolutionary changes in science and engineering at the service of its own class interests. As the report of the Central Committee of the CPSU to its 24th Congress stressed:

the monopolies have been making extensive use of scientific and technical achievements to fortify their positions, to enhance the efficiency and accelerate the pace of production, and to intensify the exploitation and oppression of the working people.^^1^^

There is now, in fact, no major sphere of the capitalist economy that has not been directly or indirectly affected by this revolution.

The taking up of the latest discoveries of science and advances of engineering, especially in industry, has considerably stimulated further growth of productivity in the whole economy, but the fruits of scientific and technical progress have been primarily realised in capitalism's industrial centres. A graphic idea of this can be got from the following figures. Whereas the average growth rates of labour productivity in the industry of all countries in the 60s and 70s were roughly 3.2 per cent, they were 3.9 per cent in the developed countries and 1.5 per cent in the developing ones. It needs to be remembered, moreover, that this tendency did not develop in a straight line, but was very closely linked with the cyclic movement of capitalism. During the world economic crisis of the mid-70s, for instance, productivity growth rates fell in absolute terms in most capitalist countries and many developing ones.^^2^^ At the turn to the 80s, in the process of the next cyclic fall in production in the industrial centres there was another significant decline in the growth rates of productivity, and in a number of countries (the USA, Great Britain, etc.) it fell absolutely on a national scale.^^3^^

Capitalism's postwar economic growth, of course, was not _-_-_

~^^1^^ 24th Congress of the Communist Party of the Soviet Union, March 30-April 9, 1971. Documents (Novosti Press Agency Publishing House, Moscow, 1971), p 20.

~^^2^^ Labour productivity in industry fell in 1975 in all capitalist countries lumped together by almost 3.5 per cent compared with the preceding year, while it rose by approximately 2 per cent in developing countries (UN Statistical Yearbook 1978, pp 42--45.)

~^^3^^ UN World Economic Survey 1980--1981 (N. Y., 1981); OECD Main Economic Indicators, 1981--1982.

78 simply due to the effect of the scientific and technical revolution. This stimulus was primarily felt in the most monopolised and economically powerful sectors of the industrial countries' economies, so that this tendency inevitably went hand in hand with a marked intensification of the disproportionality and unevenness of development of the various countries and industries that brought with it an immense social explosive charge. The scientific and technical revolution, by furthering growth of the productive forces, is not only leading to reproduction on an ever greater scale, and to an ever greater acuteness of all the social antagonisms of the capitalism, but is also giving rise to new, unresolvable contradictions, including

the contradiction between the unlimited possibilities opened up by the scientific and technological revolution and the roadblock raised by capitalism to their utilisation for the benefit of society as a whole. Capitalism squanders national wealth, allocating for war purposes a great proportion of scientific discoveries and immense material resources.^^1^^

The long-term development processes of the postwar world economy cannot be studied in isolation from the dynamics of the growth of manpower. The estimates deducible from the international statistics indicate that the size of the employable population (aged 15 to 64) had increased by nearly 500 million at the beginning of the 80s compared with the start of the 60s, which was governed ultimately by the dynamics of the growth of their human resources. The latter grew by more than 1,000 million over the same period.

The drawing of considerable new manpower into the process of extended reproduction (even allowing for the permanent existence in the developed countries of a reserve army of unemployed, and the immense agrarian overpopulation of Third World countries) has been an important factor, in the last analysis, governing the forward movement of production in capitalist countries. The expansion of employment _-_-_

~^^1^^ International Meeting of Communist and Workers' Parties, Moscow 1969 (Peace and Socialism Publishers, Prague, 1969), p 19.

In this connection it is as well to bear in mind that the struggle to raise labour productivity on the basis of the scientific and technical revolution is becoming one of the most important spheres of the rivalry of the two world systems in today's situation. The process of the dialectical interconnection and contradiction of socialism and capitalism within the global economy of human society is especially clearly traceable.

79 in the sphere of material production has been mainly in industry, in which it rose by more than 60 per cent on the whole in the 60s and 70s (by roughly a quarter in the developed countries, and by double in the developing countries).^^1^^

The growth of manpower, and above all of the working class, is a natural process, analysis of which helps bring out the class essence of the results and perspectives of capitalism's long development. At the beginning of the modem transitional period, Lenin, noting that in any period, however long, there were and would be 'various deviations from the average type and mean tempo of the movement' in it and 'individual and partial movements, now forward now backward', had written:

We cannot know how rapidly and how successfully the various historical movements in a given epoch will develop, but wo can and do know which class stands at the hub of one epoch or another, determining its main content, the main direction of its development, the main characteristics of the historical situation in that epoch, etc.^^2^^

The development and expansion of the working class's influence in society are preparing the objective conditions for growth of the class struggle both for radical socio-economic reforms in capitalist countries and for the moulding of a world system of truly equal, mutually beneficial, all-round economic, scientific, technical, and cultural co-operation of nations. All these processes can be traced particularly clearly in today's situation.

To return, however, to the problem of capitalism's postwar growth of production, we must stress that it was due not so much to extensive expansion of the mass of labour as to a further rise in its effectiveness. More than threefifths of the increase in the aggregate GDP since the war has come from the increase in labour productivity. As follows from one of the most important tenets of Marxist-Leninist political economy, viz., that all society's material goods are created by people and their labour, there is a definite functional dependence between the increase in the mass of labour, its productivity, and the growtli of production.

_-_-_

~^^1^^ UN Statistical Yearbook 1968, pp 48--50; Statistical Yearbook 1978, p 34; World Bank. World Development Report, 1980 (Washington, D.C., 1980), pp 142--147.

^^2^^ V. I. Lenin. Under a False Flag. Collected Works, Vol. 21 (Progress Publishers, Moscow, 1964), p 145.

80

In other words, the GDP growth rates of world capitalism considered above are functions in the last analysis of two variables, namely, the growth rales of the mass of labour and the growtli of labour productivity.

Any determination of the results of economic activity from society's expenditure of labour over a certain length of time in such a big, heterogeneous, unstable system as the capitalist world economy is of course very arbitrary. Nevertheless il can not only provide some support for a retrospective analysis of the long-term line of development, but can also be used, in our view, as an approach to estimating the further growth of the GDP, since the scale of the increase of manpower and labour productivity both lend themselves, to some extent, to theoretically justified extrapolation.

Today's trends of long-term development cannot be evaluated fully enough without allowing for the postwar features and internationalisation of social production in the old colonial periphery. The processes developing there in recent decades have not only led to considerable shifts in the historically formed political structure of the world capitalist system but have also promoted the creation of important conditions for achieving new advances of the productive forces of former colonies and semi-colonies that had already then been drawn by expatriate capital into the maelstrom of world economic relations. The break-up of the colonial empires also had a marked effect on the rates and direction of economic growth in this system as a whole.

The poor development of the statistical base of the period of colonial domination makes it extremely diflicnlt to compare the dynamics of the growth and internalionalisation of the developing countries in the postwar decades with their preceding development. Still, however, certain comparisons can be made.

As the estimates of UN economists indicate, the annual growth of the gross product in those countries was extremely low in the interwar years and on the whole did not exceed 2 per cent.^^1^^ In the postwar decades there have been certain changes in this respect. The mean annual growth rates of the GDP for the whole group of developing countries we estimate to have been 5.6 per cent in the 60s to 70s, i.e. to _-_-_

~^^1^^ The authors of one of the UN world economic surveys, in particular, came to this conclusion (World Economic Survey 1959, United Nations, New York, I`Ju'O, p fi.'j).

81 have been higher than the corresponding indicators for the whole world capitalist economy (4.3 per cent). In other words, growth of the GDP in developing countries was one of conspicuous factors of the ahove-mentioned postwar speeding up of the development of that economy's potential. At the beginning of the 80s the share of the developing countries in the total volume of the gross product created by capitalism reached 20 per cent, or was more than 60 per cent of that of Western Europe.

This line of accelerated development is traceable mainly in industry (for all the instability and extreme unevenness of these countries' growth). On the whole their industrial output increased more than threefold from 1960 to 1981, and at the end of it was about 19 per cent of the aggregate industrial production of all non-socialist countries.^^1^^ At the same time there was also a tendency toward a certain, though not so marked, acceleration of the international trade of the developing countries as a group. The bulk of it, moreover, around 75 per cent in the early 80s, was as before with developed capitalist countries.^^2^^

The tendency toward an acceleration of the economic development of former colonies in the postwar period is undisputed. In spite of it, however, their position in the capitalist world economy continues to be hard. The economic gap built up between them and a comparatively small group of industrially developed capitalist countries during the undivided sway of imperialism and colonialism remains immense. Furthermore it has continued to widen according to several indicators (above all in per capita GDP). The tendency toward a relative decline in their share in world capitalist trade manifested in recent decades has also played a substantial role in this. Their weight in the total trade of non-- socialist countries (which was around a third in the early 50s) _-_-_

~^^1^^ Calculated from: UN Yearbook of National Accounts Statistics 1969, p 160; UN Statistical Yearbook 1978, p 11; UN Monthly Bulletin of Statistics, 1982, 8:XVI-XVIII.

^^2^^ The structural changes in international trade will be examined below. Here we would draw attention to the fact that never before in the whole preceding history of capitalism did the trade between these two groups of countries achieve such a considerable scale. The physical volume of capitalist countries' exports to developing countries rose, for example, by 250 per cent in 1900s and 70s alone, while the physical volume of their imports from them rose by 200 per cent (UN Monthly Bulletin of Statistics, 1981, 6:XLVI.

82 had fallen to a quarter on the eve of the 80s. If we exclude the data on the comparatively small group of oil exporting countries, this indicator was only around a seventh at the end of the period under review.^^1^^

The growth and internationalising of the productive forces of developing and industrialised capitalist countries are closely interconnected processes. There is thereby an aggravation of one of the main manifestations of the uneven development of the capitalist world, far-reaching in its social consequences, the predominant trends in which are leading today to further intensiiication of this unevenness.

The probability of such a course of events does not mean that any real slowing down of the rates of economic growth already achieved by developing countries is inevitable over any lengthy period. Rather, on the contrary, the further development of processes unfavourabe for them will foster a strengthening of the most diverse factors stimulating their economic growth in the last analysis.

Those factors refer primarily to the objectively inevitable growth of their peoples' anti-imperialist struggle for a stepping up of socio-economic progress and ending of survivals of colonialism in both their own countries and the sphere of world economic relations.^^2^^

World socialism's steady support of this struggle will continue to operate in the same direction.

It is also impossible, in this case, to disregard the already _-_-_

~^^1^^ UNCTAD. Handbook of International Trade and Development Statistics, 1979, pp 2-11; UN Monthly Bulletin of Statistics, 1982, 7:106--107.

~^^2^^ In estimating the prospect of a further widening of this gap we have to allow for the fact that the developing countries suffer the burden of world economic crises particularly acutely. The report of the International Bank for Reconstruction and Development for the 1975 financial year was indicative in that respect. At a time when a recurrent cyclic crisis was raging in the capitalist world with a force unusual for the postwar years, the Bank staled: 'For the 1.000 million people living in lower-income countries, the economic events of the past year have meant that average real incomes have not risen at all' (World Bank. Annual Report 1975, Washington, D.C., 1975, p 0). The process repeated during the next cyclic recession in the economies of world capitalist centres. In about 75 per cent of the most seriously affected developing countries, the annual absolute GDP production 'experienced a negative growth' in 1980 and 1981. 'Moreover, ... there is some evidence that the slower pace of development has shifted the distribution of income against the poorest income groups' (Trade and Development Jleptirt, 1981, N.Y., 1981, p 2).

__PRINTERS_P_83_COMMENT__ 6* 83 clearly distinguishable line of capitalism's neocolonialist strategy aimed at speeding up development of its agrarian and primary commodity producing periphery as profitable markets, sources of raw materials, and spheres of capital investment.^^1^^

The crisis of the colonial structure of the world capitalist economy will also probably develop further on the background of operation of a general tendency toward a certain speeding up of the growth rates of the productive forces in the liberated countries, and this development may in turn be governed by the fact that the struggle for national liberation in many of these countries is growing in practice into a fight against exploiter relations in general. Several of them, though still within the sphere of action of the patterns of the capitalist economy, have already taken a line of building a socialist society in the long run and have begun to carry out radical socio-economic reforms. A very special situation is thus building up in developing countries. New possibilities of socio-economic progress along roads of noncapitalist development have opened up before their peoples, although they are still in a special position in the world economy.

These possibilities could only arise because world capitalism is no longer a closed economic system, and because the rapid extension and consolidation of developing countries' equal, mutually advantageous relations with world socialism have in fact finally broken the previously undivided sway of the imperialist powers directly within this economy. As a result, loss of their monopoly position in the capitalist economy has been converted in today's conditions into one of the decisive factors in the progressive deepening of its crisis.

This process is shaping fundamentally new prospects for accelerating the emancipated countries' development, growth of the revolutionary struggle to abolish the domination of expatriate capital, establish a socio-political system suitable for them, and progressively limit and liquidate _-_-_

~^^1^^ See V. L. Tyagunenko. Problemy sovremennykh natsionalnoosvoboditelnykh revolutsiy (Problems of Contemporary National Liberation Revolutions), Nauka Publishers, Moscow, 1969; idem. Mezhdunarodnoye razdeleniye truda i razviuayushchiyesya strany (The International Division of Labour and Developing Countries), Nauka Publishers, Moscow, 1976; N. N. Inozemtsev ct al (Eds.). Mirovoi revnlutsionny prolscss i sovremennost (World Revolutionary Process and Contemporaneity), Nauka Publishers, Moscow, 1980.

84 imperialism's world economic relations. Their peoples have got the chance to take an ever more active part, together with the other progressive forces of the world, in the fight to build a truly world economic system that corresponds to the urgent tasks of today.

Allowance for all these factors distinguishing the most general indicators of the results of postwar economic development in their interconnection and interaction is acquiring an essential role for evaluating the changes in the sectoral structure of the GDP. Comparative analysis of the dynamics of the main industries helps us clarify many of the specific features and long-term trends in the genesis of its decisive contradictions in recent years.

__ALPHA_LVL3__ § 3. The Basic Branches of Production

A host of the most varied economic, political, social, and psychological factors affect the course of production. All of them, in their unity and contradictions, in the long run determine that dynamic relation of the main parts of the aggregate social product which ultimately shapes the structure of the GDP of world capitalism at any stage of its development.

Recent decades have been marked by significant shifts in the structural proportions of the capitalist economy. Apart from the effect of the patterns inherent in capitalism, the influence of the processes considered above is beginning to manifest itself, processes that belong only to the postwar period and are directly connected with the scientific and technical revolution, the competition of the two world social systems, and the consequences of the break-up of the colonial system. Each of these processes is putting its stamp on today's stage of development of social production, clarification of the most general changes in whose structure is the central task of this section of this chapter. At the same time we must bear in mind that changes of this kind underlie or are reflections of many deep-seated crisis phenomena in present-day capitalism's world economy, which have been displayed with extraordinary sharpness in the 70s and early 80s.

When the dynamics of the aggregate growth of the GDP of all the countries of the capitalist world economy in the 85 postwar years arc being analysed by its main components, the quantitative estimates of the items of the gross product can of course be only very approximate. Still, the international statistics offer a possibility of comparing the course of development of the two main groups of the sectors of this economy that are involved in various ways in the process of production. In one of them we must put such basic branches of material production as industry, agriculture, and building, in which almost all the decisive forms of commodity output take place. The other group includes sectors that belong to the sphere of circulation and services, which also make their contribution in one form or another to the value of the mass of commodities.

Considering the great peculiarity of each sector, this classification is simply an abstract way of initially systemalising the facts when attempting a structural analysis of the gross product. Nevertheless, however, this method allows us to delineate the contours in comparable indicators of a problem that is very important for our study, namely comparison of the dynamics of the postwar growth of the basic industries on the one hand, and of the circulation and services sphere on the other.

The whole history of capitalism indicates that, as society's productive forces develop, the circulation and services sphere naturally broadens and becomes more and more important in the reproduction process. Its growth rates have noticeably quickened since the war. We estimate (from UN statistics) that its volume of production had increased by nearly 240 per cent at the end of the 70s compared with 1950. As we shall show below, this growth occurred very unevenly in the various sectors and groups of countries, but on the whole its indicators corresponded approximately to those of the main sectors of material production, whose aggregate product increased by more than 230 per cent in the same period (see Fig. 3).^^1^^

The dynamics of growtli in the various sectors are compared in the graphs of Fig. 3 for three periods, viz., the 50s, _-_-_

~^^1^^ Hero and subsequently the figures for the end of the 70s and beginning of the 80s are rough estimates, in which in turn the effect of cyclic fluctuations of capitalist production on the dynamics of its sectoral structure is reflected. The matter of the influence of these fluctuations on the economies of capitalist and developing countries will be considered in the next chapter.

86 __MISSING__ Fig. 3 [87] 60s, and 70s. As will he seen, almost all sectors except agriculture developed at roughly the same rates in the 50s. Later the imbalance clearly intensified, which could not help affecting the structure of the aggregate product.

The extension of the scale of production noted in one branch and the other was partly due to a relative acceleration of their dynamics in the 60s compared with the 50s (the mean annual GDP growth rates of the non-socialist world were, respectively, 4.9 and 4.15 per cent), but the expansion was due much more to the fact that every per cent of growth in the following period became `heavier' than in the preceding one. The iiicrease in aggregate industrial production by 1 per cent was fotir times as great at the end of the 70s, for example, as the corresponding indicator for 1950. And the fact that the GDP in industry increased much more in the last decades covered by the graphs than in the first postwar ones is mainly due to that, although the mean annual rates in 1970--81 obviously slowed and were around 3.5 per cent against 4.2 per cent in 1950--60.

Comparison of the long-term results of the development of the sectors of material production and services sphere is even more difficult. Capitalist statistics include spheres of activity under services that in fact are not involved in the social reproduction process, including the non-productivo activity of a considerable part of the classes that are dominant in exploiter society, who, while not creating new value, redistribute the fruits of the productive labour of the people in their own favour. A kind of 'double counting' is therefore characteristic of capitalist statistics, which makes comparison of the results of the production of various types of output quite arbitrary in absolute terms. But since the method of UN accounts is built on unified, comparable indicators, comparison of the dynamics of their growth reflects the relative scale of growth with a certain degree of reliability. It also makes it possible to estimate the real tendencies in the sectoral structure of the reproductive process.

Industry remains, as before, the most dynamic sector of production in the modern capitalist economy. The heavy industries play a decisive role in its development; their growth is considerably faster than that of all the other leading industries, and is roughly 16 per cent faster than that of the circulation and services sphere. On the other hand, the other basic industries, especially agriculture, lag notably 88 behind this sphere. Consequently, simply because of the accelerated development of industry, the aggregate share of the basic industries in the total GDP of the non-socialist world remained in fact at roughly the same level in the 50s and 60s. Later, however, above all under the impact of the world overproduction crises, that affected the industrial centres particularly strongly in the mid-70s and at the turn of the decade, industrial growth rates began to fall rapidly. In 1973--81 they declined by nearly 67 per cent compared with 1960--73 (from 6 per cent to 2.3 per cent), so that there was consequently, in particular, a marked strengthening in those years of the tendency for the weight of material production in the gross volume of production of goods and services to fall. The corresponding indicator sank in all countries of the world capitalist economy in the early 80s to an unprccedentedly low level for the postwar period of around 45 per cent, whereas it had been 47 per cent at the beginning of the preceding decade. Development of this tendency was also encouraged by the continuing lowering, in the present stage of the crisis of capitalism, of the growth rates of farm production and building work.

The raising of the proportion of industry with a simultaneous lowering of the weight of agriculture and of the building industry led to not unimportant shifts within material production. Whereas agriculture yielded around a quarter of the total volume of inaterial production at the very beginning of the 50s, its share was only a little more than a seventh at the end of the 70s. The ratio between agriculture and building also changed appreciably (see Table 5). Although the growth rates of building have been relatively low, they have been higher, as before, than those for farm production. As a result the gap between them as regards their contribution to the GDP has .been narrowed. The stable, long-term character of this trend gives grounds for supposing that the proportion of building in the GDP of the non-- socialist world may exceed that of agriculture by the mid-80s.

The unevenness of the dynamics of growth within the circulation and services sphere fostered a redistribution of the role of the different sectors within it. It has been those sectors that are directly involved in material production, providing the needed infrastructure of the economy that have grown at accelerated rates. In that respect the comparatively fast growth rates of transport and communications call for 89 attention (in mean annual terms for the whole period under review they exceeded 4.8 per cent). As in many other leading industries, this growth was directly linked with the introduction of fundamentally new, very efficient advances of the scientific and technical revolution. The place of means of transport and communications in frhe total volume of the GDP has been somewhat enhanced. Their significance in the social reproduction process has been raised even more __PARAGRAPH_PAUSE__ Table 5 Weight of the Different Sectors of the Economy in the Aggregate GDP of the World Capitalist Economy (in percentages) Sector 1950--51 1960--61 1970--71 1980-8!* Industry Agriculture Building & construction Transport & communications Trade & commerce Others (services) 28 11. 29.5 10 7.5 6 15 32 32.5 7.5 32.5 6.5 6 0.5 15 33.5 6 15 32.5 6 15 32 * Estimated Sources: as for Table 4. __PARAGRAPH_CONT__ because of the rapid development of both the domestic and, in particular, the international division of labour.^^1^^ These sectors surpassed agriculture in their total share in the GDP at the end of the noted period, whereas their weight had been almost half that of agriculture at the beginning of the 50s. The growth of commodity production and of means of transport and communications also governed the main trends in the postwar development of such an integral part of the circulation sphere (and consequently of the whole _-_-_

~^^1^^ The length of railways, and railway freight traffic, for instance, in the postwar period were more than double the level reached in all the earlier history of capitalism. Marine, road, and air transport also reached qualitatively new levels. The tonnage of merchant shipping was three times that of the early 50s by the early 80s, and international trade on the sea lanes was more than eight times as high. The number of lorries in use in the non-socialist world quintupled in the period 1955--80. The tonnage of air freights correspondingly rose dozens of limes over on international air routes, and so on (according to UN data).

90 reproduction process) as trade. Its volume expanded rather faster than the growth of population, and by their average rates of increase of its contribution to the added value of the GDP, its indicators corresponded roughly to the aggregate growth rates of the basic industries. Not all this value was created directly within commodity exchange, of course. Some of it, which it is impossible to estimate reliably enough, was created in other sectors and later redistributed through trade.

The weight of trade in the total GDP of non-socialist countries rose somewhat only in recent years, which was due to the fact that the decline in the development rates of trade was less than in the branches of material production. On the whole, commodity circulation increased by more than 250 per cent (in constant prices) from the beginning of the 50s to the beginning of the 80s inclusive. That figure indicates, in fact, a change in the scale of domestic trade.^^1^^ An extreme instability and unevenness of growth in the various trade groups, individual countries, and periods remained characteristic, moreover, of both the home and the foreign trade of the non-socialist world.

The scope of the services sphere expanded noticeably in the postwar period, but its development rates on the whole lagged rather behind most of the other sectors. That also led to a certain fall in its share in the aggregate product. The change in its weight in relation to industry is very indicative, though this tendency did not operate equally in all countries.

It is not the province of this section to elucidate the structural shifts within the services sphere itself in the separate national economies. Analysis of services in each country is associated with the specific features of its relations of production when estimating productive and non-productive labour,^^2^^ a problem that calls for special study taking into _-_-_

~^^1^^ The physical volume of the international trade of non-socialist countries increased by a factor of 6.7 in the 50s through the 70s, from which it follows that their foreign trade developed 80 per cent faster over those years than their home trade.

~^^2^^ Marx's statement about the division of labour into productive and non-productive is of paramount importance in this case. 'These definitions (he said) are therefore not derived from the material characteristics of labour (neither from the nature of its product nor from the particular character of the labour as concrete labour), but from the definite social form, the social relations of production, within which the labour is realised.' Characterising the specific nature of services, __NOTE__ Footnote cont. on page 92. 91 account that there are different views in Marxist literature on which sectors of this sphere should be classed as productive labour and which as non-productive.^^1^^

The changing 'balance of power' between the main components of the GDP in the postwar period is evidence on the whole that several new phenomena have arisen, or are arising, in modern conditions in the aggregate production of the non-socialist world. Each of these phenomena undoubtedly calls for close attention and consistent itemising, but that does not exclude the need for further detailed study and comparative analysis of their mutually intersecting development on the scale of the whole world capitalist economy, including, as well, along the main lines of the use of social labour.

__ALPHA_LVL3__ § 4. The Sphere of Consumption of the Social Product

There has been a definite modification, in recent decades, of the tendencies that characterise the structure of consumption of the aggregate product of the countries of the nonsocialist world. This structure is shaped primarily by three main spheres of expenditure: (I) private consumption; (II) public consumption; and (III) the accumulation fund, i.e. expenditure, embracing all forms of capital investment on extended reproduction of goods and services.

A certain part of the GDP of every country is not employed directly in its economy but is exported. At the same time another part of the goods and services used by it is imported from abroad. When estimating consumption of the gross domestic product, therefore, it is necessary to allow as well for the material results of international economic relations; in that connection all countries invariably distinguish exports and imports when characterising the main spheres of the distribution of the GDP. The balance between them makes it possible to determine the actual scale of the consumption of goods and services within any given country over a _-_-_ __NOTE__ Footnote cont. from page 91. he stressed that `services' was 'a specific term for Uie particular usevalue of labour in so far as it does not render .service in (lie form of a thing, but in the form of activity'. Theories <>/ Surplus-Value, Part I (Progress Publishers, Moscow, 1975), pp 157, 404.

~^^1^^ Some aspects of this matter relating to the ratio of (lie postwar dynamics of the growth of M'lvices, like tin- sluu lural shifts within other sectors of the GDP in the leading groups of world capitalism, will be considered in the next chapter.

92 year or some longer interval. An estimate of these indicators is especially important for the purposes of oar analysis; it gives an idea of the dynamics and scale of the internationalisation of social production both within separate countries or groups of countries and the world economy as a whole.

Marked fluctuations in the level of consumption are closely dependent on the cyclic movement of capitalist production and on the continuous rise and fall in the market elements of supply and demand, from which it follows that a long-term approacli to the study of structural changes in the main spheres of consumption is very necessary.

The international statistics do not allow us to examine the results of the trends in the distribution of the GDP in the world economy for the whole postwar period. Consolidated accounts from the beginning of the 50s have been published only for the developed capitalist countries. Analysis of them, however, brings out, though not fully, many highly important features of the structure of consumption in the postwar capitalist economy, since around four-fifths of the gross product of all its countries were expended in the industrial centres at the end of the 70s.

Among these features the dynamics and ratio of public and private consumption deserve special attention. Public consumption increased more in the first postwar years than private. Later, however, the trend toward a heightening of the role of government in aggregate consumption of the GDP weakened. During the period covered by Fig. 4 private consumption rose rather fastor. In 1960--80 it rose on the whole by 130 per cent (in constant 1975 prices), while public consumption approximately doubled.

These facts, however, hardly provide grounds for concluding that the tendency inherent in the preceding history of state-monopoly capitalism for a rise in the importance of government in consumption of the aggregate social product had lost its force. In this case, of course, we need a multifactor analysis of the specific features of the socio-economic processes of recent times taking place in the individual leading capitalist countries.

Nevertheless we must always bear in mind here, (1) that relatively slower growth rales of public expenditure were by no means observed in all the leading capitalist countries. In particular it was largely linked with the decline in the growth rates of U.S. public consumption, especially 93 __PARAGRAPH_PAUSE__ Fig. 4 Capitalist countries: dynamics of the principal types of outlay of the GDP (1960=100) 425 400 1980 375 350 1377 325 300 275 250-- 970 225- 1980 1977 1970 1980 1977 1970 970 200-- 1980 175- 1977 1970 150- 12S- 100. PUBLIC EXPENDITURE PRIVATE EXPENDITURE GROSS CAPITAL INVESTMENT Sources: UN Handbook of World Development Statistics lafO- Major Economic Indicators Showing Historical Development Trends (New York 1980); UN Statistical Yearbook, and Monthly Bulletin ™ Statistics for the relevant yeara. __PARAGRAPH_CONT__ [94] after the collapse of its military adventure in Vietnam.^^1^^ In several other capitalist conn tries budget expenditure rose rather faster than private expenditure at the same time.^^2^^ (2) When the facts mentioned above are being evaluated, it must be taken into account that budget appropriations continued more and more to exert a stimulating influence on the formation of the accumulation fund.

The substantial fall in the 70s and early 80s noted above, in the long-term development rates of the gross production of goods and services in capitalist countries, naturally, was expressed in a simultaneous slowing of the dynamics of the consumption sphere. This slowing down, moreover, was even more marked in personal expenditure. Their mean annual growth rates were around 3.5 per cent in 1970--80, or almost half the rates of the preceding decade. The corresponding slowing of the dynamics of public expenditure was roughly one-third. The extra demand created by the state was intended in those years somehow to compensate for the weakening of the growth trends of personal consumer demand, primarily in the crisis phases of modern capitalism's development.

The growth of capital investment on extended reproduction compared with consumer expenditure has become a not unimportant factor in structural changes in the distribution of the GDP. Over the period, investment in fixed capital increased by 260 per cent in the industrial centres of world capitalism. The dynamics of investment outlays, moreover, tended on the whole to accelerate, with very considerable fluctuations of the mean annual rates in the various phases of the capitalist cycle and in various countries right up to the world crisis of the mid-70s. In 1950--60, for example, these rates were 4.6 per cent, arid in 1960--73 6.1 per cent. As a result the weight of accumulation in the total consumption of developed capitalist countries rose from 18 per cent at the beginning of the 50s, to 22 or 23 per cent at the beginning of the 70s.

The heaviest cyclic crisis in the postwar history of _-_-_

~^^1^^ The mean annual growth rates of U.S. government purchases of goods and services was 4 per cent in the late 60s and only less than 1 percent in the 70s (Economic Report of the President, Washington, D.C., 1981, p 235).

~^^2^^ UN Statistical Yearbook 1978, pp 655--675; Monthly Bulletin of Statistics, 1982, 3:L-LV1I.

95 capitalism that then followed, and the crisis decline of production in most capitalist countries at the beginning of the 80s, substantially slowed down operation of this tendency. The annual rate of increase of gross investment in the last decade reviewed in Fig. 4 fell to 1.8 per cent, i.e. was roughly a quarter of that in the previous decade. This process was steepest in the U.S. economy, where the volume of capital investments in the 70s was still greater than in all the other capitalist countries put together.^^1^^ The growth rates of investment again rose in the second half of the 70s, during the next upswing, and were appreciably above the pre-crisis level.

When gross investment in the economies of separate countries and groups of countries is being estimated it becomes necessary to allow for imports of capital as well as the volume of national capital investment. The international statistics of the United Nations do not publish sufficiently generalised facts on this tidal flow of productive capital, but the available accounts indicate the great scale of this process, in which transnational corporations of the USA and other main capitalist countries occupy a leading place. Their exports of capital developed 60 per cent faster than industrial production in the postwar period.^^2^^

Not only does a considerable part of capitalist countries' production and consumption fall to them, but also much of international trade, about 40 per cent of the turnover of which already consisted of intracorporative transactions at the beginning of the 80s.

The authors of the 1981 UNCTAD Report stressed in connection with the present-day `dramatic growth of transnational conglomerates':

In the case of minerals and manufactured products recent tendencies have been towards an expansion of intrafirm transfers among the transnational trading affiliates of industrial transnational firms. This growth of intrafirm transactions has made _-_-_

~^^1^^ The volume of the gross capital investments of all capitalist countries fell by 9.9 per cent in 1975, compared with 1973, including 14.5 per cent in North America (UN Statistical Yearbook 1979/80, pp 9, 10).

~^^2^^ N. N. Inozeintsov et al. (Eds.). Theses of the Institute of World Economic and International Relations. Nauchno-tekhnicheskaya revolulsiya i protivorcchiya kapitalizma (Tho Scientific and Technical Revolution and the Contradictions of Capitalism), Nauka Publishers, Moscow, 1981, p 41.

96 for the widespread use of transfer pricing. Through Ibis technique corporations are able to minimize their overall tax payments by manipulating the prices of intrafirm transactions, shifting profits from countries characterized by relatively high tax rates to those where rates are lower. Such corporate practices affect the trade and other international transactions not only of developing but also of developed countries.^^1^^

The very important tendencies developing in the sphere of the capitalist international division of labour have begun to have an appreciable influence on structural shifts in consumption of the aggregate social product. The production for export of the main centres of capitalism rose by 430 per cent between 1960 and 1980, while the weight of industries working for export in the aggregate distribution of the GDP rose in the same years approximately from 10 to 20 per cent. The growth of exports in turn opened up broader horizons for their imports, the physical volume of which correspondingly increased by 310 per cent.

Never before have capitalist countries made such big outlays in such a short period in the realm of internationalising social production, as is evidenced by its entering on a higher phase of its development. This kind of broad social phenomenon must undoubtedly be the consequence of deep-seated processes in the capitalist world economy arising from the concentration and centralisation of monopoly capital, rather than of superficial and transient ones. The rapidly mounting expansion of multinational monopolies in the postwar world, and especially of U.S., West European, and Japanese transnationals, is playing an extremely important role in this respect. Although their activity now embraces most of the main types of capitalist countries' domestic expenditure, it is reflected most fully in the area of their external economic policy.^^2^^

The composite indicators of the international statistics on the end use of the GDP do not include the total figures on exports and imports taken separately, but in their integral _-_-_

~^^1^^ UNCTAD Trade and Development Report, 1981, N.Y., 1981, p 64.

~^^2^^ These matters have been studied in detail in I. D. Ivanov's monograph Mezhdunarodniye korporatsii v mirovoi ekonomike ( International Corporations in the World Economy), Mysl Publishers, Moscow, 1976, and G. G. Chibrikov's Rol sovrernennykh mezhdunarodnykh monupoliy v protsesse internatsiunalizatsii kapitala i proizvodstva (The Role of International Monopolies in the Internationalisation of Capital and Production), Moscow University Press, 1979.

__PRINTERS_P_97_COMMENT__ 7---0170 97 inter-rotation. In fact they take account only of the difference between total exports and imports of goods and services. If, for example, exports exceed imports in any country, or group of countries, their consumption of the gross domestic product will be lower than their domestic production. On the other hand, an excess of imports over exports of goods and services means that consumption will be higher than home production.

Over recent decades the exports of industrially developed capitalist countries as a whole have, as a rule, exceeded their imports. At the same time there has been another trend in the whole group of economically backward agrarian countries and raw material producers; their imports have, as a rule, exceeded their exports, which has inevitably led to a systematic growth of their foreign debt. The latter has reached unprecedented size since the break-up of the colonial system. The public and private indebtedness of these countries to the developed capitalist countries alone, for instance, increased in 1973--79 by almost 3.5-fold exceeding $ 400 billions by the beginning of the 80s.^^1^^ In the last quinquennium (1976--80), for example, their medium and long-term indebtedness to developed capitalist countries increased in current prices by more than 120 per cent (from $ 130 billion to $ 287 billion). Total payments on this debt rose at the same time from $ 20 billion to $ 30 billion. The economists of the International Bank for Reconstruction and Development estimated that the foreign debt of all developing countries would exceed $ 550 billion by the end of the next quinquennium, while the outflow of funds from them to repay the basic debt and meet the interest on it would be higher than $ 100 billion.^^2^^

The discrepancy between the volume of production and consumption of the GDP in the different groups of countries noted above is only one aspect stressing the need for a comprehensive study of the long-term tendencies in the area of its distribution. Such a study would help clarify certain essential features of the world capitalist economy since the break-up of the colonial system. The figures in Table 6 can characterise in very general form the dynamics of the _-_-_

~^^1^^ World Bank. 1981, Annual Report (Washington, D.G., 1981), p 132.

~^^2^^ World Bank. World Development Report, 1980 (Washington, B.C., 1980), p 101.

98 changes in the structure of consumption in both capitalist and developing countries in the 60s and 70s.

In the early 60s consumption (and production) was still growing faster on the average in developed countries than in developing ones. Later, however, another tendency began to show; the growth rates of the first group slowed while those of the second increased perceptibly, which led as well to a certain rise in the share of developing countries in the __PARAGRAPH_PAUSE__ Table 6 Expenditure of GDP by Developing and Capitalist Countries (in percentages)* C.apilalist Countries Developing Countries Total expenditure 1960- 1970-- 1961 1971 1980-- 1981** 1960-- 1961 1970-- 1971 1980-- 1981** Total Public Private Gross investment Exports Imports 85 91.5 84 87 74.5 78.5 84 90 84 86.5 75 83 80. 84 82 75. 82 79 15 8.5 16 13 25.5 21.5 16 10 16 13. 25 17 19. 16 18 24. 18 21 * Total in the two Croups in each rubric = 100 ** Estimated Sources: as for Fig. /i. __PARAGRAPH_CONT__ total consumption of the capitalist world's GDP. In spite of the comparative smallness of the increase, it can be taken as a not unimportant indicator of the prospective new lines of development of the capitalist world economy that are becoming noticeable in connection with the break-up of its former colonial structure.

The accelerated growth of public consumption in the emancipated countries above all requires attention. Over the years covered in the table it rose in constant prices by more than 250 per cent, which is considerably higher than the corresponding indicators for the developed countries. As a result the weight of the group of developing countries in Asia, Africa, Latin America, and Oceania in the aggregate public expenditure of all the countries of the non-socialist world as a whole rose to 16 per cent at the end of the 70s against __PRINTERS_P_99_COMMENT__ 7* 99 Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1982/WCE326/20070620/199.tx" __EMAIL__ webmaster@leninist.biz __OCR__ ABBYY 6 Professional (2007.06.20) __WHERE_PAGE_NUMBERS__ bottom __FOOTNOTE_MARKER_STYLE__ [0-9]+ __ENDNOTE_MARKER_STYLE__ [0-9]+ 9.5 per cent in the early 60s. This tendency will probably spread to some extent in coining years. We must also bear in mind that, in addition to the extreme heterogeneity of the political structure and state system of the emancipated countries, there are substantial differences between the socio-- economic nature of their public sectors and state-monopoly capitalism.

The increase in the role of government in the decisive areas of the public life of the former colonies and semi-colonies has naturally been converted into a constantly operating factor of the deepening crisis of the imperialist system of exploitation since the war. As 0. D. Ulrich has justifiably commented, the creation and extension of the public sector in the emancipated countries

is an absolute pattern of their economic development and characteristic feature of the social changes taking place in them. The process reflects the objective conditions and main practical tasks that now determine their development. The basic one is consolidation of national state and political independence in the fight for economic and social progress, which presupposes tho preparation of and transition to new forms of production.^^1^^

Private consumption in the capitalist and the developing countries rose at about the same rates to the end of the 60s, while the ratio between them in the total GDP of the world capitalist economy remained quite stable. Since then this type of `stability' has also become a thing of the past. The rates of expenditure of the private sector rose more slowly in the 70s in the capitalist countries than in the developing ones, which went hand in hand with a certain rise in the weight of the latter in the capitalist world's total outlays in this sector. Nevertheless the gap between them in this respect remained immense and is estimated at a ratio of 4.5 to 1 at the end of the period considered in favour of the main economic centres of capitalism.

Private expenditure occupies a decisive place in both groups, but in the developed capitalist countries its share in aggregate consumption of the GDP has been perceptibly lower, while the proportion of public expenditure has been correspondingly higher than in developing countries. This _-_-_

~^^1^^ O. D. Ulrich. 'Trety mir': problemy razvitiya gosudarstvennogo sectora (The Third World: Problems of the Development of the Public Sector), Nauka Publishers, Moscow, 1975, p 8.

100 structure of consumer expenditure has also largely determined the important differences in the forming of the accumulation funds in the two groups.

This tendency, established in the imperialist stage, has in fact been losing its former significance in recent years in a situation of crisis weakening of investment in the whole group of industrially developed countries. Furthermore, at the end of the 70s and in tho early 80s the proportion of investments in the structure of their consumption was less than in the developing countries. The latter's accumulation fund continues to expand more rapidly than in capitalism's centres. Nevertheless, more than three-quarters of the total investment of the non-socialist world was still being made in capitalist countries.

The objective conditions for a further deepening of the contradictions in the economic, and consequently social development as well, of the two groups thus continued to operate, which was also fostered by the lines of development of the economically backward countries' economic ties with the industrial centres, which remained extremely unfavourable for the former. Evidence of this is given by the figures in Table 6 on the changes over recent decades in the ratio of the weight of exports and imports between the two groups of countries.

The very broad-scale trends of development of the most important spheres of production and consumption being considered only lay the initial basis for studying the world capitalist economy as an integral system, and cannot, of course, provide an adequate foundation for any detailed conclusions and generalisations.

For this very intricate system consists of various sub-- systems, each of which in turn is extremely varied and has special characteristics of `self-movement' that often differ from those of the movement of the system as a whole. The final directions of the latter's development may therefore differ considerably from the trends in any one region or country, since one and the same factors often have a very different effect on the system as a whole and on its separate parts.

The underlying idea of the foregoing exposition started from the well-known principle of Marxist-Leninist systems analysis of the economic structure of society, that was formulated in particular by Lenin in his review of Bogdanov's A Short Course of Economic Science. Noting that `the most 101 important problems of contemporary social life' are linked in a very direct way with the problems of economics, Lenin stressed the need

to represent the different aspects and different manifestations of contemporary economic life as component parts of a definite system of social economy, as manifestations of the basic features of that system.^^1^^

A comparative analysis of these features in the development of the productive forces of the postwar capitalist economy and of its most important sub-systems will be continued in the next part of our book.

_-_-_

~^^1^^ V. I. Lenin. Review. A. Bogdanov. A Short Course of Economic Science. Collected Works, Vol. 4 (Progress Publishers Moscow 1974), pp 47--48.

[102] __NUMERIC_LVL2__ 4 __ALPHA_LVL2__ SHIFTS IN THE DISTRIBUTION OF THE PRODUCTIVE FORCES __ALPHA_LVL3__ [introduction.]

The structural changes in the industries of any large economic system of any kind embrace an intricate bundle of extremely varied but inseparably linked phenomenon and processes. In summarised form they display many features of the main development trends of society's productive powers in any one historical interval or another. Their generalised characteristic is a high degree of abstraction, necessary for scientific analysis, uniting the most diverse types of man's productive activity in a single whole. As Marx wrote:

Production in general is an abstraction, but a sensible abstraction in so far as it actually emphasises and defines the common aspects and thus avoids repetition. Yet this general concept, or the common aspect which has been brought to light by comparison, is itself a multifarious compound comprising divergent categories.^^1^^

The indicators mentioned in the preceding chapters of the resultant development trends in the postwar capitalist economy also reflect a high degree of generalisation. Nevertheless they are extremely important for a combined study of the real course of events. A scientific methodology for analysing broad social processes, including economic ones, requires us without fail 'to proceed from concrete realities, not from abstract postulates'.^^2^^,

In this connection Marxism-Leninism has always attached paramount importance to developing methods of making qualitative, i.e. statistical, estimates of socio-economic processes. Lenin, stressing the need for a concrete approach to _-_-_

~^^1^^ Karl Marx. A Contribution to the Critique of Political Economy (Progress Publishers, Moscow, 1977), p 190.

~^^2^^ V. I. Lenin. The- Second Congress of the Communist International. Collected Works, Vol. 31 (Progress Publishers, Moscow, 1974), p 240.

103 study of the main forms of capitalism's development in industry, wrote that one must examine the development of any particular form, after bringing out its essence and distinguishing features, by means of `properly compiled statistics'.^^1^^ He made the same demand in regard to agriculture, for study of which we needed 'a picture of the process as a whole, with all the trends taken into account and summed up in the form of a resultant'.^^2^^ Only in that way can the decisive tendencies of economic development be concretely determined and the main point in them separated from the chance and secondary.

In his article 'Statistics and Sociology', written in 1917, Lenin stressed that

the most widely used, and most fallacious, method in the realm of social phenomena is to tear out individual minor facts and juggle with examples. Selecting chance examples presents no difficulty at all, but is of no value, or of purely negative value, for in each individual case everything hinges on the historically concrete situation. Facts, if we lake them in their entirety, in their interconnection, are not only stubborn things, but undoubtedly proof-bearing things. Minor facts, if taken out of their entirety, out of their interconnection, if they are arbitrarily selected and torn out of context, are merely things for juggling, or even worse.^^3^^

Hence a problem of vital interest for the study of social systems of any size, namely that of analysing the interaction of the whole and the part, inevitably arises, because the universal cannot exist otherwise than 'in the individual and through the individual'.^^4^^

This problem becomes particularly acute when we are trying to elucidate the dynamics of the long-term tendencies in the distribution of the productive forces within such a broad system as the world capitalist economy. In it the `individual' is not in fact simply the national economy of each country (in which the universal is also manifested _-_-_

~^^1^^ V. I. Lenin. The Development of Capitalism in Russia. Collected Works, Vol. 3 (Progress Publishers, Moscow, 1977), p 459.

~^^2^^ V. I. Lenin. New Data on the Laws Governing the Development of Capitalism in Agriculture. Collected Works, Vol. 22, p 72.

~^^3^^ V. I. Lenin. Statistics and Sociology. Collected Works, Vol. 23 (Progress Publishers, Moscow, 1964), p 272.

~^^4^^ 'Every individual is (in one way or another) a universal. Every universal is (a fragment, or an aspect, or the essence of) an individual.' V. I. Lenin. On the Question of Dialectics. Collected Works, Vol. 38 (Progress Publishers, Moscow, 1976), p 359.

104 in an infinite variety of partial cases and specifically national features of development), but primarily embraces various groupings of these countries, the most important aspects of whose economies are united by the most essential common features into major sub-systems of the world economy. In the present historical situation these sub-systems include, first of all, the developed capitalist countries and the developing countries, i.e. the former colonies and semi-colonies that have thrown off foreign domination and taken the road, within that economy, of anti-imperialist struggle for independent national development. It would be logical to begin our description of the changes in the postwar distribution of the non-socialist world's productive power with an analysis of the distribution of its main industries in the light of Lenin's law of the uneven economic development of capitalism.

__ALPHA_LVL3__ § 1. Capitalist and Developing Countries

Colonialism put an indelible stamp on the structure of the geographical distribution of capitalist production. An evergrowing concentration of production capability in the comparatively few centres of imperialism and its slow growth in the overwhelming majority of the dependent agrarian countries and raw material producers was a major feature of the whole preceding colonial history of capitalist production. In disclosing one of the important aspects of the operation of the law of the unequal development of capitalism, Lenin remarked:

capitalism develops unevenly and objective reality gives us highly developed capitalist nalions side by side with a number of economically slightly developed or totally undeveloped, nations.^^1^^

In addition, as wo have already noted, there began to be certain shifts in this relationship after the war because of the breach in the imperialist powers' monopoly position. Graphs summarising the long-term trends in growth of these two groups' GDP over recent decades give a very broad picture of this (see Fig. 5).

_-_-_

~^^1^^ V. T. Lenin. A Caricature of Marxism. Collected Works, Vol. 23, p 00.

105

The immense unevenness of the development of separate regions and countries on the one hand and their industries on the other is not obvious in the dynamics noted. This unevenness will be analysed from the standpoint of changes in the structure of the distribution of the productive forces by the principal geographical regions, groups of countries, and countries of the two major sub-systems of today's capitalist economy in the following sections of this chapter. Here we shall bring out the most general shifts to date in __PARAGRAPH_PAUSE__ 500- Indices of capitalist and developing countries' production of GDP (1950=100) 199-1.jpg 450-- 400- 350- 300- 250-- 200-- 150- 100 \^L 1950 * Estimated Sources: calculated from the UN Yearbook of National Accounts Statistics, Statistical Yearbook, and Monthly Bulletin of Statistics for the relevant years. __PARAGRAPH_CONT__ the distribution of GDP between these two sub-systems. They give a very clear picture of how the economies of developing countries began to grow more rapidly than those 106 of the developed countries in the postwar period, especially in the mid-60s.

This has been happening on a considerable scale of late because of the distinct slowing of economic growth rates in the metropolises of capitalism during its world crisis of the mid-70s. Growth rates also slowed rather, in turn, in the developing countries under the impact of the crisis, but there they were nevertheless relatively higher on average than in capitalist countries, which could not help intensify the trend toward a faster growth of GDP in the former than in the latter shown in the graph.

This trend has become quite stable, and is showing itself in fact (though far from evenly) both in all their main industries and in the services and circulation sphere. Its action brings out a very important feature not only of the current shifts in the distribution of the capitalist world's productive forces associated with the break-up of the colonial system but also with possible prospective ones.

Study of this trend, however, without clarifying the specific character of its movement by industries, is clearly inadequate to characterise the patterns promoting probable changes in the future. From that point of view a comparative analysis of the structure and long-term dynamics of the growth of production in industries on the one hand and in the circulation and services sphere on the other, by the two groups of countries, is of great interest. The facts indicate that for all the diversity of their growth rates, the circulation and services sphere, etc., developed much faster in the agrarian countries (in contrast to the industrial ones) than the industrial sphere. As a result the proportion of the circulation and services sphere in the total gross production of developing countries rose roughly from 37.5 per cent in the early 50s to 44 per cent at the beginning of the 80s, while there was a slower development of this sphere on the whole in the industrialised countries, with the exception of periods of world cyclic crisis which, as a rule, bore most heavily on industrial production.

The trend toward faster growth of material production on the scale of the world capitalist economy noted above, however, operated mainly only before the world crisis of 1974-- 75, and stemmed basically from the features of the impact at that time of the scientific and technical revolution on the economies of the capitalist industrial centres. The structural 107 shifts emerging in the periphery developed in another direction; the circulation and services sphere expanded there much faster than the branches of material production. This difference of direction within a single system is an interlocking of aspects of the processes that are common to the whole system. In this case they include (in our view) not only the initial breaking down of age-old backwardness in sectors that form the infrastructure of the economies of former colonies and semi-colonies (railways, communications, etc.) but also the progressing impact of the scientific and technical revolution on the infrastructure of the world capitalist system as a whole. It is under its direct impact that the picture of the level and growth rates of production has begun to change, important changes are developing in the principal items of society's material and technical basis, and its sectoral proportions and the ratio between its productive and non-productive spheres are altering. The revolution is furthering advance of some sectors along the line of scientific and technical progress and a slowing of the development of others.

The steady deepening of the main contradictions of world capitalism in the 70s and early 80s, which was marked by a general slowing of economic growth within its limits, led to a sharp intensification of the instability and imbalance in the development of capitalist countries' social production. The stimulating effect of contemporary scientific and technical progress on the economy (above all on the leading industries) clearly weakened, and there were very substantial shifts in those years in that connection in the sectoral structure of capitalist and developing countries (and so in the whole system of their world economic relations) on a scale unknown in preceding decades.

In the summary analysis of the postwar structural changes leading to a raising of the weight of the circulation and services sphere in the gross production of capitalist and developing countries, the following facts primarily draw one's attention. Transport and communications stand out specially in both groups of countries. In 1960--81 alone their volume of production in the industrial centres increased by a little more than 140 per cent, and by nearly 250 per cent in the developing countries. As a result their weight in the GDP of each group converged, rising respectively from C.O to 6.5 per cent in the capitalist countries and from 108 rouglily 4.5 to 5.5 per cent in tho developing countries.

Although the proportion of transport and communications still remains comparatively low, its dynamics are very informative. It is in them that the tendency in today's capitalist world toward a certain smoothing out of the marked imbalances in the structural relations of the various sectors of the GDP between developed and developing countries is making itself felt.

This tendency began to become noticeable in the postwar period to one extent or another in almost all the principal sectors creating goods and services, including those that used to be decisive in characterising the underdevelopment of the colonial world's economic structure.

This underdovelopmeiit showed particularly clearly in those sectors outside the sphere of material production that are lumped together in the general concept `services'. In the early 50s they accounted for 35 per cent of the aggregate __PARAGRAPH_PAUSE__ Table 7 Sectoral Structure of the GDP of Capitalist and Developing Countries (in percentages) Sector Capitalist Countries Developing Countries 1950-- 1951 1970-- 1971 1980-- 1981* 1950-- 1951 1970-- 1971 1980-- 1981* All 100 100 100 100 100 100 Material production 44.5 45 42.5 62.5 60.5 56 industry 28.5 32.5 32.5 22 33 32.5 agriculture building 8.5 7.5 5 7.5 4 6 36 4.5 22 5.5 17.5 6 Circulation & ser-- U M vices 55.5 55 57.5 37.5 39.5 44 transport & communications 6 6.5 6.5 4 5 5.5 trade & commerce 15 15 15.5 14.5 14.5 15 others 34.5 33.5 35.5 19 20 23.5 * Estimated Sources: UN Handbook of World Development Statistics, 1979 (United Nations, New York, 1980); UN Yearbook of National Accountts Statistics, Statistical Yearbook, and Monthly Bulletin of Statistics for the appropriate years. __PARAGRAPH_CONT__ GDP of developed capitalist countries. The corresponding indicator for developing countries was only a little more than 109 20 per cent. Subsequently this gap began gradually to close. Changes like that do not yet, of course, enable us to characterise the depth of the remaining backwardness of the structure of the economies of developing countries thoroughly and fully enough. The fact, for example, that the proportion of commerce in their GDPs was approximately the same as in the industrial centres of capitalism is by no means evidence that they have achieved as significant a degree of development in this respect. We also have to allow for the absolute volume of production of each sector in the one group and the other, the size of the population, and the level of labour productivity (which we shall touch on below). A comparative study of these structural shifts, however, enables us to size ,up many of the important features of the postwar development and distribution of the productive forces on a very broad plane. As we develop the main theme of this chapter they will be consistently analysed more concretely and more exactly defined.

In this respect to describe the changing role of industry is of the greatest significance. The growth rates of industrial production in both groups of countries are higher than those of their social product; consequently the weight of industry in the GDP of industrially developed countries for the periods in Table 7 had a tendency to grow a little in the 50s and 60s, while it rose by 50 per cent in the peripheral countries. In the following decade, however, due to the two economic crises, the annual growth rates of industry did not rise An the first group, while the corresponding indicators were even lower in the aggregate growth of the GDP of the second group. As a result the proportion of industry in their gross production of goods and services roughly flattened out and was around one-third at the beginning of the 80s.

The longer-term trend arising in the postwar period toward a reduction of the imbalance in the structure of production between the two main sub-systems of the world capitalist economy had thus begun to show more pronouncedly in industry than in the circulation and services sphere.

In spite of the remaining wide gap in levels of industrial development, analysis of the current processes, that are making a further undermining of the colonial foundations of the capitalist system inevitable, allows us to suggest that this convergence will probably increase. One can 110 foresee, in particular, that the difference in the weight of industry in the GDP of the two groups created in earlier stages of the genesis of world capitalism will be narrowed still further in coming years. In some industries, however, there may be a significant coming together in this century.^^1^^

The same line is discernible to some extent in agriculture for all its extremely specific character and peculiarities. In both groups there has been a parallel and quite marked fall in recent decades in the weight of agrarian produce in their aggregate social product. The proportion of agriculture in the GDP of developed capitalist countries fell from 8.5 to 4 per cent, and in developing countries from 36 per cent to less than 20 per cent.

The indicators cited include the results of very intricate socio-economic processes and could undoubtedly be taken as the starting point for a special comparative study of the real shifts that are becoming noticeable in the agriculture of these groups. But they already provide an opportunity in their present form to make certain generalisations of a factual order needed for further analysis.

During the whole preceding colonial development of capitalism, a decisive part of the aggregate product of its periphery was, as we know, created in agriculture, which was a natural consequence of the underdevelopment of the social production of the colonies and semi-colonies. This underdevelopment was further deepened by the fact that the colonial authorities saddled them with the role of economic appendages of the metropolitan countries. Their agrarian production was forcibly oriented on supplying the centres of capitalism with produce at the expense of their own consumption, so that while agriculture was the main occupation of the bulk of their populations, hunger and poverty prevailed in them, which was one of the most pernicious consequences of the transformation of capitalism into a world economic system.^^2^^

_-_-_

~^^1^^ Postwar trends in the branch structure of industrial production for the principal groups will be described in Part III.

~^^2^^ Capitalist propaganda and economics have exerted every possible effort to obscure this incontrovertible fact somehow (and still do). The past chairman of the Executive Committee of the UN Food and Agriculture Organisation, Josue de Castro wrote, back in the early 50s: 'Because of its explosive political and social implications the subject until very recently has been one of the taboos of our (i.e. capitalist--- Auth.) civilization. It has been our highly vulnerable Achilles' heel, __NOTE__ Footnote cont. on page 112. 111

By the middle of the twentieth century the gap ih this sphere between the metropolitan countries and their agrarian, primary commodity producing appendages had attained colossal proportions. The weight of agriculture in the latter's GDP was then almost double that of industry and constituted nearly 90 per cent of the value of the production of all sectors of the circulation and services sphere put together. In the metropolitan countries, however, the weight of agriculture was correspondingly roughly a quarter of that of industry and 87 per cent less than the proportion of the services and circulation sphere. Since then there have been notable changes in the structural proportions, which is very important to allow for not only when estimating the shifts that have already occurred but also when calculating probable coming shifts in the distrubition of the world economy's productive forces.

As for the developing countries, it is worth noting that agriculture, whose share still considerably exceeded that of the industrial product at mid-century, has since finally and irrevocably fallen to second place behind industry. There are real grounds for predicting a further change in this respect. In our estimation the line of development noted may lead to the weight of industry in the GDP of developing countries being at least double that of agriculture by the end of the 80s. Their lag behind the industrialised countries, however, will still undoubtedly be very considerable then, since the industry/agriculture ratio in the latter was already estimated at around 8.5 : 1 in the 70s, and will probably not be less than 9 (10) : 1 in the 80s.^^1^^

Comparison of the long-term trends of development of industries and direct services also leads to not uninteresting estimates of the changes occurring, or anticipated in the future, in the structure of the GDP of the two groups of _-_-_ __NOTE__ Footnote cont. from page 111. a subject which could not safely bo discussed in public.' The Geography of Hunger, Little, Brown & Co., Boston, 1952, p 4.

~^^1^^ This ratio will not, by any means, bo the same for all capitalist countries. The estimate reflects only the general trend, the limit of which will most likely become the proportion of agriculture in the GDP of the USA, Great Britain, and West Germany, which has been quite stable in recent years, and which was less than 3 per cent at the end of the 70s, while in France and Japan it was around 4-4.5 per cent, in Norway 5 per cent, in Italy 6.5 per cent. UN Monthly Bulletin of Statistics, 1982, 3: LXX-LXXVIl.

112 countries. According to them the ratio between agrarian production and the services sphere, for instance, steadily changed in favour of services in the economic centres of capitalism. At the beginning of the 80s 14 times more commodities were produced in it (in terms of value) than in agriculture.

A similar process, but at a qualitatively different level, was observable in the last decades in the former colonial world as well. Even at the beginning of the postwar period the share of services in the aggregate product was around 60 per cent less than that of agriculture. Three decades later it had already risen much above the latter. To all intents and purposes, however, the services sphere will retain a clearly marked tendency everywhere in the foreseeable future toward priority development compared with agriculture, probably with accelerated growth rates where the backwardness of the relations of production previously maintained by colonialism has long been an obstacle to its establishment and development.

Comparison of the growth results of the other main spheres of material production (i.e. industry and the sectors constituting `services') yields a diametrically opposite picture for the two groups. At the beginning of the postwar period the proportion of industrial production in the GDP of both of them (especially of the second group) was less than that of sectors belonging to the services sphere. But in recent decades the proportion of industry came noticeably closer to the aggregate share of the services sectors and later overtook them in both groups of countries. In other words, there was a smoothing out in this respect, too, of the acute imbalances in the structure of social production in both groups with the decay of the colonial system, while the one preserved its immense superiority over the other as regards level of economic development.

We shall shortly demonstrate below how the structural proportions between the principal industries within each group gradually altered after the war, but already, on the basis of the facts cited, we can conclude that, in spite of the extremely broad variety of the trends of socio-economic development, the determinant features of the postwar dynamics of the growth of social production in the countries taken separately, and the structure of the distribution of production created by capitalism between its industrial __PRINTERS_P_113_COMMENT__ 8---0170 113 centres and agrarian periphery, are beginning to undergo fairly important changes.

Relatively more favourable conditions are now taking shape in the present international situation for developing __PARAGRAPH_PAUSE__ Fig. 0 Share of capitalist and developing countries in the principal sectors of the world capitalist economy's production of GDP (in percentages) INDUSTRY ACiRICULTURE BUILDINGS TRANSPORT A THAUE CONSTRUCTION COMMUNICATIONS si.nvir.t s 100 199-2.jpg CAPITALIST COUNTRIES '///, DEVELOPING COUNTRIES * Estimated Sources: as for Fig. 5. 114 __PARAGRAPH_CONT__ countries' successful struggle to eliminate their former dependence and the colonial direction of their economies, but in practice most of them are still only in the initial phase of this objectively inevitable, long, stubborn struggle, visible proof of which will be found in the estimates of the shifts in the distribution of production given in Fig. 6.

As the graphs indicate, there has been a long-term trend in literally all the principal sectors forming the gross product of the non-socialist world toward an enhancing of the role of the production of developing countries. In the period covered by Fig. (> their share in the industrial output of the capitalist economy has increased by roughly 75 per cent, in building and construction has doubled, in transport and communications has risen by a third, in services by twothirds, and in trade by more than a quarter. That does not, however, mean any kind of fundamental break in the longstanding extreme unevenness of the distribution of production capacities between industrially developed countries and the primary producers in the present day capitalist economy. In all its principal sectors, except agriculture, five to seven times as much output originated in the metropolitan countries at the end of the 70s as in the developing ones.

Even the indisputable fact that the developing countries surpassed the main economic centres in volume of farm production does not give us the right to consider there to have been any kind of essential turn in the distribution of the productive forces. Furthermore, it is agriculture that is still, as a rule, the most backward sector of their economies, which to a crucial extent determined the steady widening of the gulf between them and the developed countries in per capita gross production.

It is of paramount importance in this connection to analyse the regional distribution and long-term dynamics of population growth. This analysis, being a sine qua non of a comprehensive study of the distribution of the productive forces, also calls for an all-embracing systems approach. The next section of this chapter will be given over to it, which will enable us to present the socio-economic aspects of this problem more fully and clearly. But before we pass to a comparative description of the demographic structure of the capitalist economy by regions and groups of countries, we must dwell on at least one more matter of first-rate importance.

__PRINTERS_P_115_COMMENT__ 8* 115

So far the objective has been to delineate the general contours of the dynamics, scale, and distribution of the gross domestic product in terms of capitalism's two principal groups of countries. At this very high degree of statistical abstraction we must not lose sight of the following point: each of the aggregate sectors considered in itself is an extremely complex system embracing at least several major lines of production which in turn are built up from ever more specialised groups of industries.

Within industrial production as a whole we primarily distinguish such very broad, large-scale sectors as manufacturing, generation of electricity, and mining, each of which can be pictured as a kind of sub-system within the aggregate, consisting of smaller sub-systems. Manufacturing, for example, is broken down into the steel, metalworking, chemical, textile, food, and other industries, which again include more specialised industries.

The logic of a macro-economic study is therefore the same in this case---from broad generalisations following from highly synthesised data to their elaboration and itemisation by analysing the main trends in the movement of the separate sub-systems in their interaction and subordination. It is through this approach that we get the opportunity to determine the specific features of the development of the part in the world economy concretely compared with, and integrally connected with, the principal channels of movement of the whole.

Even from that standpoint the conclusions drawn earlier about the shifts in the distribution of production between the industrialised countries and the agrarian and raw material appendages must consequently be elaborated, deepened, and so made more complicated. If we consider, for example, that the mining, electricity generating, and manufacturing industries comprise the three most important parts ( subsystems) of industrial production in general, then the resultant trends of its development over recent decades can be summarised in the index numbers of Table 8, which in the final analysis reflect the main lines as well of the impact of scientific and technical progress on industry and at the same time are evidence of the rise within industry of qualitatively new phenomena and contradictions.

The figures referred to graphically illustrate the longterm line of the changes in the industrial structure of modern 116 world capitalism, and in the distribution of the most important components of industry in the two main groups of countries; while enabling us to represent the scale and general picture of these changes more distinctly, they at the same time provide the factual basis needed for comparative study of the various sectors of the economy in the separate groups. Among the various processes noted in Table 8, the everincreasing differentiation of growth rates among the mining, power, and manufacturing industries merits special attention. Mining grew at the lowest rates after the war, with a consequent lowering of its proportion in the total volume of industrial production from roughly 11 per cent at the end of the 30s to 6 per cent at the end of the 70s. But the fall occurred mainly in the industrial centres. The developing countries, on the contrary, had unprecedentedly high growth rates in extraction of minerals, primarily of fossil fuel. As a result from 1960 to 1980 their share in the mining of the non-socialist world rose steeply; roughly from twofifths to more than three-fifths.

Table 8 Weight of the Basic Industries of the Two Groups of the World Capitalist Economy (in percentages) Industry Capitalist Countries Developing Countries 1960-- 1961 1970-- 1971 1980-- 1981* 1960-- 1961 1970-- 1971 1980-- 1981* Manufacturing 91 89 86 9 11 14 Mining 57 42 39 43 58 61 Power (electricity, gas) 93 91 87 7 9 13 * Estimated Sources: UN Handbook of World Development Stnlisticx 1979; UN Statistical Yearbook and Monthly Bulletin oj Statistics for the appropriate years.

The most dynamic trend of industrial development in both groups was in the power industry, whose average growth rates were more than double those of manufacturing and four times as high as those of mining (which could not help raising its role). The proportion of the output of the power industry in all total industrial output, in comparable indicators, was around 3 per cent on the eve of World War 117 II and is now more than 8 per cent. The power capability of the developing countries lias heen expanding particularly fast; in the 60s and 70s alone it rose by roughly 500 percent. In spite of that, however, their industrial production of power was still rather less than one-seventh that of the capitalist countries at the beginning of the 80s.

The difference between the two groups has remained even deeper, on the whole, in manufacturing, in which the weight of the developing countries has remained very low, even though it has increased slightly. At the start of the 80s it was roughly 14 per cent against 9 per cent at the beginning of the 60s. The weak development of manufacturing is the main reason for the preservation of many features of the old colonial structure in the distribution of the productive forces of present-day capitalism and the backwardness of all the other spheres of the economy involved in creating the former colonies' aggregate social product.

With a further deepening of systems analysis of the shifts in the distribution of the aggregate product between the two groups of countries in each of the sectors of production, we can distinguish major sub-systems, as in industry. In agriculture they include primarily the production of food on the one hand and of industrial raw materials on the other, which in turn consist of more specialised groups of industries (crop growing, animal husbandry, etc.).

When making a comparative study of the cardinal problems of the distribution of any industry, however, we must always ask what is the relation between the dynamics of production of the respective product in the different groups of countries, and the size of their populations and manpower.

__ALPHA_LVL3__ § 2. The Principal Productive Force of Society

The growth of human resources in the much contracted postwar capitalist world economy has been unparalleled in scale. The population of all its countries increased by more than 1,350 million in 1950--80, which was more than double the corresponding figure for the first half of the century (620 million). As a result the total population of the capitalist and developing countries was nearly 3,000 million at the beginning of the 80s (as against only a little more than 1,600 million at the beginning of the 50s and 1,000 million at the beginning of the century). In other words, human 118 resources increased by 80 per cent between 1950 and 1980 within the non-socialist world, and by roughly 190 per cent since the beginning of the century.^^1^^

These considerable changes were determined to a crucial extent by the 'demographic explosion', whose causes are linked with the break-up of the colonial system and advances in health protection. These points have been widely discussed in Soviet socio-economic literature,^^2^^ so we shall touch here only on those consequences of population growth that characterise its distribution in the principal regions of the capitalist world and are essential for understanding the shifts in the distribution of manpower among them, and consequently of the long-term trends in the development of their basic productive force.

The following facts come out immediately from a comparison of these shifts: in the 50s, 60s, and 70s the rate of population increase in the developed capitalist countries (1.05 per cent) was 60 per cent lower on the whole than in the developing countries (2.5 per cent), so that during those years the number of their inhabitants rose by 215 million, while the numbers in the periphery rose by more than 1,200 million for the years covered by Fig. 7. Thus about 85 per cent of the total increase occurred in the developing countries.

Such an immense disproportion has not, by any means, been typical of the whole period of the development of capitalism's world system. Estimates based on UN demographic statistics indicate that even at the beginning of this century the growth rate of the metropolitan countries was patently higher than in the colonies and dependent countries of Asia, Africa, and Latin America, where _-_-_

~^^1^^ These figures do not allow for the size of the population of countries that are now in the world socialist system. The total population of the world rose (according to UN data) from roughly 1,600 million at the beginning of the century to 2,500 million in the middle, and to more than 4,500 million in 1981.

~^^2^^ Tho theory and methodology of the problem of population growth have been developed in the postwar period by a number of well-known Soviet demographers (A. Ya. Boyarsky, B. Ts. Urlanis, D. I. Valentey, Ya. N. Guzevaty, and others). Many aspects of the problem have been touched on in D. I. Valentey (Ed.) Marksistsko-leninskaya teoriya narodonaselenlya (The Marxist-Leninist Theory of Population), Politizdat, Moscow, 1974. Much attention is being paid to the global and regional trends in the growth of population and manpower by the United Nations and its specialised organisations like the ILO, FAO, and UNESCO.

119 epidemics raged and hunger and high infant mortality prevailed. The expectation of life in the latter was about half that in the metropolitan countries. The demographic indices of the two groups, it is true, had already begun to even out between the wars, and over the period 1900--1938 their average annual population growth rates converged and __PARAGRAPH_PAUSE__ Fig- 7 Dynamics of the population of the main regions of the capitalist economy * 199-3.jpg 1981 * within the present-day boundaries Sources: as for Table 9. __PARAGRAPH_CONT__ were around 0.8 to 0.9 per cent, but because the population of the colonial world was roughly double that of the 120 industrial centres in absolute terms, the increases were respectively 250 million and 140 million.

Since the war there has been a marked exacerbation of the demographic situation in the capitalist %orld. The rates of increase began to rise in the former colonial world. Tn 1938--50 they averaged 1.4 per cent a year, in the 50s 2.3 per cent, and in the 60s and 70s 2.6 per cent. In the developed capitalist countries the rates were also rather higher in the first postwar decades, but again began to fall and in the 70s were around 0.85 per cent a year, i.e. about the average for 1900--1938.

The most populous centre of world capitalism has always been and still is Western Europe. At the middle of the century rather more than half of the total population of capitalist countries lived there, but the growth rate in most West European countries has been very low in recent decades compared with other geographical regions, while emigration has been very high, which has deepened the trend already long apparent toward a reduction of the weight of Western Europe's population in both the capitalist countries as a group and the capitalist world as a whole.

The population of the North American area increased much faster than Western Europe's after the war. In the period 1950--81 its annual average growth rate was 1.30 per cent, which led to a certain convergence of the absolute size of the populations of the two main centres of capitalism. While the ratio between them was 1.7 : 1 in favour of Western Europe in the early 50s, it was 1.4 : 1 at the end of the 70s.

One must remember, however, that the population of North America was increased in the first half of the century, and especially as a result of World War II, by a flow of immigrants from outside, including Western Europe, in addition to a rate of natural growth higher than in other developed capitalist countries. At the same time there was a high population growth rate in other capitalist countries, above all in the biggest of them, Japan, although it was also much lower than in the developing countries. A consequence of all these factors was a considerable decline in the weight of the industrial centres in the total population of today's capitalist world (see Table 9).

An even greater unevenness and extreme diversity of the dynamics of population growth characterise the present-day __PARAGRAPH_PAUSE__ 121 Table 9 Weight of the Principal Regions in the Total Population of the Capitalist W'orld (in percentages) Years Total Developed capitalist countries Developing countries _ . . Western North Total Europe America Others Total Asia Africa Amer'ica 1900 100.0 35.6 22.3 8.1 5.2 64.4 44.6 12.9 6.9 1938 100.0 35.7 19.0 10.1 6.6 64.3 43.1 12.6 8.6 1950 100.0 34.7 17.7 10.3 6.7 65.3 42.6 12.8 9.9 1960 100.0 32.4 15.8 10.2 6.4 67.6 43.6 13.2 10.5 1970 100.0 28.9 13.8 9.3 5.8 71.1 46.1 13.6 11.4 1981 100.0 25.5 11.7 8.2 5.6 74.5 47.5 14.6 12.4 Mean annual growth rates 1950--1981 1.9 1.2 0.8 1.8 1.4 2.3 2.3 2.2 2.5 1960--1970 1.6 1.1 0.8 1.4 1.6 2.6 2.5 2.6 2.9 1970--1981 2.1 0.8 0.6 0.8 1.5 2.5 2.5 2.7 2.7 Sources: UN World Population Prospects as Assessed in 1963', ILO Bulletin of Labour Statistics. Labour Force and World Population Growth, UN Statistical Yearbook 1979; World Bank. World Development Report, 1981; UN Monthly Bulletin of Statistics, 1981, 1982. [122] __PARAGRAPH_CONT__ demographic situation in the developing countries. The bulk of their inhabitants has long been concentrated in the Asian region, in which more than two-fifths of the total population of the capitalist world lived at the biginning of the postwar period. The consequences of the 'demographic explosion' showed themselves first in that region with the break-up of the colonial system. The number of its inhabitants approximately doubled in the decades reviewed, or increased by mora than 700 million, which was half of the total increment of population in the postwar capitalist world.

The population of Africa (not counting South Africa) rose by 210 million, or more than doubled, in the same period, and its average annual growth rate began to exceed that of Asia in the 70s. These rates were not, however, limiting ones. Latin America set records of sorts, its population increasing by 120 per cent by the end of the 70s compared with the early 50s, with a mean annual growth rate of 2.75 per cent.

These major shifts in the ratio of population among the various groups of countries convincingly emphasise the need to make careful allowance for the demographic factors when studying the long-term development trends of the productive forces in the postwar capitalist economy. And they are of special significance for a sectoral analysis of the results of the main regions' economic development.

At the same time these factors are extremely important for forecasting growth of the productive forces in any one economic system and on a global scale. The Soviet sociologist Arab-Ogly has justifiably commented that

the tempestuous growth of population is one of the most important historical phenomena of our time as regards its remote consequences. It is facing both individual countries and mankind as a whole with a number of exceptionally complicated though in principle resolvable economic, social, and political problems. That is why there is an urgent need for substantiated and as exact as possible forecasts down to the year 2000. The compilation of such forecasts has now acquired universally acknowledged theoretical and practical significance. Demographic processes as a rule have immense inertia, which also makes it possible, strictly speaking, to make more or less substantiated forecasts of future populations.^^1^^

_-_-_

~^^1^^ E. Arab-Ogly. The Demographic Mirage and the Demographic Iceberg. Mirovaya ekontnnika i mezhdunarodniye otnostieniya, 1975, 9:93.

123

The figures quoted above allow us to slate that the longterm trends in the area of population are more amenable to projection into the future than those of production, given the instability of development integrally inherent in the capitalist system, cyclic crises, feverish booms and slumps in market conditions, and so on. In spite of the marked rise in tempos in various countries and years, the dynamics of population growth is limited in the principal regions by quite definite parameters, which provides the necessary premises for a more or less long-term estimate of the future distribution of manpower among them.

A real effort has been made in UN demographic publications to tie up population growth trends somehow with certain outlooks for the subsequent course of development of production. One of its surveys remarked, for instance:

The future size, structure and distribution of population are essential for any plan that involves food, housing, employment' education, health or other public services. This is also an era of increasing awareness: of man's unprecedented growth, of the interaction between this growth and the environment, and of the possible implications for the future. Investigations into these complex relationships have added to the demand for population projections.^^1^^

For all the substantial differences in estimates of the future development of the international demographic situation, the majority of them quite validly, in our view, assume that one can hardly expect any extraordinary changes in growth rates in the really foreseeable term either in the capitalist or the developing countries compared with the postwar period, though some demographers' forecasts assume a certain lowering of these rates in coming years.^^2^^

In any case, however, there are adequate grounds for _-_-_

~^^1^^ World Population Conference, Bucharest, Romania, 19--30 August 1974. World and Regional Population Prospects (E. Conf. 60/CRP/15, 16 April 1974), p 4.

~^^2^^ See, for example, S. Bruk. The Post-war Dynamics and Structure of the World's Population. In: I. R. Grigulevich and S. Ya. Kozlov (Eds.). Ethnocultural Processes and National Problems in the Modern World (Progress Publishers, Moscow, 1979), pp 179--243.

To some extent these forecasts are based on trends that arose in the 70s in a number of developing countries, above all in the Asian region, toward a certain, though still insignificant reduction in the rates of population growth. In mosl developing countries the 'demographic boom' had not weakened at the beginning of the 80s. (See UN Monthly Bulletin of Statistics, 1982, 7:1--5).

124 staling that the number of inhabitants of all the countries of the non-socialist world will increase by at least 50 per cent in the last two decades of the century (16 to 20 per cent in the first group and 56 to 60 per cent in the second). In absolute terms this means an increase in the population of the industrialised countries of roughly 120 to 150 million, and in the developing countries of 1,200 to 1,300 million.

These estimates, like all similar generalising forecasts, are approximate, but in themselves they are very important not simply for understanding the outlooks for the development of population but even more for clarifying their interconnections with the possible trends of the future growth and distribution of the productive forces in the countries at present forming the world capilalisl system. Allowing for all that, some not uninteresting conclusions about the future follow from Table 9: above all the figures indicate that a progressive lowering of the weight of the population of the industrial centres compared with that of the developing countries can be expected. In all probability, whatever the variant, their proportion will fall to less than a quarter in the mid-80s and to nearly a fifth in the mid-90s, while it was more than a third at the beginning of the century. Further shifts can also be expected in the distribution of population within the capitalist countries. Whereas the manpower of Western Europe considerably predominated at the beginning of the century (roughly two-thirds) and equalled that of all the other capitalist countries taken together in the middle of the century, the ratio later began to tip in favour of countries outside Western Europe, where it is probable that up to two-thirds of the population of modern industrial centres will be living by the end of the century. The overwhelming part of their gainfully employed population will also consequently be in them, which needs to be taken into consideration when analysing the long-term outlook for the distribution of these centres' production.

The postwar period has been marked by a further increase in the unevenness of the distribution of the main productive force in the developing world. Most of its inhabitants, and so of its manpower, has long been concentrated, as we know, in Asia, whose weight in the total population of the capitalist world has been steadily rising in postwar decades. Analysis of current trends gives grounds for sugg-esting that the Asiatic population will be around half in the mid-80s, 125 and more than half in Ihe 90?, of the total population of the capitalist world within its present boundaries. But the majority of the liberated countries of Asia (in which more than 2,000 million people will probably be living at the end of the century, i.e. three times as many as in the middle of the century) are now the most backward areas, economically speaking, of the developing world. The population of Africa and Latin America is increasing even faster.

These expected shifts arc undoubtedly fraught with serious socio-economic consequences for the fate of capitalism in those areas. In coming decades jobs will have to be created in them for hundreds and hundreds of millions of people, but their agriculture is already unable to absorb any considerable part of the flood of new labour power.

The objectively operating laws of agricultural production, moreover, are leading to surplus manpower being pushed out into the towns which, given capitalist relations of production, inevitably means a growth of poverty and proletarianisation of broad masses of the peasantry. That is one of the important distinguishing features of capitalism compared with the exploiter formations that preceded it. The law of faster growth of the urban population under the capitalist mode of production, Lenin stressed, 'does not and cannot operate otherwise than through the disintegration of the peasantry into a bourgeoisie and a proletariat'.^^1^^

When that conclusion was drawn there was still no socialist economic system. Experience of its development has shown that for it advance of society's productive forces is inseparably linked with priority growth of the urban population, but it also indicates that the new mode of production, unlike the capitalist, makes it possible to avoid the extremely grave consequences of urbanisation for the broad masses objectively inevitable for all capitalist countries.

Since the war urbanisation has intensified to an unusual degree under the impact of the shifts in the structure of social production considered above. It has begun to have an ever more active effect on the character of the distribution of manpower in the world capitalist economy. In the 50s, 60s, and 70s the urban population of non-socialist countries more than doubled, so that the ratio of urban and rural _-_-_

~^^1^^ V. I. Lenin. The Agrarian Programme of Social-Democracy in the First Russian Revolution 1905--1907. Collected Works, Vol. 13 (Progress Publishers, Moscow, 1967), p 404.

126 population altered, with socio-economic and political consequences of no little importance.

At the end of the 70s more than 40 per cent of the capitalist world's total population was already living in towns, while less than a third had done so in the early 50s. In the industrial countries this proportion rose to 75 per cent, and in the developing countries to a third, with fewer and fewer of the rural inhabitants available for work being directly involved in agrarian production. At the same time an increasingly large amount of manpower is becoming concentrated in the towns, a trend that has become stable not only in industrially developed capitalist countries but also in the overwhelming majority of developing countries.^^1^^

There are, of course, considerable regional differences in this respect in both groups, largely associated with features of their preceding historical development (see Table 10). In the industrial centres the highest proportion of urban population is in North America, particularly in the United States, where more than 90 per cent of the total population was living in towns at the end of the 70s. There is an even more significant spread in the weight of the urban population in developing countries, from 15 or 20 per cent in Asia to 60 or 65 per cent in Latin America.

One of the most characteristic trends in recent urbanisation is the rapid increase in the role of former colonial regions in the total urban population of the capitalist world in both absolute terms and relatively. At the beginning of the period reviewed the bulk of the urban population lived in industrial countries, while at the end already more than half of the townsmen lived in the agrarian and primary producing countries. The size of this population grew roughly twice as fast in the latter as in the former, and analysis of the long-term trend allows us to suggest that more than half of the population of the contemporary capitalist world __PARAGRAPH_PAUSE__ _-_-_

~^^1^^ The proportion of the non-agricultural population in the total gainfully employed population rose, for instance, from 93 per cent in the early 60s in the USA to 98 per cent in the early 70s, from 78 to 91 per cent in France, from 86 to 96 per cent in West Germany, from 60 to 87 per cent in Italy, from 61 to 87 per cent in Japan; in Indonesia it rose from 25 to nearly 39 per cent from 1960, in Pakistan correspondingly from 24 to 45 per cent, in Brazil from 48 to more than 60 per cent, in Mexico from 45 to 61 per cent, in Nigeria from 29 to nearly 54 per cent, and so on (World Bank. World Development Report, 1980, pp 146--147).

127 Table 10 Distribution of Urban and Rural Population in the Capitalist World Groups of countries Weight of group Proportion of urban population § in urban population in rural population 1950 1965 1980* 1985** 1950 1965 1980* 1985** 1950 1965 1980* 1985** Total 100 100 100 100 100 100 100 100 32 37 43 44 Capitalist countries 60.5 53.5 44 41.5 22.5 17.5 12 11 56 64.5 73.5 75 Western Europe 31.5 26 19.5 18.5 11 8 5.5 5 57.5 66 73 74 North America 20.5 19 16 15 5.5 4.5 3.5 3 63.5 72 79 80.5 Others 8.5 8.5 8.5 8 6 5 3.5 3 39.5 50.5 60 69 Developing countries 39.5 46.5 56 58.5 77.5 82.5 88 89 19 25 32.5 34 Asia 22.5 25 28.5 30 53 57.5 62.5 64 11 13.5 25.5 27 Africa 4.5 6 9 9.5 16 17 18 18 12.5 17.5 26.5 28.5 Latin America 12.5 15.5 18.5 19 8.5 8 7 .5 7 40.5 52.5 65.5 67 * Approximately ** Forecast § In the total population of the respective groups of countries Sources: UN Statistical Yearbook 19T2', UN Demographic Yearbook 1980 (United Nations, New York, 1981); UN Monthly Bulletin of Statistics, 1982. [128] __PARAGRAPH_CONT__ will be townsmen by llie end of the century. At least twothirds of them will be living in the former colonies and semi-colonies of Asia, Africa, and Latin America.

A not unimportant feature of the long-term shifts in the distribution of population is its growing concentration in very big cities. The number of cities with more than a million inhabitants increased in the 50s and 60s alone by more than 50 per cent, while the number of their inhabitants more than doubled. Big cities have been growing much faster, moreover, in developing countries. Most of the biggest cities of the contemporary capitalist, world are now already located in developing countries. The chaos of capitalist urbanisation is leading to the formation of broad urbanised zones with multimillion populations in both groups of countries, which are drawing an ever bigger part of the population of adjoining towns and rural areas into their orbit, thereby intensifying the unevenness inherent in capitalism and anarchy in the distribution of society's main productive force.^^1^^

Substantial shifts are also taking place in the geographical distribution of the rural population of the non-socialist world, which has grown in recent decades exclusively in the agrarian and primary commodity producing countries. In the industrially developed countries there has been an absolute fall in its numbers, while it has increased by more than two-thirds in the developing countries as a whole, and exceeded 1,600 million at the end of the 70s.

In the principal economic centres the complete ousting of the petty producer from agriculture was completed, or almost so, in the postwar decades. Engels pointed out the objective inevitability of this in his time, remarking that

the development of the capitalist form of production has cut the lifestrings of small production in agriculture; small production is irretrievably going to rack and ruin^^2^^.

_-_-_

~^^1^^ By the mid-80^ these giant urbanised zones will (according to UN forecasts) include the following cities (the assumed population in 1985, in millions, is given in brackets): Mexico (17.9), Sao Paulo (16.8), Bombay, Cairo, and Calcutta (12.1), Rio de Janeiro (11.4), Caracas, Karachi (9.2), Delhi, Djakarta (7.7), Manila, Teheran (7.9). The megalopolises in capitalism's centres will include: Tokyo (25.2), New York (18.8), Los Angeles (13.7), London (11.1), Paris (10.9). According to these same forecasts, there will be more cities in the world at the end of the century with populations greater than ten million than there worn cities of » million at the beginning of it.

^^2^^ Frederick Engels. The Peasant Question in France and Germany. __NOTE__ Footnote cont. on page 130. __PRINTERS_P_129_COMMENT__ 9---0170 129 In the majority of emancipated countries that have taken the road of capitalist agrarian relations, this process is developing with increasing force, but attempts to force its pace are still complicated by the low level of development of the other spheres of their economies, above all of industry.

The proportion of the industrial countries in the total rural population consequently fell by half in the 50s through 70s, while it rose from less than 75 per cent in the developing countries to 90 per cent. As a result there was a considerable extension of agrarian overpopulation in the latter. This enormous overpopulation, which was long a heavy burden on their economies, still remains one of the most disastrous social 'side-effects' accompanying their economic growth under capitalism.^^1^^

An increasing amount of world capitalism's rural population is thus concentrated in developing countries, above all in Asia and Africa, where the rapidly growing towns are unable to absorb the villages' immense surplus of manpower. At the beginning of the 80s around two-thirds of this rural population lived in Asia and more than 20 per cent in Africa. The only major region where its proportion has begun to fall is Latin America, and there too, in fact, it still maintains its tendency to grow in absolute terms (increasing by more than 40 per cent in the period under review). In the coming decades the marked imbalance will apparently not be smoothed out, but will become rather more acute. In fact, all in any way valid long-term _-_-_ __NOTE__ Footnote cont. from page 129. In: Karl Marx and Frederick Engels. Selected Works (in throe volumes), Vol. 3 (Progress Publishers, Moscow, 1976), p 458.

~^^1^^ In this connection Lenin's statement that 'in the "border regions" of capitalism (i.e. those countries and those branches of the national economy in which capitalism is only just emerging and clashing with pre-capitalist conditions) the growth of poverty---not only ``social'', but also the most horrible physical poverty, to the extent of starvation and death from starvation---assumes a mass scale' has not lost its actuality today (A Draft Programme of Our Party, Collected Works, Vol. 4, p. 234). Many capitalist publications provide evidence of the scale of this process. The American Nation (Nov. 5, 1973), for example, wrote: 'Each night a billion and a half people in the nearly 100 developing nations of the Third World go to bod hungry' (p 458). The 1978 report of the World Bank on the economic position in these countries said: 'About 40 per cent of the population of developing countries, nearly 800 million people, are still living in absolute poverty. The majority of them are in rural areas' (World Development Report, 1978, Washington, D.C., 1978, p 7).

130 demographic forecasts envisage a progressive reduction of the rural population in capitalist countries and an inevitable growth of it in developing ones by at least a third by the end of the century.

is there, however, any real possibility that the agriculture of developing countries will be able to support the burden of new hundreds of millions of surplus agrarian population in the coming period, and provide the extra labour force with productive employment, albeit minimal, without radical socio-economic reforms in the structure of social production? There is no doubt about the extremely pressing nature of this issue, in the present situation, which goes far beyond the limits of demographic forecasts. For the ever-increasing underemployment of the manpower of the periphery of world capitalism is now becoming a burning question of universal human importance calling for close attention.^^1^^ According to the International Labour Organisation, 40 per cent of the labour force of developing countries either had no work at all in the mid-70s or were underemployed, and received less than the most minimal wage for their work. More than three-quarters of them, i.e. almost 230 million, lived in rural areas.^^2^^

The absence of sufficiently reliable estimates of the agrarian overpopulation in developing countries is a factor making it extremely difficult to determine exactly the scale and dynamics of employment in the whole world capitalist economy. The inadequacy, in turn, of the data on full or partial unemployment in industry and other spheres of production in most developing countries, and in some capitalist ones, is also an obstacle; so, too, are the constant upswings and recessions in employment through the effect of marked cyclic and non-cyclic fluctuations of the capitalist economy.

_-_-_

~^^1^^ Many aspects of this problem have been dealt with in the series 'The Economics and Politics of Developing Countries' prepared by the USSR Academy of Sciences' Institute of World Economics and International Relations, and published by the Moscow Mysl Publishers. A detailed analysis was made in the FAO's study Agriculture: toward 2000 (Rome, 1979), which brought out, in particular, that the manpower in developing countries' agriculture numbered more than 700 million in the miri-70s. In other words, it had increased by 150 million since the beginning of the 50s. Even greater growth is expected in the 80s and 90s (p 10).

~^^2^^ Employment, Growth and liaaic Needs: A One-World Problem (Praeger Publishers, New York, London, 1977), pp 17, 18.

__PRINTERS_P_131_COMMENT__ 9* 131

Still, however, there arc composite indicators in the international statistics that enahle us to estimate, with the necessary degree of comparability, the growth trends in the long term of that part oi' the population that could be involved in the reproduction process. This type of indicator primarily includes estimates of the scale of growth of the gainfully employed population, analysis of which helps us arrive at the characteristics of the development trends of productivity for the different groups of countries.

The imbalance in the postwar growth of the able-bodied population between the two groups of the capitalist economy has increased immensely. Over the twenty years of the (i()s and 70s, for example, their numbers increased twice as slowly in the developed capitalist countries as in the developing ones. Consequently there was a tendency for the proportion of the former in the total gainfully employed population of the capitalist world to decline.^^1^^

in the next 15 or 20 years the main directions of the operation of this tendency are unlikely to change.

From the fact that the decisive mass of the population that will begin to work at that time in both groups of countries already exists, we can assume that around three-- quarters of the gainfully employed population of today's nonsocialist world will be concentrated in the now developing countries of Asia, Africa, and Latin America in the mid-80s, and around i'our-iifths by the end of the century.^^2^^ But this labour force will still obviously be relatively unskilled in the main while the most skilled part will be concentrated as before in the economically developed centres.

In that connection the problem of the migration of various categories of workers between countries with different levels of development will be aggravated. In many industrial countries there has been a fast growing shortage since the war of national personnel in the mass trades that do not call for any degree of professional skill. The shortage began _-_-_

~^^1^^ This proportion fell (according to the ILO figures) to 30 per cent in the early 70s, against 34 per cent in the early 50s. (Sec ILO. Labour Force Projections, 1965--1983, Geneva, 1971, Parts I-V, Tables 1 and 4; idem. Labour Force and World Population Growth, Geneva, 1974, Table 13, p 74).

~^^2^^ The ILO estimates that the total labour force of these countries will come to 1,400 million by the end of the conlury, or almost double compared with the mid-70s. (See Employment, Growth and Basic Needs, P 19.)

132 to be covered more and more by importing labour from economically less developed countries. In the 70s thi* shortage constituted around ten or twelve million, and may (according to some estimates) increase several times over again by the end of the century.

As for the developing countries the inherent tasks of their socio-economic development will steadily lead, in the first place, to an increase in their need for well-trained, skilled personnel, a need that cannot be wholly met simply from local resources. The possibilities for attracting specialists from outside, however, are greatly limited by the increasing need for such personnel in the developed countries themselves, and also by the comparatively high standard of their pay there. It is not fortuitous that a mounting portion of the West's funds for 'technical aid' are spent on the specialists sent to developing countries, and on training students.

At the same time, monopoly capital, utilising the laws of capitalist competition, is everywhere broadening the `import' from developing countries of the most talented and capable part of their intelligentsia and skilled specialists. The 'brain drain' from Asia, Africa, and Latin America has become a marked feature of the international migration of labour.^^1^^ The spontaneous flow of surplus labour between separate developing countries has also become unparalleled in scale in recent decades.

All these objective `costs' of the internationalisalion of social production are making world capitalism's demographic problems extremely complicated and increasing their tension. At the present level of development of mankind's productive forces the registering, regulation, and planning of manpower are already becoming more and more urgent on both the national and the international level, but capitalist society, rent by antagonistic contradictions, is unable in practice to face up to dealing with them. They can only be coped with by a more rationally structured progressive social system, a thought, that Engels expressed as follows:

If it should become necessary for communist society to regulate the production of men, just as it will have already regulated the _-_-_

~^^1^^ In the decade 1962--72 alone, according In the official data, around 75,000 qualified specialists (scientists, engineers, doctors, etc.) took up residence in Ihe USA, more than (10,00(1 \n Givat, Britain, and nearly 38,000 in Canada (ILO. Ibid., p 130).

133 production of things, then it, and it alone, will bo able to do this without difficulties.^^1^^

In most areas of the capitalist world there has been a tendency since the war toward a certain reduction of the proportion of the gainfully employed population in the total population. The operation of this trend is linked in the main with the considerable changes in the age structure of the population, especially in the developing countries, where there has been a marked extension of the age brackets of people who have not yet reached maturity. In many capitalist countries, above in Western Europe, another factor underlies the lowering of the proportion of the ablebodied, namely the rise in the expectation of life and increase in the age bracket of elderly people of pensionable age.^^2^^ Analysis of the age factors leads to the conclusion that an increasing part of the most active age brackets will probably be concentrated in coming years in the developing countries, from which there follow very complex demographic, and consequently socio-economic, consequences for further shifts in the distribution of the main productive force within the world capitalist economy.

The indices of the dynamics and scale of the distribution of manpower in the two groups of countries will become even more significant when they are compiled from the data cited above on growth of the aggregate product. This comparison makes it possible to bring out the long-term trends in growth of the social productivity of labour calculated on the labour force potentially existing in the non-socialist world, i.e. on the size of the gainfully employed population. This productivity can be expressed most generally as the difference between the mean annual growth rates of the GDP in every macro-economic system (or its sub-systems) and the corresponding indicators of the growth of manpower.

An attempt to determine these trends from UN _-_-_

~^^1^^ Frederick Engcls. Loiter to Karl Kautsky iu Vienna, 1881. In: Karl Marx and Frederick Engels. Selected Correspondence (Progress Publishers, Moscow, 1965), p 315.

~^^2^^ At the beginning of the 80s the proportion of persons aged 00 and older in the industrially developed cotmtrics was approaching one-fifth and was approximately three times as high as in developing countries. The picture is quite different as regards the younger age groups. The proportion of children (under 15), for example, is less than a quarter in the first group of countries and around two-fifths in the second. (World Development Report, op. cil., p 40.)

134 international statistics is made in Table 11. Because of their generalised character the results arrived at are very approximate and require further elaboration and concretisation both for the groups of countries and their leading industries and for the various periods. It follows from them that, with all sorts of fluctuations of production and employment in the two groups of countries, the mean annual growth rate of potential productivity of social labour, calculated from the dynamics of the gainfully employed population over the whole period considered was around 3.1 per cent in the centres of capitalism and 3.2 per cent in the developing countries. This relation was extremely unstable, however, and was by no means typical for all the postwar decades.

Table 11 Mean Annual Growth Rates of Labour Productivity for Capitalist and Developing Countries (in percentages) Period Capitalist countries Developing countries 1950--1960 3.0 3.0 1960--1970 3.7 3.8 1970--1980 2.2 3.3 Sources: ILO. Labour Force Projections, 1965--1985', UN Yearbook uf National Accounts Statistics, 1969', UN Statistical Yearbook and Monthly Bulletin of Statistics for the appropriate years.

In the first years after the war the considerably accelerated economic development in the main agrarian economic regions, and the comparatively low rates of manpower growth preserved in them from the colonial epoch, led to a tendency toward accelerated growth of their extremely low productivity of social labour, reaching the average indices of the main centres of capitalism in the 50s. In the 60s, however, there was again a revival of capitalism's inherent line toward widening of the gap in this respect belwcen its centres and periphery, which was furthered by the industrial countries' active taking up in those years of the advances of the scientific and technical revolution, though within the system as a whole insuperable inner contradictions fraught with new economic upheavals continued to accumulate.

135

The extremely acute crisis processes that developed in the rnid-70s in the world capitalist economy were marked by an unprecedented weakening of the economic effectiveness of exploiting the advances of this revolution in practice in all Ihe industrially developed countries. The substantial slowing of growth and later the absolute fall in production of their aggregate GDP could not help being reflected as well in the productivity of social labour. Calculated per head of the gainfully employed population in the 70s it proved to be much below the level of the 60s, which led to a marked lowering of the dynamics of its growth shown in Table 11 for the capitalist countries. At the same time productivity rose in the developing countries al faster rates, with the result that in the 70s there was a certain narrowing of the gap in these indicators between capitalist and developing countries.^^1^^

The major postwar economic crisis of the mid-70s laid bare the growing instability of the world capitalist system and the extremely contradictory character of the effect of modern scientific and technical progress on it as regards growth of society's productive forces. It would hardly be proper, however, to say that the objective patterns leading to the creation of such a vast imbalance in the levels of the social productivity of labour between the two groups of countries at the different poles of this system will begin to lose their former significance in coming years. In all probability this imbalance and steep fluctuations of its dynamics will remain essential features of the world capitalist economy's further development.

The processes mentioned indicate simply certain very general resultant trends in the postwar shifts in the economies of capitalist and developing countries. Within each of these groups there is in turn a very wide range in the levels, dynamics, and conditions of the growth of social productivity. Above all we must draw attention to the considerable strengthening of unevenness in the distribution of the productive forces in the developed capitalist countries in recent decades.

_-_-_

~^^1^^ Al the beginning of the 80s, however, this gap remained extremely significant, and we calculate that it could then be expressed on the whole by a ratio of roughly 11:1 in favour of the economic centres of capitalism.

136 __ALPHA_LVL3__ § 3. The Industrial Centres of Capitalism

The decisive part of (lie economic potential of capitalism is still, in spite of the very considerable changes in the distribution of its productive forces after World War [I, concentrated in two principal regions--Western Europe and North America. This is due to the whole preceding course of their historical development, especially in the monopoly stage. At the beginning of the 1080s more than 70 per cent of the aggregate product of world capitalism was created in these regions, or nearly seven-eighths of the gross production of its industrial centres. The task of studying the __PARAGRAPH_PAUSE__ F i g. 8 Weight of North America and Western Europe in capitalist countries' tola! production of GDP (in percentages) [tide; 3W 199-4.jpg 1950 1960 12 I CAPITAL I:;T| COUNTRIES! 1965 1970 1975 1981' * Index of capitalist countries' growth of GDP (1950=10(1) " Ksliniated .Sources: |!N Yearbook of National Accounts Statistics, Statistical Yearbook. and Monthly Bulletin of Statistics for the relevant years. __PARAGRAPH_CONT__ changing balance of power between the West European and North American regions therefore figures largely in any comprehensive investigation of the process of the postwar shifts in the ratio of the productive forces of these centres. 137 An approximate idea of the postwar dynamics and role of North America and Western Europe in the total GDP of all capitalist countries can be got from Fig. 8.

As a result of World War II there was an abrupt redistribution of forces between the principal countries of monopoly capitalism and their opposing groupings of that time, but the total share of the production of North America and Western Europe within the shrunken boundaries of the imperialist system after the war not only was not reduced but even rose a little. At the turn of the 40s and 50s around 94 per cent of the goods and services of all the countries of this system were produced in them.

The postwar disorganisation in the economies of the overwhelming majority of West European countries and Japan favoured establishment of the domination of the United States in the capitalist world, production capacities being concentrated in it that considerably exceeded those of all the other capitalist countries taken together. Major sectors of the economy of Canada, where around 6 per cent of the GDP of the North American region was created in 1950, were moreover under full American control.

The economic expansion of U.S. monopolies had acquired a broad scale in other developed capitalist countries as well, since the latter's monopoly groupings were at best only in a condition to claim the position of junior partners of their American rivals. U.S. military and political superiority in the non-socialist world was then unchallenged. Priority of the dollar had also been established in the international monetary system. It would seem, at first glance, that there was no force that could oppose the gigantic growth (as a result of the war) of the expansionist strivings of the American monopolies.^^1^^

And still the attempts to consolidate hegemony of one country's monopoly capital in the imperialist system further, or to maintain it for a long time, proved flimsy. The _-_-_

~^^1^^ Even during World War II the true aims of U.S. imperialist circles were formulated by Virgil Jordan, the President of the National Industrial Conference Board, who said in a speech widely reported at the time: 'Wo have no alternative, in truth, than to move along the road we have been travelling in the past, quarter century, in the direction which we took with the conquest of Cuba and the Philippines and our participation in the last World War.' (Cited from Victor Perlo. American Imperialism, International Publishers, New York, 1951, p 123.)

138 objective processes governed by operation of the law of the unevenness of capitalist countries' economic and political development, were characterised by new shifts in the distribution of the productive forces within modern capitalism.

Although the GDP doubled in North America in the 50s arid 60s its proportion in the world aggregate fell by around 5 per cent. The volume of production in Western Europe rose by 160 per cent in the same period and by nearly 360 per cent in the other capitalist countries, mainly because of Japan. Consequently, as is seen from Fig. 8, there was a corresponding growth of the proportion of these two last groups, and the gap between the GDP of North America and Western Europe was patently reduced.

The operation of this trend during the cyclic development of modern capitalism, it is true, like the processes in general considered here, has not been displayed evenly or stably. After the world crisis of 1974--75, for instance, the gap between North America and Western Europe widened a little, but at the turn of the 70s and 80s, because of a substantial fall in GDP growth rates in the USA and Canada, it again narrowed. Since the late 60s Western Europe's share in the total production of capitalism's industrial centres has in turn begun to show a tendency to fall (because of the speeding up of the economic growth rates of other developed capitalist countries).

This has all led to the total weight of North America and Western Europe in the total GDP of all capitalist countries beginning gradually to decrease in the past 15 or 20 years, for all the considerable fluctuations in their development rates. By the beginning of the 80s it was 8 per cent lower than at the beginning of the 50s, and 5 to 6 per cent lower than the 60s. It is unlikely that one need consider this line of development a temporary one.^^1^^

In the capitalist countries not located in the West European and North American centres, the principal production capacities are concentrated in Japan.^^2^^ It is the rapid postwar _-_-_

~^^1^^ We must hear in mind, when analysing the causes of this development, the features of the cyclic movement of the economies of the various regions and countries within the world capitalist cycle. In this respect the fact that postwar crisis falls in production were deeper and more protracted in North America than in the other capitalist centres deserves attention. (See the next chapter.)

~^^2^^ At the beginning of the 80s nearly four-fifths of all these countries' production, taken together, was concentrated in Japan.

139 development of the Japanese economy that has governed the substantial growth of the role of this group of countries in the world capitalist economy. At the end of the period reviewed their share in the aggregate production of goods and services of capitalism's industrial centres was more than 14 per cent, as against roughly 8.5 per cent at the very beginning of the 60s, and 6.5 per cent at the turn of the 40s and 50s. It is not fortuitous that the monopoly circles of the USA and Western Europe are increasingly alarmed by the possibility that the Japanese 'centre of force' will take the lead in the world capitalist economy by the end of this century.^^1^^

The second area of significance among these 'other countries' is Oceania, which includes Australia and New Zealand. But they lag markedly behind Japan and the other leading capitalist countries in both the scale and the rates of their development of production. At the end of the period under review their production was only a fifth of Japan's, while their GDP had been more than half that of Japan's at the beginning of the 50s. Oceania, and in particular Australia, has great, still unutilised potential resources, which allows us to assume a rise in the development rates and role of this region in the coming period. We must also remember, moreover, that the countries of Oceania are being more and more distinctly drawn into the orbit of economic influence of the Japanese 'centre of force'.

The rivalry of the monopolies in the struggle to divide and re-divide spheres of political domination and economic influence can only be studied in motion. At the same time it would be wrong to reduce this struggle simply to an analysis of imperialist contradictions within the limits of separate countries or even regions. The whole system of capitalism is becoming its field. As Lenin wrote:

Monopolist capitalist associations, cartels, syndicates and trusts first divided the home market among themselves and obtained more or less complete possession of the industry of their own country. But under capitalism the home market is inevitably bound up with the foreign market---As the export of capital _-_-_

~^^1^^ The possibility of such a course of events is not sufficiently real, in our view, considering the specific features of Japan's economy (a very acute lack of raw materials; its immense dependence on foreign markets; the limited character of its territory, and so on). It must not be ignored, moreover, that a further strengthening of its position in the world capitalist economy is a definite probability.

140 increased, and as the foreign and colonial connection;, and 'spheres of influence' of the big monopolist associations expanded in all ways, things `naturally' gravitated towards an international agreement among these associations, and towards the formation of international cartels.^^1^^

In those conditions a need arose for a comprehensive analysis of the process as a whole.

A new level of the international concentration of capital and production has been reached in recent decades, incomparably higher than at the beginning of the century. But whatever the degree, forms, and methods of concentration, Lenin's methodology of studying shifts in the structure and distribution of production among the principal imperialist powers remains of first-rate value for estimating the important development trends of the system of international capitalist division of labour and inter-imperialist contradictions. These shifts stem from processes developing within the national economies and characterising the position of each country in the world economy to a decisive extent.

The tendencies noted above toward growth of production in the industrially developed regions have in fact been determined in the postwar period, as throughout the preceding history of monopoly capitalism, by a handful of powers, whose composition has essentially remained unchanged, limited to the Bix Six (the USA, Japan, and the four West European powers, Great Britain, West Germany, France, and Italy).

Although there have been changes in the balance of power of the Six that have been of considerable importance in their long-term world economic consequences, more than four-fifths of the GDP of all capitalist countries was produced in them at the end of the 70s, a fact that explains one of the deep-lying causes of the maintenance of their dominant position in the decision of the world economic and political problems of modern capitalism. The tendency noted in postwar years toward a gradual reduction of the weight of the `great' powers in the aggregate production of capitalist countries has primarily been associated with the very substantial fall in the postwar share of the USA.

The objective conditions were thus brought about for an _-_-_

~^^1^^ V. I. Lenin. Imperialism, the Highest Stage of Capitalism. Collected Works, Vol. 22, p 246.

141 inevitahle gradual growth of instahility and inner contradictions in imperialism's system of world economic ties that arose soon after the war under the aegis of the United States.

The quite slow economic growth of Great Britain, the country that was the USA's closest junior partner in the building of this system, in turn helped weaken and undermine it. The share of Great Britain, once the mightiest power in the capitalist world, in the aggregate GDP of today's industrial centres of imperialism has fallen by nearly 40 per cent. At the same time there has been a relative consolidation of the positions of the other members of the Six (West Germany, France, Italy, and especially Japan), though with substantial differences (see Table 12).

Table 12 Weight of the Leading Countries in the Aggregate GDP of Capitalist. Countries (in percentages) Country 1960 1965 1970 1975 1081 USA 43. 4 42 .2 38. 8 37. 6 36 .6 Great Britain 6. 5 5 .8 5. 1 5. 0 4 .3 France 7. 4 7 .6 8. 0 8. 4 8 .3 West Germany 11. 1 11 .0 10. 8 10. 3 10 .3 Italy 4. 4 4 .3 4. 5 4. 3 4 .4 Japan 6. 6 8 .1 11. 3 12. 4 13 .8 Canada 3. 1 3 .1 3. 2 3. 0 3 .5 Total of above countries The rest 82.1 17.0 81.7 18.3 81.6 18.4 81.3 18.7 Sources: UN Ktntistirnl Yearbook 1978 (United Nations, Now York, 1979); UN Handbook ol World Development Stctistics (United Nations, New York, 1970); OECD. Economic Outlook, 1982, 0.

As a result the distribution of the production capabilities of the main capitalist powers had acquired qualitatively new features at the beginning of the 80s, different from both the prewar and the first postwar years. The powers that were defeated in World War II, whose economies suffered a smaller burden of militarisation immediately afterward because of certain circumstances, strengthened 142 their position in the capitalist world economy at the expense of the powers (chiefly the USA and Great Britain) that headed the imperialist camp after the war ;md were striving to take on responsibility for its fate. The sinking of Great Britain from second place among the Six to next-to-last, and the rise of Japan from last to second place, as regards GDP, are very indicative. West Germany perceptibly strengthened its influence, and only France, of the West European victor-powers, managed to consolidate its position a bit as regards its weight in the aggregate production of the principal capitalist countries.

A very peculiar situation built up during their uneven economic development in the 70s and early 80s because of the extraordinary deepening of the whole set of world capitalism's contradictions. Its peculiarity consisted primarily in the process' having taken place, as we showed above, on the background of a general and relatively protracted slowing down of the economic growth rates of all capitalist countries, which showed particularly clearly after the 1974--75 economic crisis.

It has therefore been a matter, of late, of the maximum prevention of a further crisis decline in rates of production, in the course of the bitter rivalry of the imperialist monopolies and powers on their home and the world markets, rather than of raising them. In that connection the shifts in the ratios of the industrial potentials of the leading industrial powers considered above show only the relative changes in their positions compared with other powers. The continuing rise in Japan's share of the gross product of the Big Seven, for instance, is essentially due to the fact that its rates of general economic development, although down 60 per cent in the 70s on the previous decade, all the same remained markedly higher than those of its main rivals. In the last analysis the changing balance of forces in the main centres of modern capitalism has been primarily determined by their rates of industrial development, which fell very much more in the period covered by Table 13 than the growth rates of their GDP.

The shifts in the distribution of the productive forces noted above cannot, however, diminish the fact that the United States is still the leader among the capitalist powers because of its predominant economic might. Its share in the aggregate product of the Six, it is true, has shrunk, but more 143 goods and services were still produced in that country at the end of our study period than in all its principal imperialist rivals. The United States had a GDP four times that of Japan at the beginning of the 80s and almost double that of the four West European countries taken together (see Fig. 9). Some of the GDP of the other capitalist countries (apparently at least 6 or 7 per cent on the average), it must be noted, moreover, was created then either under the direct control of American transnational corporations, or with their direct involvement.

The economic superiority of the USA, which grew by leaps and bounds during the two world wars, is rooted in the pro-monopoly period of capitalism. Our figures, based on the work of the British economist Angus Maddison and UN statistics, permit us to say that the GDP of the USA __PARAGRAPH_PAUSE__ Table 13 Annual Growth Rates of the GUP and Industrial Production of the Leading Capitalist Countries (in percentages) Country GDP Industrial production (including l 19fiO-l!l7(> 1970--11)81 19(i()-1970 1970--11181 USA 3.8 2.8 3.6 3.0 Great liritain 2.4 1.5 2.4 0.3 France; 5.7 3.4 7.0 2.4 West (iermanv 4.7 2.5 5.1 1.9 Italy 5.3 2.8 (5.3 2.9 Japan Canada 10.7 5.4 5.2 3.5 10.9 6.2 4.4 3.3 Total 2.9 5.2 Sources: Calculated from UN Handbook oi World Development Statistics 197!)', UN Ktntixticnl Yearbook 1979/80;WN Monthly Bulletin u1 N/«/i;;(ics, 1(182:5; The OECII Economic. Outlook, 1982,0. __PARAGRAPH_CONT__ was already double that of Great Britain at the beginning of the 1970s, though it was still a little less than that of West European countries.^^1^^

_-_-_

~^^1^^ See Angus Maddison. Economic Growth in the West (The Twentieth Century Fund, New York, Allen & Unwin, London, 1904), p 28; UN Statistical Yearbook 1975 (United Nations, New York, 1976), pp 700--702.

144

The loading position of the USA was markedly strengthened in the monopoly stage. In 1913 the USA produced almost as much output as Great Britain, France, Germany, and Italy taken together. In the early interwar period (1920) (according to the Soviet economists Bolotin and Kudrov) the volume of U.S. production was around half the GDP of the industrial centres of capitalism (within their contemporaneous frontiers), was about equal to the total GDP of all the countries of Western Europe, and was 25 per cent greater than that of the four main ones.

From the end of the 20s the U.S.'s role in the world economy began to decline noticeably, and it felt the weight of the economic crisis of 1929--33 more than the other capitalist powers. On the eve of World War II the U.S. share in the aggregate production of capitalism's industrial centres had fallen to 41.7 per cent, but was still 230 per cent that of Great Britain (12.5 per cent), 340 per cent that of West Germany (9.(5 per cent), 380 per cent that of France (8.7 per cent), and six times as great as Japan's (7.0 per cent).^^1^^

Generally speaking, long-term analysis of the constant fluctuations in the relation of the main powers' production capacities suggests that the position of the USA in the GDP of imperialism's centres was substantially weakened at the beginning of the 80s compared with the levels reached after the two world wars. Furthermore, their weight seldom fell so low during the whole preceding history of monopoly capitalism, yet, being still much superior to their main rivals in economic power, area, natural resources, and population, they still retain a leading position in the world economy.

It would obviously be insufficient to explain the changes mentioned just by transit factors stemming from the specific conditions of the development of production in these countries, taken separately, for one year or another. Changes like these on the long-term plane are ultimately determined by the deep-seated patterns of monopoly capitalism brought out by Lenin at the beginning of this century, patterns that include tendencies to a levelling of the development of its business centres.

_-_-_

~^^1^^ Calculated from B: Bolotin and V. Kudrov. The Throe Con I res in World Capitalism (an Experiment in International Economic Comparison). Mlriirnya i-koiminikn i mezlidunarodniye otnoslicniya, 1972, 3:98--99.

__PRINTERS_P_145_COMMENT__ 10---0170 145 199-5.jpg [146]

This trend, which reveals an important feature of the intensification of the uneven development ol Ihe capitalist powers, like other objective patterns at the stage of imperialism was not and could not he stable. On the one hand, its effect has been repeatedly disrupted and broken by the military and political, and cyclic, upheavals of the world capitalist economy. On the other hand, it has been intensiiied and stimulated by the internationalization of capital, which in turn has promoted a concentration and specialisation of production on an international scale, mainly in periods of relatively peaceful development.

The processes leading to this levelling have been very distinctly manifested during the mounting impact of the scientific and technical revolution on the productive forces at a time when world socialism has significantly limited monopoly capital's possibilities of unleashing global destructive wars and resolving inter-imperialist contradictions by force of arms. Graphic evidence of that is provided by comparative indicators of the total GDP per capita in the countries where the main economic potential of modern capitalism is concentrated (see Fig. 10).

It will be clear from the facts cited that the unevenness leading to gradual closing of the gap between the development levels of advanced capitalist countries is being converted into an integral world economic problem of monopoly capitalism. With time, as these levels converged, it has been becoming more and more pressingly important, in fact, for the many phenomena determining both the current and the long-term development trends of capitalism's whole system, of international relations to be investigated. This tendency makes it possible, as well, to determine more exactly certain long-term consequences of the various groupings' continuous competition, and the chances, limits, and prospects of their temporary alliances and blocks in the postwar capitalist world.

It has begun to appear probable that some of the main imperialist countries will succeed in approaching the USA in such important economic indicators as GDP per capita even before the end of this century, and in individual cases overtaking them. At the beginning of the 50s such a prospect still seemed unrealisablo in practice, especially for the powers that had been weakened by the war and had fallen into economic and financial dependence on American capital, at __PARAGRAPH_PAUSE__ 147 Fig. 10 Ratio of GDP per capita in developed capitalist countries (USA=100 per cent) ioo-| 30-j eo-- 70-- 60-- 50-- 40-- 30-- 20-- 10-- 199-6.jpg 199-7.jpg 199-8.jpg 3REAT BRITAIN 1960--19E1 * Estimated Sources: UN Siaiisiica! yearbook and Monthly Bulletin oj Statistics, and OECD Main Economic Indicators periods. Calculated in comparable 1975 prices. for the relevant [148] __PARAGRAPH_CONT__ least in any foreseeable time. In 1950 France lagged behind the USA in per capita production by more than (i() per cent, West Germany by almost two-thirds, Italy by more than 80 per cent, and Japan by almost 90 per cent. In Great Britain, which then occupied second place only to the USA, production per capita was 55 per cent of that of the United States.^^1^^

It must be remembered, when analysing the world economic consequences of the shifts brought out in Fig. 10, that the U.S. growth rates of per capita GDP were higher in our study period than in the interwar years, arid higher on the whole than in the first half of the century. At the end of the 70s they were almost 80 per cent higher than in 1950 (in 1970 prices), but the dynamics of their growth was clearly slower than in the USA's main imperialist rivals, Great Britain excepted.

Consequently there was a marked redistribution of forces within this group of countries, and at the same time a certain convergence of levelsof development. The Japanese economy, for instance, which still lagged around 45 per cent behind Great Britain in this respect had surpassed the level of the latter by 50 per cent two decades later. Italy, which had been in bottom place in the Big Seven, had come very close to Great Britain, although, like Britain and Japan, it had not reached the average European level of per capita GDP at the end of the period analysed. At the same time France and even more West Germany were considerably above this level, the latter proving to he even a little above the USA at the beginning of the 80s.

These facts by no means exhaust analysis of the extreme contradictions and trends spontaneously operating in the present capitalist world toward intensification of the uneven economic development of separate regions and countries, but they do make it possible to discern the general contours of a very intricate process, namely, the shifts in the'secloral structure of the distribution of their production, and so to bring out several characteristic features of this mounting _-_-_

~^^1^^ This enormous disproportion undoubtedly largely reflected the economic consequences of the \vnr, but it was based on the course of capitalism's whole preceding development. Suffice if to recall thai, at the beginning of (he period under review, the economies of I lie countries that had suffered most from the war had already passed the prewar level in the main indicators of the development and inlernationalisation of production.

149 unevenness. If we estimate these shifts in the light of the indicators of the dynamics of the main industries that contribute to the aggregate product of all the developed capitalist countries, and primarily of North America and Western Europe, then calculations based on UN statistics make it possible to draw the following conclusions, highly important for our further investigation.

The sphere of material production in North America (industry, agriculture, building) developed as a whole more slowly (with a very broad range of long-term and annual fluctuations of growth rates in the industries of each country taken separately) than in the countries of Western Europe. There had been even a more considerable slowing of North America's growth rates compared with the capitalist countries of other geographical areas, in which Japan's unusually rapid economic progress played a paramount role in the first postwar decades. We estimate that the volume of production in this sphere increased on the whole by 160 per cent in the first group during the 50s, 60s, and 70s, by 240 per cent in the second group, and by more than 500 per cent in the last. The gap between these regions, moreover, was not evenly closing in the various industries. It was closing mainly by industry and building. In agriculture, in which production developed at low rates almost everywhere after the war, North America was a little behind Western Europe, and later fell obviously behind the other capitalist countries.

As regards the sectoral dynamics of the sphere of circulation and services in the main regions, large-scale changes also developed, which can be attributed initially to several resultant indicators. The total volume of the product of the sectors of non-material production trebled in Western Europe over the same period, increased by 180 per cent in North America and nearly eightfold in the other countries where it had been historically at a relatively low level. Here, too, the levelling was accompanied with an intensifying of the unevenness of development.

The most important shifts in the structure of the gross product in the three groups of countries considered arc summarised in Table 14. Because of their high degree of statistical generalisation these figures cannot claim to be absolutely accurate. Still, in our view, they reflect the long-term processes actually taking place after the war with sufficient reliability. They can also be used as an approach to 150 forecasting these processes, as they indicate the most probable trends in the movement of the interconnected tendencies both toward a heightening of unevenness and to a levelling up of the sectoral structure of capitalist countries' GDP.

It follows from Table 14 that there was a clear convergence of development levels between North America and Western Europe in the sectors of material production, and above all in industry, in the postwar years. It must also be recalled that as regards total volume of industrial output (in fixed 1970 prices) the West European region came noticeably closer to the North American, although the gap between them remained "quite considerable in per capita terms, being around 40 per cent in contrast to the nearly two-thirds of the early 50s.

The lag of the other capitalist countries, which noticeably approached the West European level in industrial production __PARAGRAPH_PAUSE__ Table 14 Industrial Structure of the Distribution of Production in Capitalist Countries (in percentages)* North America Western Europe Others + + + Sector CO Ci [^ OS CO Oi O 02 01 00 01 CD Oi r^ OS Oil Ci 0 0 0 O O o O o o CO 3O CD 00 ;o I--- 00 Oi Oi 31 Oi 01 01 Oi Oi S3 Industry 43 39 37 47 46 43 10 15 20 Agriculture 35 32 30 51 50 50 .14 18 20 Building & construc-- tion 40 33 31 49 51 47 11 16 21 Transport & commu-- nications 43 42 40 48 44 42 9 14 18 Trade & commerce 54 49 47 35 36 35 11 15 18 Others (services) 51 48 43 38 37 38 11 15 19 * Total production in each sector tor all groups of countries tor the appropriate years---10(1 <- Estimated .Sources: rounded figures from UN Ilandbnoh of World Development Statistics 7.97.9, Stiitislicnl Yt'iirlmal: imn/fin, and Monthly Bulletin ol Statistic* for 1082. __PARAGRAPH_CONT__ per capita, was substantially reduced at the same time, whereas they had been at less than half that level in the early 50s, but the difference between North America and the 151 industrial countries of other geographical areas will in all probahility he reduced in the immediate future, though it will remain quite deep for some countries.

The growth rates of the economic capability of Western Europe and other capitalist countries are inseparable from the development of construction in them. This has been the second industry (afler agriculture) in which Western Europe has exceeded North America in absolute terms since the war, though it still lags behind in per capita terms. At the same time the other capitalist countries have come fully up to the European level; whereas the contribution of building to the GDP in them used to be traditionally in last place, now substantially exceeds agriculture. At the end of the 70s the ratio of building and agriculture in the aggregate social product of all main groups of capitalist countries is estimated at 1.3:1 in favour of the former.

The international political consequences of the structural shifts that have taken place in the distribution of farm production in the capitalist centres are no less important than the economic ones. They are not as impressive and marked, it is true, as in industry and building, largely because of the historical features of the way the uneven distribution of the productive forces came about in this industry.

The West European area, which long surpassed the North American in the absolute scale of farm production (except during the world wars), has steadily fallen behind the USA and Canada in per capita production, especially of food. During the first postwar years this gap began to be rapidly closed, and in the 60s, when farming was transferred onto a basis of machine industry, West European per capita production was already around 60 percent of the North American level. The subsequent convergence was not, however, clearly expressed, since the production of certain food and fodder crops accelerated in the USA and Canada and was more and more oriented on the expanding demand of the foreign market. In some years the tendency to close the gap iii general disappeared, and was reversed.

The close dependence of agrarian production on natural conditions, plus the continuous fluctuation of market conditions, makes it difficult to distinguish stable trends and growth prospects in separate regions and countries over comparatively short periods. Still, the regional lines of the longterm development of agriculture noted above permit us to 152 assume that the tendency to level up will most likely continue given the potentially increasing shortage of certain types of agricultural raw material and food in the present-day capitalist world economy, above all in its former colonial periphery. (These points will be considered in more detail in Chapters Eight and Nine.)

The decline in the importance of agrarian production in the economies of most developed capitalist countries, it must be emphasised, will probably reach a certain limit, which may be characterised by the weight of agriculture in the GDP of the United States. A similar conclusion follows from Table 15, which shows, in particular, the place of farming in the GDP of capitalist countries.

In addition to the immense peculiarities of the economic structures and proportions of each capitalist country there is certain more or less distinct, regular synchrony in most of them which, objectively reflecting processes developing __PARAGRAPH_PAUSE__ Table 15 Relative Weight of Industries in the GUP of Selected Capitalist Countries (in percentages) Agriculture Industry (including building) Transport, communications, services Country West Ger-- many G 3 53 48 41 49 Great Brit-- ain 4 > M 43 36 53 62 France 10 5 38 37 52 58 Italy 13 7 41 42 46 51 Sweden 7 4 40 33 53 63 The Nether-- lands 1) 4 46 34 45 62 USA 4 3 38 34 58 63 Canada 6 4 34 31 60 65 Japan 13 r> 45 40 42 55 Australia 12 5 37 32 51 63 Xuurce: World Bank. World Ucvclopmunt Hepurt, 1980, [i I 1 u. [153] __PARAGRAPH_CONT__ within the productive forces, is summarised in the quantitative estimates referred to above in the sectoral distribution of production capacities between North America, Western Europe, and the other geographical areas. It is very necessary to clarify this type of synchronism when wo are studying macro-economic systems.

Everywhere there is, for example, a steady decline in the proportion of agriculture in the sphere of material production. In the period under review it fell from 14 to 8 per cent in North America, from 20 to 10 per cent in Western Europe, and from 30 or 31 per cent to 11 per cent in the other areas. At the same time there was a gradual raising of the corresponding proportion of industry almost everywhere in the main centres of capitalism, mainly through the leading heavy industries.

Among the objective processes operating synchronously in the sphere of non-material production the long-term trend toward a raising of the role of services has become of paramount importance since the war. The trend has developed unevenly in the different countries and at various stages, which has promoted the redistribution of the productive forces in the `services' of the main economic centres already referred to. North America has maintained its leading position in this sector to a greater extent than in others. At the end of the 70s, for instance, around 56 to 57 per cent of the whole output of the services sphere of the developed capitalist countries was still produced in the North America, and it was, moreover, the most dynamic sphere of the postwar economies of the USA and Canada.

The superiority of the North American area in per capita production of services was even more marked. At the end of the period under review North America exceeded the average West European level by 160 per cent and was more than three times the level of the other capitalist countries. In this sphere, as in the other main sectors of the GDP, a tendency is discernible in turn toward a levelling up, which is clearly displayed in the consolidation of its importance in the economy of modern capitalism, per capita regional and national indicators included. But even allowing for a very probable gradual intensification of this trend, the existing considerable gap in levels of development will remain a feature of the economies of capitalist countries for the last twenty years of the century.

154

A certain smoothing out of previously formed substantial differentiation of the role and place of trade and commerce in extended reproduction has also been characteristic of the postwar development of these economies. It has come about, as a rule, through a decline in the proportion of trade in their GDP, where it was traditionally high, and through a rise where it was comparatively low. In spite of the gradual convergence of the per capita indicators in this sector, however, more than half of the added value created in the trade and commerce of the developed capitalist countries taken together came at the end of 70s from the North American region, and the per capita gap, moreover, remained particularly wide.^^1^^ Analysis of the postwar trends allows us to conclude that the weight of trade and commerce may hardly change essentially on an average. For most countries, apparently, it will remain between one-sixth*and one-seventh of the GDP.

The regional dynamics of transport and communications in the industrial centres had much in common with that of the growth of trade and services. Given the increasing unevennessof growth in the various countries and in these sectors under the scientific and technical revolution, a levelling tendency forced its way through, which led to a gradual closing of the gap between them in both absolute terms and per capita indices of production. At the end of the period reviewed, however, nearly as much was produced in value terms in the North American region as in all the developed countries of the other regions.

The tendencies to `self-movement' of the main sectors of production in world capitalism's centres considered in this section bring out, in their aggregate, several very important shifts in its postwar structure. In essence they are various forms of the manifestation of broader processes reflecting both the course of the unevenness of capitalism's economic development and the objective needs of the further growth and intcrnationalisation of society's productive forces. Concrete analysis of these trends undoubtedly remains topical for a description of the underlying processes taking place within this mode of production in our time.

These needs have largely determined the regional and sectoral shifts in the postwar production of the developing _-_-_

~^^1^^ At this time the added value per head of the population in Western Kuvopc was around 04 per cent loss than in Nortli America, and in the other countries 58 per cent less.

155 countries in the ever deepening crisis of world capitalism's former colonial relations. In the stage of imperialism, as we know, the sphere of operation of the law of uneven economic and political development hegan to embrace not only its centres hut also their agrarian appendages drawn by the colonial powers and foreign capital into the maelstrom of international economic relations. In October 1917 Lenin insistently stressed:

As if all peoples were equally drawn into this one world economy! As ii' there existed no relationship of bondage between llie uncivilised and the `civilised' peoples precisely on the basis of 'all peoples' being drawn 'into one world economy'.^^1^^

This postulate of his has acquired special significance and topicality with the break-up of imperialism's colonial system. But a wide range of matters arises here, stemming from the specilic features of the manifestation of the law of uneven development in the former colonial periphery, matters that call for special, comprehensive analysis.

__ALPHA_LVL3__ § 4. The Agrarian and Raw Material Producing Countries

The winning of political independence by the bulk of the countries of the colonial world in the postwar period opened up fundamentally new opportunities for them to fight to step up their national development, and for socio-economic progress and equality in international relations against imperialist diktat and exploitation by expatriate monopoly capital. As Leonid Brezhnev said at the 25th Congress of the CPSU:

Glancing at the picture of the modern world one cannot help noticing the important fact that the influence of states that had only recently been colonies or semi-colonies has grown consider ably.

It may definitely be said about the majority of them that they are defending their political and economic i ights in a struggle against imperialism with mounting energy, striving to consolidate their independence and to raise the social, economic and cultural level of their peoples.^^2^^

_-_-_

~^^1^^ V.I. Lenin. Revision of the Party Programme. Collected Works, Vol. 20 (Progress Publishers, Moscow, 1904), p 154.

^^2^^ L. I. Brezhnev, lleport oj the CPSU Central Committee and the Immediate Tasks of the Party in Home and Foreign Policy. XX Vth Congress of the CPSU (Novosti Press Agency Publishing liouse, Moscow, 1970), p 16.

156

In these conditions important changes are occurring or coming into life in the structure and distribution of the developing world's social production, which are putting their stamp on the processes that govern the peculiarities of the former colonies' and semi-colonies' position in the present international division of labour, including their mounting struggle to lay the foundations of their economies. In the 50s through the 70s the physical volume of their industrial production as a whole rose by more than 450 per cent, so that now, in contrast, to the earlier stages of their economic history, industrial goods, especially manufactures, are beginning to predominate in the material production of most of them. At the end of our period somewhat more was produced by manufacturing industry in value terms (in 1970 prices) than in agriculture, and roughly four times as much as in mining.

As the general economic capability, and especially the industrial potential, of these countries grew there was an inevitable consolidation of the demarcation of class forces, a deepening of the heterogeneity of their social development, and a growth of class struggle. For the immense majority, at the same time, that were to one degree or another within the orbit of the laws of the world capitalist economy, it remains characteristic that the tasks of the anti-feudal revolution have not been completed and the socio-economic survivals of the colonial period are very burdensome. Many of the new sovereign states had begun to carry through radical reforms during the liberation struggle that were both antifeudal and anti-capitalist. In thatsituation the differentiation of their paths and levels of economic development greatly broadened.

In spite of essential differences of that kind, however, all the emancipated countries are part of the agrarian and raw material periphery of the industrial centres of capitalism. Even the most economically advanced of them are still mainly exporters of raw materials arid importers of machinery, equipment, and other industrial goods.^^1^^ They _-_-_

~^^1^^ The changing role of the developing countries in the structure of the international trade in industrial goods and primary commodities will be studied in the next sections; here, however, it is expedient to draw attention to the fact that only 4 per cent of the total value of exports of machinery and capital equipment in capitalist world trade came from developing countries in the lale 70s, whereas more than four-fifths of all their exports of industrial raw materials, fuel, and __NOTE__ Footnote cont. on page 158. 157 continue to he in an unequal position within the capitalist world system and subjected to exploitation by expatriate monopoly capital, which is why they are being urgently faced with a number of common internal and external economic problems.

The most important trends in the changing postwar structure of the periphery's social production have been analysed above. How, however, was this production distributed among the developing countries in the first postwar decades? The answer is given in concise form by Fig. 11, which enables us at the same time to compare the dynamics of the physical growth of the GDP by regions.

As will be clear from the graphs the growth rates of aggregate production were very fast in Latin America, where most of the countries had achieved national independence and taken the road of independent capitalist development long before break-up of the colonial system began.^^1^^ As a result the postwar years have been marked by a gradual raising of the role of Latin America in the aggregate product of the developing world, from 40 to 44.5 per cent, so that it is now greater than that of the Asian region although the latter had nearly four times its population at the end of the period surveyed.

This growth did not come about through the contribution of all Latin American countries, but occurred on a background of a marked imbalance of their economic development and was mainly determined by a few leading countries, primarily Brazil and Mexico, for which much higher growth rates were typical.^^2^^ At the end of the 70s more than 60 per cent of the aggregate product of the region was produced in these two countries alone, whereas they produced around 40 per cent of it at the beginning of the 50s. At the same time certain countries (Haiti, Honduras, Barbados, etc.), still caught up in heavy chains of dependence on expatriate commodity monopolies, remained among the most economically _-_-_ __NOTE__ Footnote cont. from page 157. food went to capitalism's industrial centres (UN Monthly Bulletin of Statistics, 1981, 7:spccial Table F).

~^^1^^ Here and from now on, unless otherwise stated, this group includes, in addition to the countries of South and Central America, the countries of the Caribbean basin (without Cuba).

~^^2^^ In the OOs and 70s, for example, the mean annual growth rates of tho GDP of Brazil wore 7.1 per cent, of Mexico 6.2 per cent, and of the third biggest Latin American country, Argentina, 4.2 per cent (World Bank. World Development Report, 11)80, Washington, D.C., 1980, p 113).

158 backward appendages of the world capitalist economy, with the usual low growth rates typical of semi-colonial countries.

Fig. 11 Developing countries: weight and growth dynamics of GDP in the principal geographical regions irdex* '0-1 199-9.jpg 100% !2t? ``''"' 197I)- 1974- 1979-- t951" "6, ,97, )45 J™.. I -SOUTH A SOUTH FASl A^iA l|- NCAR .'-MIDIILE 1 AS1 (ASIA) ' Index of the growth of GDP of all developing countries (l!)5fl=100) ``* Estimated Sourcr.s- Calculated from UNCTA1) Handbook of Int/'rnational Trade and Development StnliHlic.it, I'.IT.I; UN Yearbook of National Accounts Sttitistics, Slati«lie.iil Yi-nrhixih, and Monthly Bulletin of Statistics for the relevant years. 159

A steady deepening of the unevenness of Hie intor-regional. and especially of the intraregional, distribution of production has become typical of the various groups of commodityproducing countries in the other continents. In Africa, where colonialism succeeded in retaining key positions in many areas for a number of years in the postwar period, the course of economic development has proved to be relatively slow, so that the weight of the continent in the aggregate social product of developing countries has had a clear tendency to fall, despite the fact that the total GDP of African countries has risen substantially.

As national independence has been consolidated and African countries have thrown off the yoke of colonial exploitation, however, their growth rates, it must be noted, as in other areas of the developing world, have gradually risen. They have been highest, as a rule, in the Arab countries in North Africa, where the positive consequences of the breakup of the colonial system made themselves felt much earlier than in Tropical Africa. The rapid increase in income from exploiting their oil wealth, moreover, provided some of them with favourable material conditions for their struggle for quicker economic development.

There has been an ever wider difference in levels and rates of development in Asian countries, where around two-thirds of the developing`world's population lives. Most of Ihem, which were in forced dependence on a handful of European powers during nearly the whole history of the forming of the world capitalist economy, were able to win national independence at the start of the postwar period. In the 50s they had already begun an active fight for accelerated growth of their previously stagnating productive forces. The mean annual growth rates of the GDP of all the developing countries of Asia reached 4.5 per cent in that decade, 5.1 per cent in the 60s, and around 6 per cent in the 70s. This accelerated growth was due to no small degree in recent times, however, to the 'oil boom' in the Near and Middle East. The real volume of the GDP (in value terms) increased more than sixfold in that region in the 50s through the 70s, and was more than one-third of the GDP of all the developing countries of Asia, although its population at the end of the period was only 7 per cent of the continent's total. At the same time the GDP of all the other developing countries in South and South-East Asia, which 160 have immense human resources, rose less than threefold.

Demographic factors, as we have already mentioned, play a very considerable role in general economic analysis, and are particularly significant for comparing long-term development trends in developing countries that differ almost solely in their demographic situation and rates of population growth. The aggregate indices of the dynamics of growth of the GDP arid population in the main regions and biggest countries for separate periods are compared in Table 16, which helps us characterise the long-term processes more fully.

If we examine these processes through the prism of the data on population growth, the generalisations made above, stemming from a comparative description of the regional dynamics of production, obviously need to be made more precise, and corrected. The successive changes in the indicators of per capita GDP for the separate regions and countries enable the scale of the shifts in the geographical distribution of their productive forces to be brought out more clearly.

In almost all the groups of countries in the table, there is a quite marked tendency, albeit extremely varied in dynamics and significance, toward a differentiation of population growth rates, in addition to a sharpening of the differences in dynamics of production. This trend characterised one of the inevitable consequences of the break-up of the colonial system, and could not help having an essential influence on the ratio of economic potentials, and consequently on the mutually interlocked processes of economic development.

In the Asian region a particularly wide gap has been formed in the dynamics of per capita production of the aggregate social product between the oil-producing countries of the Near and Middle East and the overwhelming majority of the countries of South and South-East Asia.

Within each regional group, in turn, there has been a further widening of the imbalance in per capita production. An analysis of the data in international statistical publications does not, in general, provide the grounds for expecting a smoothing out of this imbalance in the immediate future. In all probability it will widen because of the natural laws of capitalism, with an increasingly great effect on the sharpening of the crisis processes and international socio-economic __PARAGRAPH_PAUSE__ __PRINTERS_P_161_COMMENT__ 11---0170 161 Table 16 Approximate Estimates of the Growth of Per Capita GDP by Selected Groups of Countries ler Annual growth rates (in percentages) capita__________________________________ 1980 GDP in--------------------------------------------------- . ?°f,U~ 19SO PM capita Group of countries latlon ($000 .. „,,„ GDP (in (milli-ir, cur- Population GDP constant ons> rent 1977 prices) prices) 1960- 1970- 1960- 1970- 1960- 1970-- 1970 1980 1970 1980 1970 1980 I. Developing oil- 450 0.97 2.6 2.5 5.5 C.I 2.8 3.5 exporters of which the largest* 70 4.61 3.0 3.1 10.5 8.4 7.3 5.0 II. Other developing countries (regions) 1. with a low income level* (a) Asia 990 0.21 2.4 2.2 4.2 4.2 1.8 2.0 (b) Africa 140 0.24 2.5 2.8 4.2 3.0 1.7 0.2 2. with average income lovelj (a) South-East Asia & Oceania 160 1.17 2.8 2.3 7.7 8.0 4.9 5.6 (b) Africa, south of the Sahara 125 0.87 2.5 2.9 4.9 3.9 2.4 0.9 (c) North Africa & Middle East 30 0.66 2.4 2.6 2.3 3.0 -0.2 0.4 (d) Latin America 255 1.77 2.6 2.5 5.4 6.0 2.7 3.5 III. Developed capitalist countries 670 9.68 1.0 0.7 5,0 3.1 3.9 2.4 ^^*^^ Saudi Arabia, Kuweit, Iraq, Iran, Libya + Countries with a per capita GDP under $ 300 a year + Countries with a per capita GDP over $ 360 a year Source: World Bank, World Development Report 1980, pp 11, 99. 162 __PARAGRAPH_CONT__ problems of world capitalism's agrarian, raw material periphery.

Similar processes have been occurring in Africa, for all its special features. The growing uncvenness of development has been deepened there, even more than in Asia, by considerable differences in rates of population growth. In some cases these differences, it is true, have encouraged a convergence of the dynamics of per capita production in the separate groups of countries. That is confirmed, in particular, by comparison of the lines of postwar development of North and Tropical Africa. Population has grown faster in the former, which has led to a certain levelling out of the aggregate indicators of per capita growth of production used in the table. At the same time there have been quite different trends within each of these regions.

In the biggest North African country, Egypt, for example, there was an obvious slowing of the growth rates both of production and of population in the 60s and 70s. The annual rates of per capita growth of GDP in those years were 1.5 per cent in Egypt and only 0.2 per cent in Sudan. In other words, they were lower than in many of the countries of Tropical Africa whose economies on the whole still suffer maximally from the burden of harmful survivals of the colonial period compared with other developing countries. Although some of the new states south of the Saharajiave achieved a relatively high growth of production (Kenya, Gabon, Ivory Coast, Nigeria, Malawi, etc.), most of them still have extremely slow and very unstable rates of development. In quite a few countries, moreover, the main indices of the dynamics of GDP growth have been lower in recent decades than the growth of population (Burundi, Chad, the Central African Empire, Uganda, Upper Volta).^^1^^

The long-term trends in the distribution of production in the former colonial regions are primarily governed by the resultant tendencies of the development of a few of the biggest countries (as regards area, population, and natural _-_-_

~^^1^^ UNCTAD. Handbook of International Trade and Development Statistics 1979, pp 484--485. The most important trends of postwar development of the big group of small African countries, and of the other main regions of the developing world, wore studied in L. V. Vinogradova's Razvivayushchiisya mir: bulshiye problemy malykh stran (The Big Problems of Little Countries in the Developing World), Nauka Publishers, Moscow, 1977.

__PRINTERS_P_163_COMMENT__ 11* 163 resources). The ratio of their economic capabilities is therefore important in a generalised description of intraregional processes, including the contradictory consequences of the 'demographic explosion' in the Third World.

In Latin America, for example, GO per cent of the inhabitants and nearly two-thirds of the aggregate GDP of the whole region were concentrated in Brazil, Mexico, and Argentina. Among the 'Big Three' production developed at the lowest rates in Argentina in the postwar years, but the comparatively slow dynamics of its population growth led to its per capita production, for example, exceeding Brazil's in the 60s and Mexico's in the early 70s. It is typical that the economies of several small countries (Uruguay, El Salvador, Paraguay, Haiti, Honduras, and others) wore below the average of the developing countries of South and SouthEast Asia as regards the same indicators in those years, not to mention of bulk of the emancipated countries of Africa.^^1^^

The examples given, whose number could be greatly extended, very clearly confirm that there has been a steady sharpening of the unevenness of economic development of the former colonies and semi-colonies in recent decades. This irresistibly intensifying process, however, in no way refutes the need (in addition to the study of the features of the economic growth of each country) for a comprehensive systems approach to analysis of the summary trends of their interconnected development within the whole developing world. Such an approach helps, on the one hand, to bring out the objectively operating trends in which the extremely contradictory and isolated processes and phenomena characterising the shifts in the distribution of the productive forces of the separate countries and their regional groups are ultimately reduced, and on the other hand, gives the possibility of better understanding and appreciating the specific features of their development.

In this connection comparative analysis of the long-term changes in the industrial structure of the social production of countries in Asia, Africa, and Latin America is becoming of paramount importance (see Fig. 12).

The facts summarised in the graphs indicate that a whole series of common phenomena reflecting the deep patterns of the present stage of the functioning of their social production _-_-_

^^1^^ UNCTAD. Op. cit., pp 483--486.

164 still remain typical, given the growing differentiation of levels and paths of economic and social development in most __PARAGRAPH_PAUSE__ Fig. 12 Proportion of the principal sectors in the regional structure of the GDP of developing ..... in percentages) ASIA 1960--61 SOUTH &SOUTH-£AST ASIA 199-10.jpg JAGRICULTUHE J INDUSTRY JBUILDING& £ CONSTRUCTION 3 TRANSPORT & COMMUNICATIONS '/--/\ ^.riaOTHER SERVICES * The annu.il production of all sorlors from each rog;ion=1flO Sources: calculated from UN Yearbook of National Accounts Statistics, Statistical Yearbook, and Monthly Bulletin of Statistics for the relevant years (in 1975 prices). [165] developing countries. The trend among them toward a substantial and in fact steady fall in the role of agriculture in their gross product catches the eye. The weight of this sector in the GDP, historically predominant in their economies, fell hy around 45 per cent in Asian countries (more than a third in South and South-East Asia and almost two-thirds in the Near and Middle East). In Africa the corresponding fall was more than 50 per cent, and in Latin America about 45 per cent.

As these countries are industrialised this process will undoubtedly hec07iie more and more pronounced. Its effect gives grounds for supposing that even before the end of this century the share of agriculture in the GDP of most of the developing countries of Asia and Africa may fall by 50 to 50 per cent and reach the level attained in Latin America al the beginning of the 80s. At the same time the proportion of agriculture in the GDP of the Latin American region as a whole will also probably diminish, gradually approaching the present average level of the industrial capitalist countries (around 4 per cent). An inevitable consequence of that will be the pushing of increasing numbers of the rural population into the cities.^^1^^

Another very important trend determining botli the current structure of changes in the production of the developing countries and their probable future structure has become the general though not uniform rise-in the role of industry in their GPP. The scale of its growth, moreover, has been quite regularly higher in the economically more backward countries. Thus the proportion of industrial output in the aggregate product for the period considered in the graphs increased in the African region by 120 per cent (from 12 to 26 per cent), in the Asian region by almost 100 per cent (from 14 to 27 per cent), and in the Latin American region by almost a third (from 24 to 31 per cent).

As a result of the increasing imbalance of this growth, a trend toward a certain convergence of the significance and place of industry in the general structure of these regions' production has been noted in the postwar period. The _-_-_

~^^1^^ In 1960--80 alone the proportion of tho urban population in the total population of tho most economically backward developing countries increased from 17 lo 21 per cent, and in the relatively more developed countries (whose per capita GUP was higher than $ 3(>U a year) from 37 to 51 per cent (World Bank. Op. cit., pp 148--149).

166 proportion of industry in the GDP of countries in South and South-Easl Asia and in Africa was 50 per cent less than in Latin America at the beginning of the 50s; at the beginning of the 80s the gap had noticeably closed and was estimated now at 1:1.3 for the former and 1:1.2 for tho latter.

This trend will intensify, in all probability, in the future, and characterise one of the tendencies of developing countries' uneven economic growth. It can be expected that the weight of industry in the GDP of most Asian and African] countries will come close to tho present level in the leading Latin American countries in the next two or three decades, while the latter will reach the average level of the present-day industrial centres of capitalism.^^1^^

These very general estimates provide the dnta needed, but only the initial data, for studying the significance and place of industry in the regional economies. They naturally smooth over tho vast differences in structure and sectoral dynamics of the industrial production of the separate regions and countries. A more and more concrete analysis of the separate industries is a central task of the part that follows, but here we must bear in mind that these processes of industrial development in agrarian and raw material producing countries are largely linked with rapid growth of mining, whose output is mainly sold on the world capitalist market, and in fact is still really controlled to one degree or another by expatriate monopoly capital. The rapid growth of the mining of minerals, and in particular of fuel, has played no small role in the regions being considered in the postwar rise in the proportion of industry in the gross product.^^2^^

It would not be legitimate, however, to conclude from this that the steady raising of the role of industry in the gross product of developing countries is more or less wholly _-_-_

~^^1^^ We would recall that in recent decades the proportion of industry in the GDP of capitalism's industrial regions, taken together, also maintained a rising tendency, and was 33--34 per cent in the late 70s.

~^^2^^ See Table 8. We must hear in mind hero that tho significance of the extraction of minerals is far from the same in tho different regions. It was around 20 per cent in Latin America for instance, at tho beginning of^ tho 80s, and nearly 60 per cent in Africa. In Asian countries it was a little more than 50 per cent but more than 60 per cent in the Near and Middle East. The rapid growth of the production and refining of oil is tho main reason for tho proportion of industrial production in the GDP of the countries of that region being even higher in recent years than in the leading industrial capitalist countries.

167 linked with the working of minerals. The rapid development of their manufacturing industries in recent decades has had an ever increasing effect, especially the development of heavy industry, the volume of whose production rose on the whole by almost 150 per cent in 1968--80. At the beginning of the 80s the heavy industries of all developing countries were producing 30 per cent more output in value terms (in added value in 1975 prices) than the light industries.^^1^^ There is little doubt that their basic industries will also grow al faster rates in the next few decades, which will further a gradual raising of their role in industrial production.

In all the main geographical regions of the former colonial world there has been a considerable, though very uneven development of building in the postwar period. Its growth has been particularly rapid in the more economically backward countries, which led to the increase shown in Fig. 11 in its `contribution' over a quarter of a century to the GDP of the developing countries of both Asia and Africa, and Latin America. Their further economic growth is inseparable from an extension of the significance of building in their economies, but since it is a direct function of other industries no great increase of any kind can be expected in its proportion in the gross product in the long run. In coming years it will most likely stabilise between 5.5 and 6.5 per cent, i.e. at the level of the developed countries in the 60s and 70s.

For a comparative estimate of the long-term trends bringing out both the general and the particular in the production sphere of the main developing regions of capitalism, it is essential to compare the mean annual growth rates of their main industries (including per capita rates) over some considerable period. Because of the inadequacies of the economic statistics of developing countries it is very difficult to bring out these growth rates in summary form (in contrast to developed countries). The comparison can only be attempted on the basis of very approximate calculations (the results of which are given in Table 17), which allow us to characterise the most general trends of the sectoral shifts with a certain degree of accuracy. At the same time they can _-_-_

~^^1^^ UN Monthly Bulletin oj Statistics, 1982, 8:XVIII-XIX. The regional changes in the structure of industry in the postwar capitalist economy will be considered in the next part of our study.

168 be used as a starling point of sorts for studying the specific features of the development of production in the separate countries and groupings in each of the regions.

The figures in the Table reflect the most important results of the economic activity of the peoples in developing countries and clearly illustrate in a regional breakdown the course of the growing uncvcnness of their economic development. When the annual growth rates of the main sectors of the GDP are looked at in this breakdown Ihe following facts become of paramount importance for an analysis of the post-- __PARAGRAPH_PAUSE__ Tablo 17 Regional Differences Between Developing Countries in Annual Growth Rates and Per Capita Production by Industries (in 1975 prices) I! op ion Growtli roles fin percentages) I'cr oai'ita production* (ids 70s 19(iO-lfl61 1970--1971 1979-1U80 Agriculture As a 2.8 2.7 0.36 0.35 0.31 Africa 1.8 1.7 0.53 0.44 0.37 Latin America 3.6 3.5 0.60 0.55 0.54 Industry Asia 8.2 5.5 0.05 0.06 0.07 Africa 13.8 3.7 0.04 0.00 0.07 Latin America 6.8 5.2 0.23 0.21 0.23 Building & Conx Iructiou Asia 0.6 9.2 0.03 0.04 0.06 Africa 4.7 10.8 0.06 0.05 0.06 Latin America 5.4 6.5 0.14 0.13 0.18 All Brandies of Material Production Asia 5.6 5.4 0.10 0.09 Africa 6.7 3.2 0.11 0.11 Latin America 5.4 5.5 0.27 0.24 All Brandies oj Circulation and Services 0.09 0.10 0.25 Asia 5.9 7.5 0.03 0.03 0.04 Africa 5.8 5.5 0.05 0.04 0.05 Latin America 5.8 6.3 0.18 0.17 0.18

* The level of developed capitalist countries™ 1

Ftmrcr: calculated in tlic main from UN Jl<ni<llmi>h of \Yorlil Prrrtopmcnl Stu-

tictics, I!i7fi; UN Statistical Ywirbnoli 797 9/ft o; UN Monllil'j llullc I'm

«f Statistics tor 1981 and 1982.

[169] __PARAGRAPH_CONT__ war changes in the distribution of developing countries, material production.

In agriculture, which is still in a slate of deep, protracted depression in the developing world as a whole, Latin America and most of the countries of the Near and Middle East have displayed relatively faster growth, so that a line toward an increase in their share in developing countries' total production of farm produce has begun to show., with a corresponding drop in the role of South and South-East Asia and Africa. As a result they have become further differentiated as regards per capita farm production. By the beginning of the 80s the Latin American countries on the whole considerably surpassed the countries of Asia and Africa in this respect. It is unlikely that there will be any closing of this gap in the near future. More probably it will widen. (See Table

17.)

The fight to eliminate the extreme backwardness of agriculture will undoubtedly remain one of the most pressing socio-economic problems of most of the countries of the former colonial world in the coming decades. It is the slow development of their agriculture, compared with population growth, that is the decisive cause of the consistent tendency manifested since the war toward a widening of the gap in GDP per capita between the developing and developed countries of the capitalist world.

In the 60s and 70s, however, this trend began to be more and more actively countered by processes developing in most of the other sectors of the economies of the former colonial periphery of capitalism, and primarily in industry. The international statistics clearly indicate that the per capita growth rates of industrial production in economically most backward regions of capitalism's periphery have noticeably exceeded the industrial centres in per capita growth rales of industrial production. In the developing countries of Asia per capita industrial production increased by a factor of 4.3 from 1950 to 1978, in Africa by 3.5, and in the developed capitalist countries taken together by 2.6. The countries of Latin America also showed a rather faster growth in this respect, on an average, than the main economic regions of capitalism.

In present conditions there has begun lo be a tendency toward a certain closing of the gigantic, gap in per capita industrial production formed under colonialism, together with 170 a gradual increase in the weight of the agrarian and raw material producing countries in the industrial production of the non-socialist world. In Hie very early 50s this gap was estimated at 1:35 for Asian countries, 1:32 for Africa, and 1:5.5 for Latin America. By the end of the 70s it had been clearly reduced and was expressed by the following approximate ratios: Asia 1:24, Africa 1:27, and Latin America 1:5.3. In the middle of 70s the substantial slowing of industrial growth rates in the developed countries connected with the greatest postwar cyclic crisis of the capitalist world economy fostered a consolidation of this trend.

The general course of this process leads to th,e conclusion that it is acquiring a quite stable, irreversible character in Ihc present situation. Being a natural consequence of the break-up of the colonial system, it has already begun to have (and in all probability will continue to have) a growing impact on the steady deepening of the crisis of the unequal system of international capitalist division of labour built up on a colonial basis.

At the same time the facts adduced confirm the extreme complexity and difficulty of the problem of overcoming the age-old industrial backwardness of the former colonies and semi-colonies, especially with their constant exploitation by expalriate monopoly capital. The solution of such a major and objectively inevitable hislorical task will obviously require several decades and will continue for a long time to be one of the urgent problems ol the light of the peoples of the liberated countries for final liquidation of the heavy legacy of the colonial period and imperialist domination of their economies.

To reduce their backwardness by even two-thirds from the present mean per capita industrial production of the developed countries, for instance, it would take the countries of South and South-East Asia around a quarter of a century at the rates of real industrial growth of the 60s and 70s, Africa more than a quarter of a century, and Latin America around 30 years. Then, however, per capita output of industrial goods in each of these regions would he respectively one-eighth, a ninth, and about a third below the level already reached by Ihe advanced capitalist countries at the end of the 70s. If that level remains unchanged in the future, then in that hypothetical case the way out for most developing countries would have lo be a 15-fold or 16-fold 171 expansion of the volume of industrial production within the present-day world capitalist economy.

These figures cannot, of course, serve as a generalised criterion of a quantitative, let alone a qualitative, estimate of the future parameters and goals of the industrial development of all the developing countries of Asia, Africa, and Latin America.^^1^^ In fact, however, they help determine only the scale of the industrial backwardness of developing countries. It inevitably follows from them that the struggle for a cardinal solution of the problem in the present transitional epoch will give rise to an urgent need to develop a long-term strategy and-strictly scientific approach to the global outlook for industrialisation of the former colonies and semi-- colonies on quite other principles of social and world economic relations compared with those historically built up by capitalism.

The postwar processes in the agrarian and industrial spheres have consequently had a different effect on the resultant ratio of per capita GDP in the groups of countries under consideration. In the agrarian sphere they have fostered a widening of the economic gap, and in the industrial sphere a narrowing. But since the role of the agrarian sector in the GDP of developing countries is more significant than in the centres of capitalism, and the industrial sector less significant, the gap between them in per capita output of the main sectors (agriculture, industry, and building) has also continued to widen in recent decades, and for Asian and African countries was more than 10:1 at the beginning of the 80s against 8:1 in the first postwar years. In other words, at the turn of the decade to the 80s, per capita production in value terms (in comparable prices) was much lower in developing countries compared with capitalist ones, than at the turn of the 40s and 50s.

As for industry, its growth in developing countries has still not led to any real qualitative shifts in the liquidation of age-old industrial backwardness. The struggle to lay an industrial foundation for their national economies is still _-_-_

~^^1^^ It is not excluded for some of them that, in particular, it may already be possible in the coming decades to reach the moan per capita standards of production of the world economic centres. At the same time, it is difficult to foresee the reaching of such standards by the least developed countries, where the bulk of the population of the developing world lives, earlier limn the first quarter of the next century.

172 more or less, as a rule, in the initial stage. In spite of a narrowing of the gap in per capita industrial output, they now produce dozens of times less product than the average for capitalist countries. The most powerful, technically advanced branches of production, moreover, that can more efficiently exploit the fruits of the present scientific and technical revolution are concentrated in the latter. That is affecting the dynamics of productivity in the industry of both groups of countries. In the 60s and 70s its annual growth rates in the economic centres of capitalism were double that in the developing countries.^^1^^

The comparatively new, but stable processes being manifested in the main agrarian and raw material producing regions include a tendency that in turn is varied in its results, but in practice general, toward an increase of the circulation and services sphere in their economies. As the figures in Fig. 12 and Table 17 indicate, the growtli rates of the main sectors of this sphere accelerated markedly in developing countries in the period under review, and began to be higher, as a rule, than their corresponding mean growth indicators the slower development of which was maiuly due to the relatively low growth rates of their agriculture. Consequences of a dual sort have followed from that.

(1) There has been a quite stable tendency toward a gradual, tliough slow, rise in the proportion of circulation and services in the GDP of the developing world, which rose perceptibly in 1900--80. As a result of the rapid expansion of this sphere its weight in the GDP of the Asian and African regions rose by a quarter and nearly a third respectively in the 50s through the 70s. It rose a little as well in Latin America on the whole and constituted more than half of that region's GDP at the end of the 70s. In other words, there was a certain convergence of structural proportions in the sectors of non-materialproduction of the main developing regions, but the historical underdevelopment of these sectors still remains a distinguishing sign of the economic backwardness of the vast majority of the former colonies and dependent countries of these regions.^^2^^

_-_-_

~^^1^^ UN Statistical Yearbook 1978, p 44; Ibid., 1979/80, p 36.

^^2^^ Let us recall that the proportion of the circulation and services sphere contributes at the beginning of the 80s about 3/5 of the GDP on an average in the industrial centres of capitalism (see § 3 of this chapter).

173

(2) The proportion of developing countries in the aggregate production of the services and circulation sphere of the world capitalist economy is beginning lo grow. At the start of llio 80s it was 10 per cent against 11 per cent in the early 50s. The per capita gap between them and the developed countries, it is true, not only did not in fact diminish but even widened a bit on the whole, and was estimated at 15.5:1 in the late 70s, i.e. was considerably wider than in the sectors of material production.

For the main sectors of the circulation and services sphere this gap has not built up in the same way; in practice it has always been narrower in trade. But it is in that sector, as in agriculture, that the capitalist countries continued steadily to outpace the developing countries in per capita indices of growth, so that, although the proportion of the latter in the total value of the home trade of the capitalist world lias risen since the war (from one-seventh to one-sixth), there has been another trend in per capita terms While the value of per capita trade (in constant 1975 prices) in the GDP of capitalist countries was 12 times as much as in developing countries at the beginning of the 60s, it was 16 times as much at the start of the 70s. This trend above all determined the effect in the circulation and services sphere of the tendency toward a further widening of the general economic gap in per capita GDP between the two groups of countries.

The intensification of this trend also to no small extent was promoted by processes taking place in the sectors producing so-called services. Developing countries' backwardness in this respect has long been deeper than in the other sectors of the sphere of social production we are considering. At the turn of the 50s and 60s it corresponded approximately to the level of their industrial backwardness. At that time less than one-tenth of the value of the services created in all capitalist countries was produced in developing countries, and the gap per capita was nearly 20:1.

In recent years there have been changes in various directions in these ratios. The rapidly increasing dynamics of the growth of services in developing countries has led to their share rising in absolute terms to one-seventh at the end of the 70s. But in per capita terms the gap continued to widen for a long time, and in the early 70s could be expressed as 19.5:1, which was mainly due to the backwardness in this 174 area of the economically less developed and more densely populated countries of the African and Asian regions.

In the second half of the 70s alone, especially during the world cyclic crisis of 11)74--75, a long-term consequence of which was a marked slowing of the growth rales of services in the centres of capitalism, did this gap begin to narrow a bit; at the beginning of the 80s it was expressed by a ratio of 17.5:1 (in 1975 prices). In other words, it has remained wider than in industry. The extreme backwardness of the services sphere governs several of the paramount aims of the long-term socio-economic strategy being developed by developing countries today in their striving to attain the maximum possible speeding up of the rates of social progress in present-day conditions and to raise the standard of living of their populations.

The only major group of services and circulation sectors in which developing countries managed to get a relatively stable increase in the dynamics of per capita production over that of the developed countries in the postwar decades was transport and communications; the grand total of per capita production in them increased by a factor of 3.4 against 2.4 in the developed countries. There was a corresponding ri se (from 11 to 16 per cent) in developing countries' weight in the aggregate value of the product of transport and communications in the world capitalist economy. In per capita terms their mean annual rates of development have been higher of late than those of the industrial regions, so that in the area of the infrastructure, and in industry, there has begun to be a relatively new and apparently promising trend toward a certain narrowing of the gap in per capita indices, though it still remains extremely wide.^^1^^ If the present dynamics of the growth of production and population is maintained the gap should be halved at least on an average in the coming two or three decades in each of the main regions of the developing world, but its ultimate closing will undoubtedly still remain an urgent task for a long time.

At the same time there was a clearly increasing unevenness in the development of transport and communications in the developing countries, which, as the figures given above show, _-_-_

~^^1^^ At tho end of the 70s it was estimated to be in the industrial centres' favour as follows: 20:1 for Asian countries (including 4:1 for the Near and Middle East and 31:1 for South and South-East Asia), 21:1 for Africa, and 5.5:1 for Latin America.

175 was organically characteristic of all the other sectors of tho circulation and.services sphere. Its dynamics will also undoubtedly be a close function of the degree and scale of development of material product ion and of the population grovyth rates in the various regions and countries of the developing world. On the whole, however, one can say with confidence that as the productive forces rise the weight of this sphere in the social production of these countries will gradually increase although it will still lag greatly behind the corresponding average indicator for the industrialised countries for several decades.

The wide gap between the developing countries and the centres of capitalism in all the decisive areas of economic activity consequently remains one of the objective realities of our time. Formed long ago, during the building of the world capitalist economy on a colonial basis, it now characterises many of the most important features of that economy, and of tho whole system of its postwar international relations.

The developing countries of Asia, Africa, and Latin America, given the existing differences in their levels of sociopolitical and economic development, arc inevitably coming up against a need to deal with several common problems, vitally important for all developing countries, on both an international and a national scale. They include the very intricate set of each country's national problems, but ultimately tho struggle to cope witli all of them, taken together is objectively directed to eliminating the pernicious surviv' als of the colonial period from the affairs of human society" and to emancipating the developing countries from neoco, lonialism and continuing capitalist exploitation.

At the same time, as will be clear from the facts adduced above, the gap in levels of economic development remains extremely wide, in spite of considerable progress by the developing countries in coping with these problems, and moreover retains a tendency to widen in several determinant indicators, above all in gross product per capita. The relations of inequality and rapacious exploitation of the natural and human resources of the developing countries by expatriate monopoly capital prevailing in the world capitalist economy are furthering maintenance of this trend, even since the break-up of imperialism's colonial system. The capitalist social system itself not only bears responsibility for the socio-economic backwardness of the peoples of the former 176 colonial world, but the exploiter system of international division of labour created by it largely continues today to fetter their productive forces. The basic patterns of the world capitalist economy still operate in the direction detrimental to the developing countries.^^1^^

The striving of the developing countries to spread the liquidating of colonialism to the economic sphere, to put an end to their exploitation by the industrial powers of the West, and to achieve creation of the necessary external and internal conditions for attaining a level of development in the foreseeable future corresponding to the needs of today, is quite justified. At the same time all the nations of the earth without exception have an interest in the speediest attainment of these aims. The struggle for a steady acceleration of socio-economic and cultural progress in the former colonies and semi-colonies is therefore becoming an inseparable part of the fight of all progressive mankind for detente and the consolidating of lasting peace, for further development of the scientific and technical revolution for peaceful purposes, and for a favourable solution of the other global problems of today on which the whole subsequent course of world development to an enormous extent depends.

In his day Karl Marx concluded that

mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the_course of formation.^^2^^

In the present historical situation more favourable objective conditions are being created than ever before for the countries of Asia, Africa, and Latin America that have liberated themselves from the imperialist yoke, or are in the course of doing so, for a successful struggle to overcome the backwardness inherited by them from the past in all sectors of _-_-_

~^^1^^ A statement by S. S. Ramphal, General Secretary of the British Commonwealth of Nations, is characteristic in this respect. Noting the continuing widening of the per capita income gap between the developed capitalist countries and the developing countries, he was forced to say that the fault lay in the system itself and not in its workings. 'The system promised order, stability and growth, for the industrialized countries, for those who wielded economic power; but it implied disorder, insecurity and deprivation for those who did not' (The Other World in This One. The Promise of the New International Economic Order. Round Table, 1976, 261:63).

~^^2^^ Karl Marx. A Contribution to the Critique of Political Economy (Progress Publishers, Moscow, 1977), p 21.

__PRINTERS_P_177_COMMENT__ 12---0170 177 the economy and oilier areas of social affairs. But every kind of obstacle is still being put in llio way of this bard, long, stubborn light with the world capitalist economy by the former colonialists and expatriate monopoly capital. In these conditions the developing countries are uniting their efforts more and more firmly in the anti-imperialist movement to establish a new international economic order.

The Soviet Union and other socialist countries are supporting these efforts in every way possible and demonstrating their solidarity with the progressive aims of the struggle of the peoples of the developing world for a better future. As the Central Committee's Report to the 26'th Congress of the CPSU stressed:

the CPSU will consistently continue the policy of promoting cooperation between the USSR and the ncwly-freo countries, and consolidating the alliance of world socialism and the national liberation movement.^^1^^

The long-term trends reviewed in this chapter thus not only help us better to understand some of the general results of the changes that have already taken place in the structure of the distribution of the productive forces of the two groups of countries of the postwar capitalist world, but also to distinguish sqveral objective premises for analysing the probable outlook for subsequent structural shifts leading to aggravation of the internal contradictions and crisis phenomena in the capitalist economy. Study of these trends obviously calls for a need to allow in every way for the effect on them of the spontaneously operating laws of the cyclic development of the capitalist mode of production.

_-_-_

~^^1^^ L. I. Brezhnev. Report of the Central Committee of the CPSU to the XXVItli Congress of the Communist Party of the Soviet Union and the Immediate Tasks of the Party in Home and Foreign Policy (Novosti Press Agency Publishing House, Moscow, 1981), p 21.

[178] __NUMERIC_LVL2__ 5 __ALPHA_LVL2__ THE CYCLIC DEVELOPMENT
OF THE WORLD CAPITALIST ECONOMY __ALPHA_LVL3__ § 1. The Problem

More than 150 years ago a crisis of overproduction developed for the first time within the young capitalism, seemingly endowed with unlimited forces, that largely determined the subsequent course of the economic evolution of capitalist society. Its epicentre was England, then the main industrial power of capitalism, which had already created a world market and was laying claim to world domination.

Isolated phenomena of the cyclic development of capitalist production had already occurred in separate industries even before the first industrial overproduction crisis of 1825. But it was in the second quarter of the nineteenth century that the cyclicity of capitalism's economic growth began to take on a general international character under the influence of the interconnections of the world market. Marx, attaching paramount importance to this fact, wrote:

The commercial crises of the nineteenth century, and in particular the great crises of 1825 and 1836 [were] no longer a matter of single economic phenomena but of big storms on the world market, in which the antagonism of all elements in the bourgeois process of production explodes.^^1^^

_-_-_

~^^1^^ Karl Marx. A Contribution to the Critique of Political Economy, p 182. Furthermore, he noted that capitalist economists sought 'the origin of those storms and the means of defence against them ... within the sphere of currency, the most superficial and abstract sphere of this process. The theoretical assumption which actually serves the school of economic weather experts as their point of departure is the dogma that Ricnrdo had discovered the laws governing purely metallic currency' (ibid.). It is significant that this theoretical approach to the investigation of economic crises was later criticised seriously within the context of capitalist political economy itself. One of its leading spokesmen in the first half of the twentieth century, John Maynard Koynes, said: 'Whereas if money could be gi'own like a crop or manufactured like a motor-car, depressions would be avoided or mitigated' (The General Theory oj Employment, Interest and Money, Macmillan, London, 1930, pp' 230--231).

__PRINTERS_P_179_COMMENT__ 12* 179

From then on the world capitalist system, developing intensively in breadth and depth, began regularly to suffer overproduction crises. In the wake of a cyclic upswing there inevitably set in a time of an absolute fall in or marked slowing of the growth rales of production, international trade, and business in general. The crisis phase was succeeded by a depression, recovery, and a new upswing.

Marx, pointing out the principal historical premises of the origin of the capitalist world cycle, stressed that it

was only the period when machine industry, having sent down deep enough roots, exercised a preponderant influence on the whole national production; when, thanks to it, foreign commerce began to take precedence over home trade; when the world market successively annexed vast areas in the New World, Asia, and Australia; and finally when the industrial nations entering the lists had become sufficiently numerous; it was only from that period that the recurring cycles whose successive phases cover years, and which always end in a general crisis, the end of one cycle and the starting point of another.^^1^^

Study of the laws causing periodic slumps in production within the whole capitalist system and in its component parts, became a cardinal task of Marxist political economy that has retained its importance down to the present.

Quite naturally capitalist economics in turn has paid increasing attention to this, for it, extremely important problem. Each current world economic cycle is analysed in detail, numerous facts are brought out leading to a lowering or a raising of growth rates in one country or another, and in separate industries, but, while performing a certain social job, capitalist economists as a rule willy-nilly try however they can to skirt around those prime causes of capitalism's cyclic development that disclose its historically transitory character. Their starting point is that each economic crisis, taken separately, is the consequence of certain, even numerous, but wholly removable disturbances of the capitalist reproduction process caused in the main by the concrete market situation at any particular moment. Apart from its purely practical purposes, the work of these writers at the same time pursues a specific ideological aim, i.e. of refuting one of the most important conclusions of Marxist-Leninist political economy, which is that the main contradiction of _-_-_

~^^1^^ Karl Marx. Le Capital, Traduction do M. J. Roy, entieremcnt revisoe par 1'auteur (Lechatre et Cio, Paris), p 280.

180 capitalism manifests itself with irresistible force in cyclic development, and that 'so long as the system lasts', successive cyclic booms and slumps 'must be borne with, like the natural changes of the seasons'.^^1^^

How many times already has capitalist political economy tried to proclaim the advent of an era of crisis-free development and to give decisive battle to Marxism-Leninism in that connection. Efforts of that kind were intensified after World War II, given economic competition of the two world social systems. The specific features of the development of the world capitalist economy after the war, which accelerated the general growth rates of the productive forces compared with the interwar period, and a definite modification of the duration and depth of the phases of the cycle in the leading capitalist countries created fertile soil for reviving the idea, in the 50s and 60s, that there was a real possibility of capitalism's achieving crisis-free, `harmonious' growth of production.

A broad propaganda campaign usually develops during upswings around the theories underlying this idea. During the next crisis phase capitalist economists again and again return to the thesis that it is to be explained solely by chance temporary `difficulties' of one sort or another in the reproduction process having no inherent connection with one another (whose removal would subsequently enable the capitalist economy finally to rid itself of the negative consequences of cyclic development). In any case capitalist writers try to refute, or at least to throw doubt on, the general conclusion of Marxist theory that the business cycle is constitutionally inherent not only in national economies taken separately but also and chiefly in capitalism as a world socio-economic formation.^^2^^

_-_-_

~^^1^^ Karl Marx. British Commerce and Finance. In: Karl Marx and Frederick Engels. Collected Works, Vol. 16 (Progress Publishers, Moscow, 1080), p 34.

~^^2^^ Capitalist political economy began to pay special attention after the war to developing theories that are based in general on the external, market factors giving rise to economic crises not being amenable to long-term analysis. Such an approach was begun in Duesenborry's well-known textbook, in which ho maintained that there is no single basis in the national cycles of capitalist countries, and that each of them is engendered by a different, each lime unique, set of causes (J. S. Duosoaberry. Business Cycles and. Economic Growth, McGrawHill, Now York, 1958).

181

At the same time a striving to avoid even the very posing of the most acute social problems of the cyclic character of capitalism's development is beginning to be typical of general theoretical work. Characteristically, the commonest theories of recent decades of capitalism's transformation under the impact of the present scientific and technical revolution into some sort of new social system---Bell's ' postindustrial society', Galbraith's 'new industrial society' or `tcchnostructure', Brzezinski's 'technctronic society', Dahrendorf's 'post-capitalist society', etc.---either ignore tbe principal problems of cyclic booms and crises altogether in practice, or push them far into the background.

Karl Marx, having subjected the socio-economic foundation of capitalism to thorough scientific analysis, for the first time brought out the causal connection between the movement of the world cycle (and the cyclic development of its components) and the deep antagonisms of this mode of production. A sharp polemic develops in capitalist political economy and sociology around this Marxist tenet during each successive economic crisis. Many of their loading spokesmen, moreover, while not denying that economic cycles and crises used to be inherent in capitalism, base themselves on its having passed, since the war, to an allegedly fundamentally different stage of development, in which its former antagonisms are] losing their sharpness and may be successfully overcome by state capitalist programming and control.^^1^^

In this connection a version has begun to be intensively disseminated in the Western literature that the specific features of the postwar'dynamics of capitalist production^(and to a decisive degree of industrial production) allegedly do not provide grounds for concluding that the patterns of its cyclic development disclosed by Marxist political economy continue'to operate. It is often stated, moreover, that if the movement of industrial cycles and crises can be observed within separate national economies, this cyclicity lias either _-_-_

~^^1^^ The actual processes, it, is true, forced certain economists to sharper statements about the outlook for capitalism's further cyclic development. 'The causes of business cycles have not vanished,' the distinguished American economist Solomon Fabrieant remarked. 'A tiger caged is not the same as a tiger loose in the streets, but neither is it a paper tiger. There are good reasons for not forgetting that important fact' (Solomon Fabrieant. The `Recession' of 1909--1970. In: Victor /.arnowitz (ed). The Jlusiiii'xs Cycle Today, The National Bureau of Economic Ik-search, New York,, 1972, p 135).

182 disappeared or begun to do so on a world scale since the war. Hence optimistic conclusions are drawn about capitalism's growing over into some phase of `harmonious' development. The three economic slumps suffered by world capitalism in the 70s and early 80s, it is true, led to a marked fall in this optimism. They again graphically demonstrated that the cyclic upheavals underlying crises of industrial production are irrevocable features of the postwar development of the whole socio-economic system of capitalism as previously. It lias become very obvious, moreover, that in spite of the present-day historical situation's extremely essential differences from that established in the world economy at the start of the 30s, the menace of a repetition of all-embracing cyclic upheavals on the scale of the 1929--33 crisis has by no means disappeared. Furthermore, as the deep-seated contradictions of capitalism are aggravated, with ^timo this menace continues to grow. That fact has been more and more widely recognised in capitalist economic literature since the mid708.^^1^^

__ALPHA_LVL3__ § 2. The Postwar Industrial Cycle

The scale and periodicity of the business cycle are primarily characterised, in their most general forms, by indicators of the dynamics of gross production. These characteristics are quite justified, since the fluctuations of the cycle embrace more or less all the main spheres of the business activity of capitalist society. By no means all the sectors of social production involved in creating the gross product, however, play the same role in the shaping of the mechanism of the capitalist cycle. Most of them (agriculture, the services sphere, transport arid communications, etc.) either reflect or only indirectly affect the process, which is underlain (as MarxistLeninist political economy has established) by cyclic fluctuations of the decisive sphere of material production, i.e. industry.

It is the successively repeating crises of industrial overproduction that ultima! cly determine the onset of the conclud-- __PARAGRAPH_PAUSE__ _-_-_

~^^1^^ See, for example, The Hitsliicss Cycle and Public Pulley, 192U 1980. A Compendium of Papers Submitted to the Joint Economic Committee of the Congress of the United Stales (U.S. Government Printing Office, Washington, D.C., 1980).

183 Table 18 i'-rowth Rates of Industrial Production in the World Capitalist Economy (in percentages of the preceding year) Countries Year All Western Europe Great Britain Belgium The Netherlands Italy France West Germany USA Canada Deve lopJapan in;j countries 1951 9.0 9.5 6.0 13.0 -3.5 15.0 14.5 14.0 8.5 5.5 40.0 7.0 1952 2.5 1.5 -3.5 -4.5 0 2.5 -7.6 7.5 3.0 5.5 0 4.5 1953 6.0 5.5 6.5 -1.5 9.5 7.5 1.0 9.0 6.5 7.0 7.5 8.5 1954 0 7.5 7.0 6.0 10.0 9.5 9.0 12.5 -5.0 -1.5 11.0 6.0 1955 10.5 10.0 5.0 9.0 11.0 9.5 9.0 14.5 13.0 15.0 6.5 7 . 5 1956 4.5 4.5 0 6.0 5.5 7.0 6.0 8.0 4.0 9.0 24.5 8.5 1957 2.5 4.5 2.0 0 2.0 6.5 9.0 5.5 0.5 -1.5 15.0 6.5 1958 -2.5 1.5 -1.5 5.5 0 4.0 3.0 3.0 -6.5 -1.5 1.0 6.0 1959 9.5 7.0 5.0 4.0 9.0 11.5 2.5 8.0 13.5 8.0 24.0 7.0 1960 6.0 9.8 7.5 8.0 12.5 15.0 7.5 11.5 2.5 3.5 20.0 13.5 1961 3.5 5.0 1.0 5.0 4. .5 9.0 3.5 5.5 1.8 0 20.0 7.5 1962 6.0 5.0 1.0 7.0 4.5 9.5 4.5 3.0 8.0 12.0 7.0 4.0 1963 6.5 5.5 4.0 7.5 5.5 8.5 5.5 3.0 6.5 6.5 11.0 5.0 1964 8.0 7.5 8.0 4.0 10.0 2.0 7.0 8.0 8.0 10.0 16.0 10.0 1965 7.0 5.5 3.0 5.0 5.5 4.0 2.8 7.5 8.5 8.0 3.5 7.5 [184] 1966 6.5 5.0 1.0 1.0 6.0 11.5 6.5 1.5 9.5 7.5 20.0 6.5 1967 2J5 1.0 0 2.0 4.5 9.0 4.0 -2.5 2.5 2.5 15.0 4.0 1968 8~5 7.5 5.5 6.0 11.0 6.0 3.5 9.0 5.5 7.0 15.0 9.0 1969 7.0 9.0 3.0 10.0 10.5 4.5 12.0 13.0 4.0 6.5 15.5 8.5 1970 3.0 5.5 1.0 3.0 8.5 6.5 6.5 6.5 -4.5 2.0 13.5 8.0 1971 2.5 3.0 0 3.0 6.0 0 4.0 2.0 2.0 6.0 3.0 7.5 1972 7.5 5.0 2.0 5.5 4.5 4.0 7.5 4.0 7.5 6.5 6.5 8.5 1973 9.0 7.5 9.0 7.0 7.5 9.5 7.0 7.0 8.0 9.5 15.0 10.5 1974 1.0 1.5 -4.5 3.5 5.0 5.0 3.0 -2.0 0 3.0 -3.5 3.0 1975 -6.5 -6.0 -5.0 -10.0 -3.0 -9.0 -7.5 -4.5 -9.0 -5.5 -10.5 -4.5 1976 8.5 7.0 3.0 9.0 8.0 12.0 9.0 8.0 11.0 6.0 11.0 0.3 1977 4.0 2.0 4.5 0 0 2.0 2.0 2.5 5.5 1.5 4.5 6.0 1978 3.5 2.5 2.5 2.0 1.0 1.5 1.0 1.0 6.0 3.5 6.0 2.5 1979 4.5 4.5 3.5 4.5 2.5 7.0 4.5 5.5 4.5 5.5 8.0 4.5 1980 -0.5 0.5 -7.0 -0.5 -1.0 4.5 0 0.5 -4.0 -2.5 6.5 -1.0 1981 1.0 -1.5 -4.0 -1.0 -2.0 -2.5 -2.5 0.5 2.5 1.5 3.0 2.0 Notes: A single line beneath the total indicator for the world capitalist economy indicates the peak year for the rate ol production for the period concerned and a double line, the lowest for the same period, Sources: UN The Growth of World Industry, UN Monthly Bulletin of Statistics and OECD. Main Economic Indicators for the appropriate years, [185] __PARAGRAPH_CONT__ ing phase of a business cycle and the beginning of the next. Each of them, possessing great peculiarities and reflecting the concrete features of the current moment, differs markedly from other crises in its duration, scale, and socioeconomic consequences. Comparison of these differences, and clarification of the common features of the postwar overproduction crises are the starting point for an analysis of the present-day specific features of the industrial cycles of world capitalist economy.

As we have already noted the postwar course of the general development of capitalist economy, its cyclic development included, does in fact have essential features that are displayed in a marked intensification of the urievenness and spasmodic growth of its constituent parts. These features in turn have greatly complicated elucidation of the interaction of the cyclic movement of the individual national economies' production. Still, this interaction of the national cycles within a single world cycle is clearly traceable in the postwar period. The figures in Table 18, based on UN statistics, can be taken as evidence of that.

It follows from the table, first of all, that the capitalist conception of crisis-free, `harmonious' development of tlie economy of postwar capitalism is by no means built on facts. At the same time the table confirms tbe truth and validity of the conclusion of the 1969 International Meeting of Communist and Workers' Parties that

state-monopoly regulation, exercised in forms and on a scale which moot the interests of monopoly capital and arc aimed at preserving its rule, is unablo to control the spontaneous forces of the capitalist market. Practically no capitalist stale has been able to avoid considerable cyclic fluctuations arid slumps in its economy; in some countries periods of rapid industrial growth alternate with periods in which there is a slowdown and often a drop in production.^^1^^

As is clear from Table 18 the sharpest fluctuations in industrial growth rates, with a cyclic character, have occurred in the leading capitalist countries, above all in the USA, in spite of the fact that it was there that state-- monopoly counter-crisis regulation of the economy lias been very actively and broadly practised. But state intervention in economic affairs was unable to eliminate the causes of this _-_-_

~^^1^^ International Meeting of Communist and Workers' Parties, Muscuie 1969 (Peace and Socialism Publishers, Prague, 1969), p 19.

186 cyclicity. At best the disease was postponed. At the same time the counter-crisis measures implemented by governments began to affect the specific postwar features of the movement of the separate phases of their national cycles to one degree or another, and consequently the world industrial cycle as well. Among the other factors operating on the postwar features of the cycle the commencing process of accelerated growth of the economies of developing countries occupied a notable place. In the vast majority of the latter, as we kno\v, counter-cyclic regulation was not practised; it must bo noted, however, that their annual growth rates of industrial production have been rather higher and stabler in recent decades than in capitalism's industrial centres.

In the years considered a quite consistent succession of periods of a rise and fall in the aggregate growth rates of the separate countries' industrial production is traceable through the ceaseless short-term fluctuations of their economies. Each fluctuation has its own peculiar features, but there is nothing unusual in that. There has not been a single world industrial cycle during capitalism's whole development that fully repeated the preceding one and did not reflect specific features of the current state of the economy of some one of the main groups of countries and of the internationalising of their social production. The problem of the interaction of the world cycle and the cyclic dynamics of production in the leading capitalist countries inevitably arises when we are studying these features. Our attention is therefore eaught by the following facts at the very beginning of our analysis of the data summarised in Table 18.

The two substantial declines in the general growth rales of industrial production in the 50s were the result of a quite significant economic crises in the periods concerned in the economic situation in almost all the developed countries. There was also a certain slowing of growth in the same periods in the whole group of developing countries. This process evolved on the background of an intensification of the asynchronous character of the cyclic movement of the economies of the various regions and countries connected with the long-term consequences of World War II. While there was an almost universal slowing of industrial growth rates in the early 50s, the most marked decline was experienced by Western Europe, where there was an absolute fall in 187 production in several countries (Great Britain, France, Belgium, etc.).^^1^^

Later the economies of most of Hie West European countries, Japan, and a considerable number of developing countries picked up quite rapidly and entered on an upswing. The North American countries, however, reached this upswing much later. From the middle of 1953 there were again deep crisis phenomena there that continued for the greater part of the next year, which led to a fall of industrial production by 5.2 per cent in the USA and 1.7 per cent in Canada. That ultimately conditioned the zero total growth of production in that year, since the USA was producing more than half of the total industrial product.^^2^^

During the futher movement of the world cycle, in the course of which the peak growth rales were reached in 1955 (10.5 per cent), the temporary upswing phase prepared the ground for the next crisis slump, signs of which began to show clearly at the end of 1957. The low point of this cycle was reached in 1958, when industrial production fell for the first time since the war in absolute terms, by 2.5 per cent. The crisis swept all the industrial countries without exception almost simultaneously, but with varying force. The epicentre was the USA where the annual volume of industrial production declined by more than 6 per cent.^^3^^ Most of the countries of Western Europe, Canada, and more dynamically developing Japan (whose annual increment of industrial output fell from almost 25 per cent in 1950 to 15 per cent in 1957 and 1 per cent in 1958), were drawn into it.

A characteristic of the 1957--58 crisis was that many of the countries of the primary commodity periphery had begun to _-_-_

~^^1^^ Growth rates fell on an average in Western Europe from approximately 9.5 per cent in 1951 to 1.5 per cent in 1952. At the samo time there was a decline in the corresponding indicators in Japan (from 40 per cent to 0), the USA (from 8 to 3 per cent), and in the whole group of developing countries (from 7 to 4.5 per cent).

~^^2^^ When evaluating facts of this kind we have to remember that the mean annual indices smooth out the course of the cyclic movement. It is impossible to determine the high and the low points of any one phase during a year from them.

~^^3^^ When monthly averages are taken the decline from the beginning of the crisis to its low point over the nine months of 1958 was 12.6 per cent. See Yu. N. Pokataov. Features of the Postwar Economic Cycles. In A. V. Anikin and H. M. Entov (Eds.). Mckhanizm rkoiioinichi'skogo tsikla v SShA (The Mechanism of the Economic Cycle in the USA), Nauka Publishers, Moscow, 1978, p 81.

188 experience serious economic difficulties even at the end of the preceding upswing, although their industrial growth rates as a whole did not substantially decline. At the same time the leading sectors of their economies, especially the raw material industries oriented on export, were in an extremely grave position. All that went hand in hand with a marked weakening of their position on the capitalist market.^^1^^ Separate countries, and groups of countries, did not experience the consequences of this crisis of the late 50s to an equal extent, and the crisis phase was not protracted. World industrial production soon again reached quite high growth rates (in 1959 growth was more than 9 per cent).

The capitalist economy of the 60s was characterised by a further intensification of the unevenncss of the growth of its various parts, which could not help affecting the dynamics of its cyclic development. In several industrialised countries and many developing ones the tendency noted in the 50s toward a certain acceleration of industrial growth rates was maintained, which encouraged a strengthening of the asynchronous character of their movement in various countries and groupings. The amplitude of the cyclic fluctuations of world industrial development indices was less marked in the 60s, on r,n average, than in the preceding decade.

The consequences of the major recessions in some countries were compensated one way or another on the whole by higher growth rates in others. There was a marked slowing of production rates in 1961, for instance, in the USA, Great Britain, France, West Germany, the Netherlands and certain other countries, associated with features of their cyclic movement, and bearing the character of a partial overproduction crisis. But because of the quite high growth rates in several other countries, including Japan (20 per cent), Italy (9 per cent), and the developing countries (7.5 per cent), the average annual increment of the industrial product was 3.5 per cent in 1961 for the whole non-socialist world, against 6 per cent in the preceding year.

_-_-_

~^^1^^ The average price index of their exports declined noticeably during the crisis; the physical volume of their exports almost did not increase, while their imports full in absolute terms. For fuller details see V. Rymalov and V. Tyagunenko. Slaborazvitiye slrany v mirovom kapitalisticheskom khozyaistve (Underdeveloped Countries in World Capitalist Economy), Solsekgiz, Moscow, 1961, pp 365--374.

189

In the following years the industry of France (1905), Great Britain (1962, I960), Italy (196/j),'Japan (19(15), Belgium (19GB), West Germany (1967), and certain oilier counlries, allernalcly experienced crisis phenomena, and there was a marked lowering of industrial growth in 1he developing countries as a group (from 13 per cent in 19(50 lo 4 per cent in 1962). Still, the annual growth of world capitalist industry was comparatively high and stable, not falling below 5 per cent, and being (5.9 per cent on an average for the period 1902--60.

It was in those years that views began to be very widely disseminated in capitalist economic literature that the Marxist theory of the cyclic dovelopmenl of the capitalist economy was being refuted by the real course of events, since crisis recessions in tlic economies of individual capitalist countries had now allegedly begun to be local only and had uo fundamental influence on the development of the world system.

The period favourable for broad propagation of these views was not, however, very long. In 1967 there was a substantial lowering of industrial development rales on a world scale (lo 2.5 per cenl), which showed that there was again a strengthening of the synchronous character of their development in most of the industrial centres, although a relatively high stale of business was maintained in some developed counlries (e.g. Japan and Ilaly), and in most of the developing countries. The brief boom thai began laler, which was accompanied by an increase in the world production of 8.5 and 7.5 per cent in 1908 and 1909 respectively, was in fact the forerunner of a significant fall in growth rates at the very beginning of the 1970s. As in the preceding crisis phases the centre was in Ihe USA; at the same lime the crisis manifesled itself painfully in the economies of such major countries as West Germany, Great Britain, and Italy, and to a considerable exlenl also in Japan, Belgium, and olher counlries. The national cycles were more synchronous, though they remained far from identical, and during their evolution there was no sleep curtailment of the movement of production as a whole in the developing countries and certain individual developed counlries (France and llu; Netherlands).^^1^^

_-_-_

~^^1^^ Wo must draw allonlion hero lo the fact, thai there was a relative fall in growth rates in these countries, which were about halved in __NOTE__ Footnote cont. on page 191. 190

This intensification of the unevenness in Ihc time, scale, and frequency of the sequence of the individual phases of Ihe industrial cycle in various countries, which was averaged out and smoothed out in Ihe summary international indicators, led to the aggregate industrial production of world capitalism not falling in absolute terms between 1959 and 197/I, i.e. for a space of 10 years. True, the gap between the highest and lowest annual growth rales was very considerable. In the late GOs and early 70s, for instance, it atlained Ihe value of a faclor of more than three (the growth of industrial produclion of the whole non-socialist world was 8.5 per cenl in 1968 and 2.5 per cent in 1971).

Was this asynchronousness of the poslwar industrial growth rates of individual countries a qualitatively new thing in the world capitalist economy? This point is becoming especially acute and pressing, for another posing of the problem follows logically from it, viz., was there a single orld cycle in the first postwar decades or did the main trends of development of capitalist society's productive power lead lo its disintegration more and more into mutually isolated national cycles?

__ALPHA_LVL3__ § 3. Synchronism and Asynchronism in the Evolution
of the World Cycle

The non-coincidence in the time, duration, and intensity of the different phases of the cycle, and in the depth of the crisis in the individual national economies, of Ihe 50s and 60s was not at all unique in the history of the world economy. On the contrary, the whole experience of the evolution of the capitalist mode of production indicates that such noncoincidence was frequently a regular form of the functioning of the world cycle.

Although the inner unity of the national cycles, linked togelher by an appropriale syslem of international division of labour, is expressed in the dynamics of the movement of _-_-_ __NOTE__ Footnote cont. from page 190. France in 1971 compared with 1909 and fell by more than two-thirds in the Netherlands. Analysis of the mean monthly rates for those years indicates, moreover, that there was an absolute fall in production in them (and in most other capitalist countries) between the highest and lowest points of this cycle (UN Monthly bulletin oj Statistics, 1970, 5; idem, 1972, 12).

191 production in the world capitalist economy, that in no way signifies that they cannot manifest themselves at different times, in different months and even years, within the context of any one world cycle. Furthermore, it inevitably remains quite probable in such a complicated, many-sided process that there will be a non-coincidence of the cyclic movement of production in separate countries, and that there will often be considerable differences in the aggregate forms of the display of this movement from the specific forms of its dynamics within the separate national economies.

When we turn, in this connection, to indisputable historical facts, they prove that the principal capitalist countries repeatedly entered the crisis phases of the business cycle at different times in the past. Over the period from 1857 to 1933 the capitalist system experienced, we know, nine world overproduction crises. In only two of them (those of 1857 and 1907) did the crisis develop in all the main countries in the same calendar year.^^1^^

That, however, in no way means that the outlines of the world cycle became more and more blurred during capitalism's conversion into an all-embracing system, or that it had already begun to disintegrate into national economies at the end of the nineteenth century. Its whole history indicates that a tendency to broaden the objective conditions of a single world cycle has predominated.^^2^^

It also does not follow from analysis of the postwar cycles that there was only a tendency then toward asynchronism, or that Hie world cycle had become more and more ' disjointed'. An opposite tendency was operating simultaneously that was above all a consequence of the whole growing internationalisation of social production and led objectively to a stronger convergence of the course of the cyclic _-_-_

~^^1^^ The world industrial overproduction crisis of 1873, for example, hit the British economy especially sharply only in 1878, while the cyclic crisis that began in most capitalist countries in 1890 manifested itself in France a year later, and in the US A only in!893 (See E. S. Varga (Ed.) World Economic Crises 1848--1935, Qglz, Moscow, 1937, p 4).

^^2^^ See L. A. Mendelssohn. Teoriya i istoriya e/konomicheskikh krizisov i tslklov (The Theory and History of Economic Crises and Cycles), Vols. 1 and 2, Sotsekgiz; Vol. 3, Mysl Publishers, Moscow, 1959, 1964; I. A. Trakhtonberg. Kapitalisticheskoye vosproizvodstvo i ekonomicheskiye krizisy (ocherk teorii) (Capitalist Reproduction and Economic Crises), Sotsekgiz, Moscow, 1954; E. S. Varga. Economic Crises. Izbranniye proizvedeniya (Nauka Publishers, Moscow, 1974).

192 development of the separate countries and principal industries. One or the other of these trends is manifested more prominently under the impact of a whole host of concrete circumstances. And there are adequate grounds, for all that, for thinking that an obvious connection between the periods of cyclic rise and fall in production growth rates predominated in the main industries of the capitalist world as well as in most of its countries.

The figures in Table 18 can be taken as confirmation of this point. After the, world crisis of 1958, for instance, a comparatively brief period of a considerable rise in production growth rates set in in almost all capitalist countries. Then the movement began to slacken almost everywhere, and reached a low at the very beginning of the 60s.

By Ihe middle of the 60s relative high indices of industrial development again began to be typical of the majority of capitalist and developing countries, which again declined in many of them from the beginning of the second half of the decade. That led in 1967 to a substantial fall in the world growth rates of capitalist industry, after which a brief cyclic boom began again in the overwhelming majority of capitalist countries.

At the very beginning of the 70s the economies of almost all these countries experienced a fall in growth rates at the same time, which led to an absolute fall of production in some of them. But a little later the economy began to pick up in all the industrialised countries in 1971, and their production of industrial goods increased somewhat on an average. The peak of the upswing in this cycle was also reached almost simultaneously in the overwhelming number of capitalist and developing countries. As a result capitalist industrial production rose by 7 per cent on a world scale in 1972 and by 9 per cent in 1973.^^1^^

Thus, there was a definite strengthening at the beginning of the 70s of the tendency toward a synchronising of the country-by-country movement of industrial development, which showed particularly clearly in the middle of the decade when the industrially developed countries began, one after the other, to enter the longest arid deepest postwar world economic crisis. This trend was undoubtedly strengthened because the crisis developed in a period of acute aggravation _-_-_

~^^1^^ UN Monthly Bulletin of Statistics, 1976, 11:XIV.

__PRINTERS_P_193_COMMENT__ 13---0170 193 of the deep conIradiclions of capitalism's whole system of world economic relations. Total industrial output consequently did not increase in its economic centres in 1974 and fell hy nearly 7 per cent in 1075. At the beginning of the 80s industrial production fell markedly in the industrial centres of capitalism compared with the preceding decade. For most countries the recovery from this crisis has the temporary character typical of recent world business cycles. In 1076 the total volume of industrial production of capitalist and developing countries was more than 8 per cent above the 1975 level; later, however, as in several preceding cycles, there was a slowing of growth rates primarily associated in the developed countries with the sluggish upswing in the leading West European countries, and in the developing countries with the comparatively slow rates of many Latin American and African countries. At the same time North America and several developing countries in Asia, especially in the Middle East, showed quite considerable growth. The growth rates of industrial production in North America, for instance, were 50 per cent higher than in Western Europe in 1976--79, and in the developing countries as a whole somewhat higher than in Latin America. There was thus a certain strengthening of the asynchronism of the development of the separate groups of countries with this phase of the world capitalist cycle. This asynchronism markedly weakened after the USA, Great Britain, Canada, France, Belgium, Sweden, and most other capitalist countries entered the next loop of economic slump at the turn of the decade to the 80s (as is from Table 18 above). In 1980, compared with the preceding year, the capitalist countries' general volume of industrial production declined by roughly 0.5 per cent. At the same time there was a steep fall in industrial growth rates in all the main regions of the developing world.^^1^^ Annual index numbers cannot, however, be considered adequate for a comprehensive description of the capitalist economy's cyclic movement. They only let us distinguish the general trends of this movement since they average out and smooth over the course of the cycle within shorter intervals. We therefore need more detailed index numbers in order to study problems of the simultaneous character and lack of __NOTE__ "s" in "study" dropped down almost one whole line. _-_-_

~^^1^^ UN Monthly Bulletin of Statistics, 1981, 2:XVI--XXVII; OECD. M in Economic Indicators, 1981, 3:20.

194 synchronisation of the cyclic fluctuations of the different parts of the world economy and of the depth of the gap between I ho highest and lowest points of each cycle. In (hat respect it is very important to analyse the quarterly figures, since that lets us get a clearer idea of the build-up of the trends of economic development during capitalism's feverish fluctuations by separate quarters. A graphic illustration of this is given by the quarterly movement of the index numbers of industrial production in seveial of the main regions at the end of the 60s and in the early 70s (see Table 19). It is a special study to elucidate the general patterns and features of the quarterly fluctuations of industrial growth rates over the whole postwar period for the various countries and regions of the capitalist world economy that does not come within the tcope of this chapter; still the rounded-off index numbers in Table 19 indicate a marked coincidence of the quarterly fluctuations in the main areas of the capitalist world, during the three considerable economic recessions successively Differed by them. In our opinion, these indices can be take:) as an important orienter for posing several pressing problems of the current cyclic development of the capitalist economy. Above all, they indicate that there are quite sizable variations in the rates of decline and growth of production within one and the same phase of a cycle. In North America, for instance, where there was a substantial drop in industrial production in 1970--71, these rates did not decline steadily.

In our view Table 19 can be used as an indicator of sorts for several problems of the present-day business cycle. It shows, for example, that there were quite considerable fluctuations of the rates of decline and growth of production within one and the same phase of the cycle. Even in North America where, in 1970--71, there was an absolute fall in the volume of industrial production, there was no steady decline of rates. The reduction in volume of production in some quarters alternated with growth in others.

At, the same time analysis of the movement of quarterly indices for the \vhole capitalist world economy enables us to draw another conclusion. Even when, according to the mean annual indices, imlnMiial production increased slightly on the whole during a world slump (as happened in the early 70s), a real decline in its scale is clearly traceable in the light of quarterly indices. Hearing in mind the ratio between __PARAGRAPH_PAUSE__ __PRINTERS_P_195_COMMENT__ 13* 195 Table 19 Quarterly Index Numbers of Industrial Production (in percentages of the preceding quarter) 1969 1970 1971 1973 1974 Countries IV I II III IV I II III IV IVt I II III IV Capitalist 5.5 Western Europe 13.0 North America 1.4 Developing 3.1 -2.5 2.3 -4.0 4.1 -2.3 2.8 -6.8 13.8 -2.7 0.5 -2.1 0.7 -1.2 3.7 1.8 2.3 -0.5 0.6 -2.6 6.1 6.9 -3.2 0.6 7.2 13.4 15.9 1.4 0.7 -1.4 2.2 0.8 -0.6 0.5 2.3 3.4 4.7 -3.2 1.7 -4.9 1.7 -3.6 1.3 -9.1 9.0 -2.5 2.5 -0.8 -3.3 -4.0 7.1 0.7 1.5 1975 1979 1980 1981* I II III IV IV I II III IV I II III IV Capitalist -6.8 Western Europe -6.7 North America -5.2 Developing -6.5 1.8 -2.7 7.3 7.3 0.0 -9.8 18.8 16.4 0.9 1.8 2.7 0.0 3.9 3.0 1.5 0.4 -1.2 -2.5 -5.9 7.9 -1.5 -3.5 -10.8 14.3 -0.6 -3.7 -2.0 4.1 -4.0 0.5 0.9---2.7 -1.1 0.9 -3.6 4.5 -3.0 0.7 -9.0 14.9 1.4 1.7 -0.3 -4.5 -0 5.0 0.1 1.2 * Estimated Sources: UN Monthly Bulletin ot Statistics for the appropriate years. [196] __PARAGRAPH_CONT__ the peak of the preceding boom (fourth quarter of 1969) and the low of this crisis (third quarter of 1970), the reduction (judging by the comparative data) was 3.3 per cent. There was correspondingly a fall in the volume of industrial production in many regions. In Western Europe, for example, it was 5.5 per cent (between the third quarter of 1969 and the third quarter of 1970), while the annual index numbers for the same years indicated a growth of industrial production by 5.7 per cent. There were also periods of a reduction in the scale of industrial production in developing countries (in t-ho first quarter of 1970 and the first quarter of 1971).^^1^^

The processes considered were displayed with special force and clarity during the world economic crisis of the mid-70s (the biggest since the war), and later again in the crisis of the early 80s. The declines in production touched bottom respectively in the third quarter of 1975 and 1980. In the first case the level of industrial production of the developed capitalist countries was nearly 11 per cent below the quarterly high of the preceding cyclic upswing, and in the second case 8.1 per cent below.^^2^^

The figures in the table also characterise certain current features of the quarterly fluctuations of industrial production in developing countries. Duringthelast world recessions these fluctuations have clearly become stronger, which has led to a slowing down, and in some quarters an absolute decline, in their rates of industrial growth. A link is clearly traceable, moreover, between the quarterly dynamics of their industry and the corresponding indices of the industrial centres of capitalism. This link was particularly marked in 1975 and 1980, when there was an absolute drop in the gross industrial production of all the developing countries, taken together, for the first time in the history of the postwar world capitalist cycle.^^3^^

Analysis of the quarterly movement of world capitalist industrial production, and of its main components, gives grounds for stating that there was certainly an absolute decline in the volume of production in the 70s and the early 80s in the overwhelming majority of countries between the _-_-_

~^^1^^ UN Monthly Bulletin of Statistics, 1976, 11:XII-XXII.

^^2^^ Ibid., 1977; 2; idem, 1982, 8:XVI-XXVII.

~^^3^^ In 1975 the physical volume of their industrial product fell by more than 4 per cent, and in 1980 by 1 per cent. Ibidem.

197 peak and bottom quarters of each of Ihe 18 periods of world industrial recession noted in the table.

One can say, as a result, that the quarterly changes in production, for all their dependence on seasonal and oilier current factors, make it possible to gi\e a clear picture of the length, scale, and course of the world capitalist cycle. At the same time we must not forget that the quarterly figures by themselves, out of context of the annual dynamics of the movement of production, cannot be considered the decisive instrument or the principal statistical source of information for studying the long-term trends of world cyclic fluctuations. For in periods of comparatively high business activity one repeatedly meets cases of a sharp slowing or even drop in production in separate quarters, associated with seasonal or other short-term fluctuations of the market situation.^^1^^ Study of the relations of the various sectors and spheres of world production in their cyclic development must therefore be based first of all on analysis of the annual indicators, which help us bring out the resultant trend of the long-term dynamics of the fluctuations of production and the market within a single world business cycle.

__ALPHA_LVL3__ § 4. The Capitalist Market and World Cycle

The idea that the course of world capitalism's cyclic development reflects some mechanical aggregate of the movements of national cycles is as illegitimate as the proposition that the cyclic growth of capitalist product ion within the separate, nationally isolated economies is based on their internal factors of development. The national economies of individual countries are constitutionally linked into a single economic organism by the system of international division of labour on the world capitalist market.

Karl Marx repeatedly stressed that the world capitalist economy's cyclic movement found its general expression in regularly recurring crisis fluctuations of the world market. _-_-_

~^^1^^ Such as the absolute fall in volume of worfd industrial production observed in the third quarter of 1968 (---3.0 per rent), for instance, compared with the preceding quarter, and in the third quarter of 1969 (---2.1 per cent), in the second quarter of 1972 (---2.4 per cent), and in the third qnarler of 1973 ( - 1.7 per cent). Quarterly reductions of production like these also occurred during the boom after the crisis of the mid-70s.

198 The latter, being the final result of the interlocked cyclic development of the national economies, embrace the most important aspects of the reproduction process of the separate countries.

The world trade crises (he wrote in Vol. 4 of Capital) must bo regarded as the real concentration and forcible adjustment of all the contradictions of bourgeois economy. The individual factors, which are condensed in these crises, must therefore emerge and must bo described in each sphere of the bourgeois economy and the further we advance in our examination of the latter, the more aspects of this conflict must be traced on the one hand, and on the other hand it must be shown that its more abstract forms arc recurring and are contained in the more concrete forms.^^1^^

This conclusion is logically linked with other very important tenets of Marxist-Leninist political economy that bring out the patterns of the functioning of the capitalist mode of production as a world system all parts of which are united into a single whole through the international division of labour.

Already in the middle of the nineteenth century Marx had noted that large-scale industry was closely dependent on the world market and the international division of labour.^^2^^ Developing that idea ho subsequently showed that the world market at onco is the precondition and the result of capitalist production.^^3^^

Since these theoretical points were formulated, the internationalising of social production by capital has led to an immense strengthening of international business connections on the world market. In spite of repeated crises, international trade rose by a factor of five in the second half of the nineteenth century. From 1900 to 1938 it doubled again. After World War II it grew particularly rapidly. The physical volume of foreign trade within the bounds of postwar world capitalism, much reduced by socialism, had increased more than sevenfold on the whole by 1978 compared with _-_-_

~^^1^^ Karl Marx. Theories of Surplus-Value, Part II (Progress Publishers, Moscow, 1975), p 510.

~^^2^^ See Karl Marx. The Poverty of Philosophy. In: Karl Marx and Frederick Engels. Collected Works, Vol. 0 (Progress Publishers, Moscow, f97G), p 187.

^^3^^ See Karl Marx. Theories oj Surplus-Value, Part III (Progress Publishers, Moscow, 1978), p 253.

199 Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1982/WCE326/20070620/299.tx" __EMAIL__ webmaster@leninist.biz __OCR__ ABBYY 6 Professional (2007.06.20) __WHERE_PAGE_NUMBERS__ bottom __FOOTNOTE_MARKER_STYLE__ [0-9]+ __ENDNOTE_MARKER_STYLE__ [0-9]+ 1938, and trade in industrial items more than tenfold.^^1^^

New trends in economic relations connected with the rapid development of the international exchange of scientific and technical knowledge and know-how, new forms of capital export, the unprecedented growth of international specialisation and co-operation of production, the advent of new means of transport and further development of transport systems, etc., have notably expanded in the capitalist market in recent decades and acquired a considerable scale. All that __PARAGRAPH_PAUSE__ Fig. 13 Dynamics of international trade on the world capitalist market * (in percentages of the preceding year) 13-- 12-- 11-- 10-- 299-1.jpg \ 7-- 6-- 5. 4-- 3-- 2-- 1-- 0. -2-- -3-- -4-- -5-- "6"i 1950 51 52 53 64 55 56 57 53 S3 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 »8 I98t * Index of physical volume of exports Sources: UN Statistical Yearbook and Monthly Bulletin of Statistics for the relevant years. __PARAGRAPH_CONT__ has undoubtedly complicated final analysis of the processes taking place on the capitalist world market,^^2^^ but a guiding thread in this analysis continued to be the dynamics of international trade, which reflects the cyclic course of development of capitalist production. The most generalised indicators in this regard are the annual changes in the aggregate rates _-_-_

~^^1^^ These points will be discussed in more detail in the next part of the book.

^^2^^ The long-term developments of the postwar world capitalist market have been studied in detail by P. I. Khvoinik in his already cited Mezhdunarodnaya kapitalisticheskaya torgovlya (International Capitalist Trade), Mysl Publishers, Moscow, 1977.

200 of growth (or recession) of the physical volume of world capitalist exports, which in essence characterise the real scale and long-term trends in changes in the volume of trade on the world market (see Fig. 13).

The graph indicates that a definite cyclic trend of development of a long-term character made itself felt, as before, in the postwar period, through countless fluctuations of the elements of the world market. After each upswing of the growth rates of trade, there was invariably a recession, followed by a new upswing fraught with another recession, and so on. In the period under review several such cycles can be traced in trade as well as in industry.

Thus, the very substantial fall in the growth of world trade in the early 50s, which led to an absolute reduction in its volume in 1952, was later succeeded by an upswing that reached a peak in 1955. The next cycle began with an even more marked slump in 1957--58. Later the outlines of this type of cycle were not so marked, especially in its lower phases, but in those years, too, there were several cycles. Their troughs occurred in 1961, 1967, 1971, and 1975. In other words, for all the differences, the length of each of them averaged four to six years and was noticeably shorter than the periodicity of the market's cyclic fluctuations in preceding stages of its evolution.

The following features in the analysis of the dynamics of the growth rates of international trade since the war catch one's attention. Whereas the trough phases in the 50s were marked by an absolute fall in the physical volume of trade, such was not the case in the 60s. The trough was relatively shallower and did not sink below 4.2 per cent in relation to the preceding year.

Hence the question naturally arises whether this feature of the market, characteristic of the 60s and early 70s, was a quite new phenomenon, i.e. whether two qualitatively distinct stages must be distinguished when analysing its growth in the first postwar decades. For in the 50s the crisis phases of the world cycle ended in an absolute reduction in the scale of international trade, while in the 60s up to the mid-70s they were expressed in a relative fall in its growth rates. Only in 1975, for the first time since 1958, was there a marked contraction of the world capitalist market.

Here the approach to evaluating the ratio of the indicators that characterise the boom and crisis phases during 201 the modern capitalist economy'scydicdevelopment inevitably conies to the fore. The point is the following: is it legitimate to include years in the crisis phase when there is a substantial slowing of the growth rates of the productive forces, while such very important indicators as the volume of world production and international trade do not fall below the level of the preceding years of cyclic upswing? Another posing of the problem also follows from that: is there a sharp dividing line between the cyclic dynamics of the evolution of world capitalist economy in the past and in the postwar decades we are considering? The approach to clarification of this point is linked, of course, with the need to consider the corresponding facts of the previous history of capitalism's cyclic development.

The view that there is an inherent crisis phase in which there is necessarily a deep, protracted fall of industrial production and international trade used to be quite commonly held in the Soviet literature. The world crisis of 1929--33, in the course of which the physical volume of international trade fell by almost two-thirds and world industrial production by around a fifth, had considerable influence on the forming of this point of view. But, as the experience of the development of world capitalist economy has shown, that crisis was unique. The slumps of even the `classical' world cycles of the turn of the century, for which there are summary statistics, were by no means always, marked by an absolute reduction of the indicators of the system's international business activity.

Thus, in the 1882 crisis, world trade grew by around 4.5 per cent, but compared with the preceding boom period, this was a fall of 50 per cent (growth was 9.3 per cent in 1880). The next year, with a certain absolute fall in the volume of industrial production, the growth rates of trade fell significantly, though remaining above the 1882 level in physical volume. The cyclic crisis of the early 1890s was not accompanied with an absolute fall of world trade. In 1890 its growth was around 3 per cent against 7 per cent in the preceding year.

In spite of the subsequent decline in the .scale of world trade, its lowest absolute level in the 1890s cycle was above the corresponding high of the preceding cycle. In the 1900 crisis world industrial production increased on the whole by more than 5 per cent and. the commerce of the principal 202 trading countries by (i per cent.^^1^^ According to the UN statistics, the next year the index of the physical volume of international trade remained at the 1900 level, while the index of world production of manufactures even rose somewhat.^^2^^

Estimates based on the statistical' publications of the League of Nations, provide evidence of the dynamics of manufactnring industry during the successive world economic crises of the turn of the century (see Table 20). For all the conditional character of the summary indices presented, they make il possible for al! that to make certain generalisations of a comparative character.

Table 20 Growth Rates of Manufacturing During World Cyclic Overproduction Crises (in percentages of the preceding year) Including Years Whole world USA Great Britain Germany France Russia Sweden Belgium Italy 1889 8.6 7.1 7.2 8.2 2.5 18 .2 -1.4 6. 7 0 1800 4.8 8.4 -1.4 4.5 9.6 0 .4 25.2 -3. 0 4.7 1891 1.5 2.5 0.2 2.4 0 7 .7 2 7 -3. 1 -5.5 1892 1.2 8.6 -5.0 -3.7 -0.2 7 .6 9.3 2. 1 4.8 1899 4.7 10.0 3.6 4.2 9.5 11 .0 0 -3. 7 20.0 1900 0.1 2.0 -1.0 1.3 -0.5 8 .6 5.6 0 -15.2 1901 3.6 12.8 -1.3 1.3 -0.9 0 .3 1.1 -12. 7 10.7 1902 7.9 12.2 1.2 7.0 6.8 2 .2 3.9 27. 3 6.5 1906 4.7 7.4 3.1 5.8 7.7 7 .8 8.3 ' 7. 0 15.1 1907 3.1 1.4 0.8 -0.5 7.3 4 ,5 3.2 2. 1 10.7 1908 -8.2 -17.5 -6.3 -3.6 -1.0 2 .0 1.2 -5. 5 1.1 1909 9.7 18.8 1.9 5.6 7.5 2 .1 -4.8 11. 3 3.2 Note: the years in italics belong;, by Varna's classification, to the Initial period of the onset of world industrial crises. (See E. S. Varga (Ed.) Op. cit., p.4) fource: League of Nations Induttriuliziition and Foreign Trade (Geneva, 1945), pp. 132--135.

(1) They allow us to conclude that the course of the world market's cyclic development, when the annual indices of the physical volume of international trade did not fall in absoule terms in the lowest phases of several postwar cycles, or _-_-_

~^^1^^ Sec E. S. Varga (Ed.). Miroviye ekonomicheskiye krisisy 1848-- 1935 gg. (Moscow, 1937), pp 482--486. See also K. S. Varga (Ed.) World Economic Crises JH48--1935 (OG1/, Moscow, 1937).

~^^2^^ UN Statistical Yearbook I960, p 54.

203 fell very temporarily, is not a phenomenon that emerged then. Such cases have heen repeatedly met in the history of capitalism.

The same can be said of the spasmodic character of the dynamics of industrial growth on the scale of capitalist economy as a whole. During its long evolution there also used to he world cycles that were characterised hy substantial, but only relative, declines in the growth rates of world trade and industrial production compared with the preceding upturns.

For the period surveyed in Table 20, which covers three world business cycles, only in 1908 was there a fall in world production (of 8.2 per cent) in the main cycle-forming branch of the capitalist economy, namely, manufacturing industry. But within each crisis phase of the cycle the main countries invariably experienced absolute or sharp relative declines in the growth of production. These, however, did not always coincide within one and the same calendar crisis year.

(2) It would hardly be justified, in that connection, to consider that the decisive criterion of the onset of a world crisis was also, in the earlier stages of capitalism, an absolute and prolonged decline in the main annual indicators compared with the level already reached in preceding years. The periodicity of the cyclic fluctuations, and the scale, depth, and length of world economic crises, are determined by the main patterns of this mode of production in its most general form. In real life, the concrete course of each of them depends on the interaction of a host of historical `accidents' and the current situation in the development of the economies of the separate countries within the system of the international capitalist division of labour.

As E. S. Varga justifiably remarked, each world cycle and crisis takes on a specific character determined by a host of very different factors of both an economic and an extraeconomic order. Moreover,

not only does each world crisis have its own special, typical features but development also proceeds unevenly in the separate countries; and within them the separate industries develop extremely unevenly, there being fast growing `new' industries and alongside them `old' ones displaying a tendency to decline irrespective of the cyclic curve of reproduction.^^1^^

_-_-_

~^^1^^ E. S. Varga (Ed.). Op. cit., p 11.

204

The correctness of these statements is confirmed by the whole experience of the cyclic development of the world capitalist economy, but that experience does not provide the necessary grounds for recognising as legitimate in all respects the view expressed by Varga in the mid-30s that

with the development of capitalism crises cannot be smoothed out but must become more and more universal, deeper, and more and more frequent.^^1^^

In any case, the summary statistical indices of the rates of postwar development cited above clearly indicate that.

The frequency of world recessions of business activity has increased, but not one of them has yet been as deep or on the scale of the 1929--33 crisis. Furthermore, these crises have been characterised in the main, on the background of the certain acceleration of the growth of the productive forces in most capitalist and developing countries in the 50s and 60s, by a relative decline in the growth of international trade and production, when comparatively deeper crises alternated with shallower ones.

Study of the specific character of each of the postwar world cycles undoubtedly requires us to allow for such concrete historical factors as the various forms of manifestation of the scientific and technical revolution in one industry or another, the steady growth of economic competition between the two opposing social systems, the extension of state-monopoly control in the leading capitalist countries and on a world scale, the socio-economic consequences of the break-up of the colonial system, the intensification of the class struggle in the developed capitalist countries for their workers' vital rights, and so on.

(3) Even the deep cyclic crises of the world capitalist economy accompanied with a drop in the volume of world industrial production and international trade in fact have a temporary character, as they used to, since they are compared only with the preceding boom phase. At the same time the low of each new crisis is higher, as a rule, in absolute terms, than the corresponding level not only of the previous crises but also of the cyclic upswings before it.^^2^^

_-_-_

~^^1^^ Ibid., p 9.

~^^2^^ In the 1958 crisis, for example, the physical volume of world trade was nearly two-thirds higher than the prewar high reached in 1929, and more than double the prewar low of 1932. The aggregate __NOTE__ Footnote cont. on page 206. 205

This is one of the most essential patterns of the growth of the world capitalist economy. Crises periodically hold hack its development and at the same lime create the objective conditions for the next upturn. The capitalist economy experienced four world economic crises, for instance, between 1880 and 1913; international trade increased over, the same period by approximately 170 per cent, it- annual growth rate being around 3 per cent. The volume of world industrial production increased correspondingly by a factor of four, with an annual growth rate of more than 4 per cent. In the next 35 years (1913 to 1948), which covered two world wars and the most acute cyclic crisis (1929--33) in the history of capitalism, the annual rates of economic growth fell steeply. In the sphere of international trade they were only 0.6 per cent, and in industrial production 2.4 per cent. In the 50s through the 70s the corresponding annual indicators within the contemporary world capitalist economy were approximately 6.8 and 5.0 per cent.^^1^^

Thus, over a long period of ca; italism's development, an absolute fall in the generalised indicator of the volume of trade and industrial production was by no means always a longterm orientor for evaluating the crisis phase of its world cycle. A relative, but more or less protracted, deep fall in the aggregate growth rates of international trade and industrial production can also serve as an indicator of this. In the same way the transition from the crisis phase to the boom within one world cycle may be determined by the development of a tendency toward a considerable acceleration of economic growth relative to the low point touched in the cycle just completed, rather than by a surpassing in absolute terms of the maximum level of development of the preceding cycle.

To characterise several successive world cycles, we have to establish a system of indicators that would 'et us compare _-_-_ __NOTE__ Footnote cont. from page 205. industrial production of capitalist countries correspondingly increased by 140 per cent between 1929 and 1958, and in the early 80s crisis was almost 20 per cent above the highest level of the cycle of the early 70s. The trade turnover indices in 1975 were 3.5 times higher than in 1958. See Miruvaya ekonomika i mezhdunarodniye otnosheniya, 1963, 8, Supplement, p 5; UN Statistical Yearbook 1969, p 54; UN Monthly Bulletin of Statistics, 1977, 5:xvi; 1982, 8:XVI-XVIII.

~^^1^^ Calculated from E. S. Varga (Ed.). Op. cit.; M. B. Wolf and V. S. Klupt. Op. cit.; UN Statistical Yearbook 1969; UN Monthly Bulletin of Statistics, 1982, 6 and 8.

206 the scale of the fluctuations of the extreme phases of cycles. For that the annual growth rates over a certain period of time are above all of special value, since they make it possible to trace the long-term trends of cyclic movement on a broader scale than quarterly or monthly data.

At various stages these tendencies, of course, acquire very substantial differences. Each of them, normally covering several consecutive cycles, reflects on a longer plane the unevenness and instability of the world capitalist economy in certain conditions of its historical development.

As we have already remarked, the annual growth rates of international trade in the decades before World War I substantially exceeded the corresponding indicators of the interwar period but were much below those of recent decades. Therefore the growth rates of the physical volume of trade at the turn of the century, which were 4 or 5 per cent per annum, could have been evidence of a cyclic boom, while now the same growth may serve as the indicator of the next cyclic downturn. Thus the negative trend manifested in international trade in the mid-60s led to an approximately 50 per cent fall in its physical volume, from 10 per cent in 1964 to around 5 per cent in 1967. A considerable fall occurred in the course of the world cycle of the late 60s and early 70s, when the growth rates of international trade fell by almost half in 1971 compared with 1968 (see Fig. 13).

But perhaps the substantial changes that have occurred in recent decades in the world market have led to its cyclic fluctuations no longer adequately reflecting the cyclic character of the world capitalist economy as a whole, above all of its industrial basis, as happened in Marx's day? To clarify this point let us compare them with the indicators of the postwar development of industrial production and gross product on a world scale (see Fig. 14).

The long-term trends brought out in the graph very obviously indicate the maintenance of a synchronous movement of these indicators, which in their aggregate reflect the regular periodicity of the main phases of the modern world capitalist cycle. Instability, a spasmodic character, and cyclicity are, as before, integral features of world capitalist business, however specific the postwar conditions of development of its productive power.

It is becoming typical of the postwar capitalist economy as a whole, consequently, for there to be a quickening of its __PARAGRAPH_PAUSE__ 207 Fig. 14 Dynamics of industrial production, international trade, and GDP of the world capitalist economy (in percentages of the preceding year) o-- 299-2.jpg 1950 51 ---i------1------1------1--- 52 53 54 55 ~i-----1-----1-----1-----1-----r~ 56 57 58 59 60 61 -1-----1------1-----T-- 63 64 65 66 ---1--- 67 68 69 70 71 72 ---I--- 73 74 75 76 77 ~T---------1---------1---------1 78 79 SO 1981' * Estimated Sources: UN Yearbook of National Accounts Statistics, Statistical Yearbook, and Monthly Bulletin of Statistics, and OECD Main Economic Indicators for the releTant years. 208 __PARAGRAPH_CONT__ cyclic fluctuations and a marked modification of the phases of the world cycle compared with its previous stages of development.^^1^^

The figures adduced indicate also that there has been a certain shortening of the time scale through a contraction of all the phases, especially of the periods of depression and revival. After each phase in the crisis, a quite rapid but unsustained quickening of the development of the productive forces set in, which was later invariably followed by a crisis decline in growth rates passing once more into a comparatively short-term boom phase, and so on. This periodicity is very distinctly traceable when we analyse the dynamics of the basic industries.

__ALPHA_LVL3__ § 5. Industry in the Modern Cycle

The driving force of world capitalism's cyclic development, according to Karl Marx's conclusions, lies in the sphere of industrial production. The indices considered above characterise the overall picture of this development in its most general features. They need further refinement and concretisation, of course, both for the separate industries and the individual countries.

How has cyclic growth of the world economy developed, then, in terms of the basic industries?

In the first place there is a clear dependence of the rates of growth of the extraction and manufacturing industries (see Table 21), a dependence that is quite explicable and is governed primarily by periodically changing demand at any stage of the cyclic development of manufacturing for raw materials and fuel. In boom years, of course, the level of production growth rates in the extraction industries is usually lower than in the manufacturing industries. This reflects __PARAGRAPH_PAUSE__ _-_-_

~^^1^^ Over a long period of the preceding development of world capitalism, the periodic repetition of cycles varied from seven to eleven years. From 1825 to 1900 it was, on an average, 10--11 years, as noted by L. A. Mendelssohn, and approximately 7-8 years in the first decades of the twentieth century (see L. A. Mendelssohn. Teorlya i istoriya ekonomicheskikh krizisov i tsi'klov (The Theory and History of Economic Crises and Cycles), Vol. 1 (Sotsekgiz, Moscow, 1959), pp 127-- 128. S. A. Dalin, examining the periodicity of the development of world capitalism in tho first decades of the century in turn concluded: 'Crises became more frequent in the epoch of imperialism, before World War II. They occurred on an average every seven years.' ( Mlrovaya ekonomika i mczliduiiarodinye otnoslietiiya, 1974, 2:112).

__PRINTERS_P_209_COMMENT__ 14---0170 209 Table 2l Growth Rales of the Extraction and 15asic (in percentages of Manufacturing Industries of World Capitalism the preceding year) Industry 1953 1954 1955 1956 1957 1958 1959 I960 I 4 1 9 5.5 3.5 -3 4 7.5 II 7.5 0 10.5 4.5 3 -2.5 11 7.5 III 9.5 ---1.5 13.5 4 3.5 -4.5 13 8.5 IV 4.5 3 6 5.5 3.5 0 8 4.5 1 4 3 4 3.5 3.5 3.5 4 4 2 7.5 2 5 4.5 2 ---3.5 9 3.5 3 4 ---1 7 5.5 3 -1 9 4.5 4 10 6 11 5 2.5 1 10 4.5 5 2 4 9.5 1.5 _ 2 0 11 3.5 6 5.5 4 11.5 5 2.5 ---1 11 6 7 10 6 13 7.5 7 3 12 10 8 6.5 ---6 22 1 1 ---13 13 8 9 10 ---3 13 4.5 3.5 ---4.5 13 8 * Estimated 1961 1962 1963 1964 1965 196U 19U7 1968 1969 1970 1971 3.5 4.5 5 5 4 4.5 3. 5 6 4.5 6 2 3.5 6 6.5 8.5 8 8 2. 5 7.5 7.5 2 1 3.5 8 7 10 9 9 2. 5 8 9 2 2.5 3.5 4.5 5 6 fc.5.5 5.5 1. 5 6 5.5 2 4 4 4 5 5 5 4.5 3. 5 3.5 5.5 4 4.5 2.5 4.5 4 6 4 5.5 0 8 5.5 1 j 4 3 5.5 4 5 4 3.5 ---1 4.5 2 ---3 4.5 4.5 4.5 5.5 7 6.5 8 1. 5 5.5 6.5 2 1.5 3.5 5.5 4 8 6.5 4.5 1. 5 7.5 6.5 1 5.5 4.5 6 5 10 4.5 3.5 1 7.5 7.5 2 5 6 9.5 8.5 11 9 10.5 6. 5 12 10.5 5 6 1 3 6.5 13.5 6 3.5 ---1 8 11 1 ---3.5 3.5 8 6.5 8 9.5 10 2. 5 2.5 8.5 1 2 Notes: aggregate industries: I---mining; II---total manufacturing: III--- 1---food beverages, tobacco; 2---textiles; 3---wearing apparel & metallic mineral products; 7---chemicals; 8---basic metals; 9---metal Sources: rounded estimates from The Growth oj World Industry, UN Statistical heavy industry; IV---light industry. Separate manufacturing industries: footwear; 4---paper printing and publishing; 5---wood products; 6---- nonproducts. Yearbook, Monthly Bulletin oi Staliitia for the appropriate years. Continued __PARAGRAPH_CONT__ the objective tendency towards a slower postwar development of the former, its growth rates in the 60s and 70s, for example, being around 3.6 per cent, while those of the latter were 4.8 per cent.

When we are analysing the development of these industries, however, we cannot help seeing that their cyclic fluctuations coincide as a rule in time. In the period under review, for all the diversity of the annual indices, the highest rates for the aggregate of the one and the other occurred in roughly the same year. The lows of the cycles also almost coincided, and fell in 1954, 1958, 1961, 1967, 1971, and 1975. Within these years the differences in the lows and the temporal parameters of their fluctuations by separate quarters, and especially separate months, was very great. And although the proportion of minerals and fuel was comparatively low, the marked synchronism of the annual fluctuations in the extraction and manufacturing industries largely determined the periodicity of the succession of the phases of the modern capitalist cycle noted in Fig. 14. The data of Table 21 also __PARAGRAPH_PAUSE__ 210 Proporndustry tion in 1972 1973 1974 1975 1975 1976 1977 1978 1979 1980 1981* I 14.0 3 6.5, j 0.5 -8.5 9 4.5 ___ 4 4 ---3. 5 II 79.2 7.5 9.5 0.5 -7.5 9 4 4 4.5 ---0. 5 III 51.1 8.5 11.5 1.5 ___ Q 9.5 4.5 5 5.5 ---0. 5 IV 28.1 6.5 5.5-0.5 -3.5 7.5 3 2.5 3.5 ---0. 5 1 10.5 5 5 1 5.5 5.5 3 3.5 3 1. 5 2 4.1 7.5 5 -3.5 -4.5 7.5 ---1 1 4 5 __ 1 5 3 3.2 7 0 ---1 -0.5 6.5 0 0 1 ---3. 5 4 6 6.5 7.5 0.5 ---11 9.5 3 4.5 5.5 1. 5 5 3.4 9 7.5 -3.5 ---8 9.5 3.5 1 3.5 ---2. 5 6 3.4 6 8.5 0 ---7.5 8.5 4.5 5 4.5 ---0. 5 7 12.5 10.5 10 2 -8 13 7 5 5.5 ---2 8 5.9 8.5 12.5 1.5 -15 9 0.5 5.5 5 9 29.2 8 12.5 1.5 -8 8.5 5 5 5.5 1 __PARAGRAPH_CONT__ indicate that the industrial cycle in the world capitalist system is mainly governed, as before, by the sphere of manufacturing industry, its main industries, moreover, playing a far from identical role in this process. Their role is __PRINTERS_P_211_COMMENT__ 14* 211 largely determined by the value and relative weight that any one industry has in the total volume of industrial production.

The marked differences hetween industries on this plane are initially characterised by the summary indices of the cyclic growth of light, and especially of heavy, industry. It is in the manufacturing sectors of heavy industry (which has been taking an increasingly leading place in recent decades compared with light industry) that the modern world industrial cycle is largely generated. And the main impulses of the development of this cycle come quite logically from the developed capitalist countries.

In an analysis of the long-term trends of development of the world business cycle, the fact that periods of boom and downturn of the growth rates of light and heavy industries have converged quite closely is of paramount importance, but the range of the fluctuations between the highs and lows of the cycle in the light industries has not been so considerable as a rule as in the heavy industries, which is a consequence in the main of their slower growth rates.^^1^^ In other words, the features of the latter cyclic movement compared with the former's have led to a certain smoothing out of the acuteness of the cyclic fluctuations reflected in the summary indices of the development of manufacturing as a whole, and consequently of total world industrial production.

In fact, there has been no major branch of manufacturing industry in the postwar period whose development has run counter to the dynamics of the world capitalist cycle c nsidered above. But in some industries, because of their specific conditions, the cyclic fluctuations have not been so distinct and have been smoother. That applies above all to the food and drink industries in which the fluctuations of growth rates have always been relatively shallow in contrast to those, for example, of such light industries as textiles, clothing, and footwear. In the postwar period (with the exception ot the crises of the mid-70s and early 80s) annual growth of the _-_-_

~^^1^^ In the world industrial cycle of the late (ills and early 70s, for instance, which was completed by the 1970--71 crisis, the growth rates of the production of heavy industry fell by a factor of 4.5 (from 9 per cent in 19G9 to 2 per cent in 1971), while they fell by a factor of roughly 2.7 in light industry (from 5.5 per cent in 1968 to 2 per cent in 1970). That tendency, also observed during previous world cycles, was very graphically manifested during the world business crisis of the mid-70s.

212 production of foodstuffs did not fall below 3.5 per cent, but also did not go higher than 5.5 per cent. Even during these crises, however, there was no absolute decline of production, although the growth curve sagged steeply. Over the postwar period to 1974 inclusive there was no decline in the annual growth rates of one of the most dynamic spheres of light industry, viz., paper and printing. In those years only once, in 1957, was there an absolute decline in the volume of production of the woodworking industries, but during the last two crises there was quite a substantial decline.

There are also branches of heavy industry in which there was only a relative slowing of the growth rates of production in the crisis phases of the postwar world cycles. In the chemical industries, for example, developing very rapidly under the impact of scientific and technical progress, growth rates were not once below 3 per cent, except in 1975, although the cyclic variations in them were quite marked. In the cycle of 1954--58, for example, the gap between the highest and lowest annual levels was fourfold (13 per cent and 3 per cent). Thus, separate groups of industries affect the course and development of the world cycle differently. The basic metal and metal-working industries have a leading place in this respect. Their cyclic fluctuations, combined with corresponding spurts and declines in the growth rates of several light industries (textiles, clothing and footwear) play the most active role in shaping the postwar industrial cycle. They have also primarily determined the depth of its crisis phases.

The four groups of industries reviewed below include, as before, the bulk of the industrial output of the capitalist economy. Their development trends mainly characterise the cyclic course of production of the corresponding light and heavy industries. Despite the quite natural differences in their dynamics, the graph brings out with extraordinary clarity the same temporal synchronism of cyclic fluctuations, with an average periodicity of four to six years, which cannot, of course, be explained at all by patterns in the periodic renewal of their fixed capital. The periods of this renewal, moreover, are essentially specific in each industry and usually have a much longer character linked in the main with the gradual obsolescence and wear and tear of equipment.

The prime causes of the periodicity of the fluctuation of industrial, and generally of economic, cycles noted in the 213 postwar capitalist economy, are undoubtedly governed by a complex set of very different factors. To explain them calls for a special industry-by-industry and country-by-country analysis, but it is clear in any case that this periodicity stems from the regular interconnection objectively established in recent decades between the cyclic variations of the growth of industrial production and the ratio of aggregate supply and demand on the world and national markets, which spontaneously govern the volume of this production. The contracting periodicity over the postwar decades in turn characterises the growing instability of capitalism's economy. Study of this consistent postwar periodicity is essential in order to explain not just the past and current trends of world capitalism's development, but---and this is the main point---the outlook for coming decades.

__ALPHA_LVL3__ § 6. Can We Forecast World Economic Crises?

It is becoming of paramount importance for analysis of the historical future of capitalism to investigate the longterm outlook of its cyclic development. It is therefore not fortuitous that this study is engaging the close attention of both Marxist and capitalist economists. The ideological struggle between them in this field is developing mainly around the fundamental causes of business cycles, especially around whether or not it is possible to eliminate sharp cyclic fluctuations of the economy within the framework of this mode of production, rather than in the sphere of estimating the scale and duration of already past cycles.

Since the facts of the past speak for themselves, capitalist economists and sociologists always make great efforts to refute the Marxist-Leninist theory of cycles and crises at least when projected into the future. Their aim is to question, by any means whatever, the legitimacy of employing this theory to analyse any subsequent stage of the development of capitalism. Given the economic rivalry of the two world social systems, many present-day capitalist economists have begun to place special hopes on state-monopoly methods of counter-crisis policy. The compilers of President Kennedy's economic report to^Congress, attaching decisive importance to these methods, remarked, for example, in 1962 that 'the business cycle does not have the inevitability of the 214 calendar' for the United States.^^1^^ The same idea was also put forward in his next report. But such statements are clearly at .variance with all the facts of the past^and with the postwar trends of the economies of the USA [and other capitalist countries.^^2^^

As we have already remarked, there is a tendency in the Western literature, especially in publications that do not have very great confidence in the traditional postulates of capitalist political economy, to recognise the inevitability, in one way or another, of the cyclic development of the capitalist economy and its regularly alternating slumps and booms. But they combine attempts to examine the objective causes of the cyclicity with a steady striving to explain them each time by concrete spontaneous processes of one sort or another of the economic situation without reference to the general socio-economic patterns of the functioning of the capitalist mode of production.

As Karl Marx pointed out in his day, students of capitalism's cyclic development

treat every new crisis as an insulated phenomenon, appearing for the first time in the social horizon, and, therefore, to be accounted for by incidents, movements and agencies altogether ^peculiar, or presumed to be peculiar, to the one period just elapsed between the penultimate and the ultimate revulsion. If natural philosophers had proceeded by the same puerile method, the world would be taken by surprise on the reappearance even of a comet.^^3^^

The same methodological approach continues to dominate capitalist economics today. The well-known American economist J. K. Galbraith, for instance, characterising the causes of the 1974--75 crisis in an interview entitled 'Why the Economy Is in a Mess---and What to Do about It', said: _-_-_

^^1^^ Economic Report of the President. Transmitted to the Congress, January 1962 (U.S. Govt. Printing Office, Washington, D.C., 1962), p 17.

~^^2^^ The New York Herald Tribune said on this in 1963, not without sarcasm, that the Kennedy Administration suggested that the USA could change the business cycle, which was almost the same as saying that it could alter the law of gravity. To say that a recession did not necessarily follow a boom, it said, was like saying that an object thrown into the air would not fall back to earth.

~^^3^^ Karl Marx. British Commerce and Finance. Collected Works, Vol. 16, p 34.

215

The recession was a matter of policy. I would attribute most of it to the use of tight money----to the use of high interest rates to curb bank lending and thus to reduce inflation. There was, additionally, some overflow effect from the high oil prices.^^1^^

Another American sociologist, Herman Kahn, Director of the Hudson Institute, declared at the end of 1974:

My feeling is that we are going through a transition that could make the 1970s a turning point in the history of the world. In other words, we could be on the threshold of a long period of orderly and si/stained growth which will solve many of the problems everybody is worrying about today__ In fact, our studies at Hudson Institute suggest that what we're actually going through now are mostly the growing pains of success and some elementary mismanagement.^^2^^

In addition, one often finds the idea in the postwar Western literature that capitalism will have to reckon in the future on the inevitability of disruptive consequences from future cyclic crises. The spokesmen of capitalist ruling circles are caused special disquiet by the fact that any ordinary economic crisis may he fraught, in a situation of an orgy of inflationary chaos, mounting instability of world capitalism's monetary and financial system, and of sharp aggravation of its energy problems, etc., with far-reaching social upheavals. They naturally see the prime cause of such a danger, of course, not in the nature of capitalist production itself, or in its unresolved contradictions, but in the probability of individual statesmen pursuing `shortsighted', `incompatible' economic policies, or in serious disturbances of the machinery of world economic relations like the energy crisis, etc.

When, for example, the world capitalist economy began, after the brief boom of 1972--73, to slide again into a recession, the British weekly The Economist wrote:

Britain may bo heading for its worst slump since the interwar years, because of an undeliberated repetition of the mistakes of 1970--71 on five times the scale.^^3^^

About the same time David Rockefeller, chairman of the Chase Manhattan Bank, warned in New York that the energy crisis `could' precipitate a world depression.^^4^^

_-_-_

~^^1^^ U.S. News & World Report, 3 November 1975, p 41.

~^^2^^ U.S. News & World Report, 2 December 1974, p 53.

~^^3^^ The Economist, 23 March 1974, p 15.

~^^4^^ The New York Times, 8 February 1974, p 41.

216

During the 1074--75 world crisis the forecasts of economists in several capitalist countries began to foresee the probability of the onset of a subsequent business crisis.^^1^^

Such forecasts are very symptomatic, and reflect recognition of the fact thai state-monopoly capitalism's many counter-crisis measures do not yield the expected effect, that the ultimately unmanageable chaos of capitalist economy engenders the cyclic character of its development and objectively carries within it a destructive potential of considerable force. For instance, a number of leading capitalist theoreticians of government counter-crisis policy had already been bitterly forced in the 60s to recognise its feebleness.^^2^^

When attempts are made in the capitalist economic literature to peer into the future movement of the world capitalist cycle, they do not usually pursue the goal of an, in any way long-term, forecast, but are limited to evaluating the immediate prospects, and as a rule are made in conditions when the main economic indicators of several countries have already pointed to the approach of another cyclic crisis.

A very important place is assigned here, moreover, to modern computers. A writer in The New York Times, being ironic in this connection about economists' lack of any theoretical developed conception of the cyclic movement of political economy, wrote after the world crisis of the 70s:

Contemporary economics employs, for soothsaying, the most impressive black magic of all: science, out of the bowels of computer.... It will yield quantitative outputs when you feed it quantitative inputs.^^3^^

_-_-_

~^^1^^ According to the model of the development of 11 capitalist countries developed by the American research firm Chase Econometric Associates, for instance, the onset of another world slump was to be expected at the end of the 70s after a short cyclic boom.---See Byulleten inostrannoi kommercheskoi informatsii, 25 March 1975 (published by the Market Research Institute of the USSR Ministry of Foreign Trade), pi.

~^^2^^ 'Many have felt it necessary to turn away from conscious management,' Alvin H. Hanson wrote, 'and to develop instead an automatic scheme of adjustment.' ({Justness Cycles and National Income, Norton & Co., New York, 1964, p 543). And one of the champions of this policy in the USA, Walter W. Heller, ex-chairman of the President's Council of Economic Advisers, recognising the failure of the policy of controlling cyclic development on the eve of new upheavals of the capitalist economy, said: 'Gone is the countercyclical syndrome of the 1950s' (New Dimensions of Political Economy, Harvard University Press, Cambridge, Mass., I960, p VII).

^^3^^ Leonard Silk. Art of Forecasting Is Ancient, Arcane. The New York Times, 3 January 1977, pp 33, 35.

217

But can the periodicity of world cycles embracing all the main groups of countries and industries of the capitalist economy, with the boundless specific character of the trends of development of each of them, in general be forecast on a more or less long-term basis? In contrast to capitalist political economy Marxist political economy gives an affirmative answer to that question. An infinite number of 'vectors of force' operate during each national cycle, and even more of each world one, and not only vectors of an economic order. A considerable number of them are not amenable at all to precise accounting and theoretically substantiated prediction.

Just the same Karl Marx managed in his day to create a scientific methodology for approaching long-term forecasting of the cyclic development of'capitalism as a socio-- economic system linked into a single economic organism by the world market.

In the attempt at laying bare the laws by which crises of the market of the world are governed, not only their periodical character, but the exact dates of that periodicity must be accounted for. The distinctive features, moreover, peculiar to every new commercial crisis, must not bo allowed to overshadow the aspects common to all of them.^^1^^

In the course of these crises, moreover, in which, as Marx noted, the contradictions of all the elements of the capitalist process of production were reflected, the consequences could, in turn, become causes, and phenomena not originally regular, but apparently haphazard, later begin to have an increasing influence on the periodicity of the succession of the world cycle's phases.

Developing these propositions in subsequent work on the French edition of the first volume of Capital, Marx stressed:

So far the periodic length of these cycles is ten or eleven years, but there is no reason to think that figure constant. On the contrary, one may infer from the laws of capitalist production, such as we have just developed them, that it is variable and that the period of the cycles will gradually shorten.^^2^^

These deductions, confirmed by incontestable historical facts, provide the initial methodological basis for analysing _-_-_

~^^1^^ Karl Marx. Art. cit., p 34.

~^^2^^ Karl Marx. Le Capital (Editions socialcs, Paris, 1970), p 280.

218 not only the past and current lines of development of the world capitalist cycle, but also of its prospective ones. As the productive forces have grown and been internationalised their time scale has in fact acquired a tendency to shrink in which is reflected, in particular, the deepening of the main contradiction of this mode of production.

Long-term analysis of the postwar cyclic fluctuations of production and international trade allows us to consider the onset of the world crises in the 70s to have been a completely natural phenomenon. In a situation of mounting inflation, acute aggravation of the monetary and financial, energy, raw material, and other world economic problems of capitalism, it was also not fortuitous that they affected the overwhelming majority of industrially developed countries and many developing ones. These crises, in which all the main contradictions of modern capitalism were manifested, in fact completed the ordinary world business cycles of the 70s, and laid the material basis for the next effect of the cyclic development of production in world business.

It is impossible, of course, to determine in advance, with the necessary reliability, just how this process will develop in the 80s, let alone the 90s, whether the regular cyclic crises will^become more destructive or shallower compared with the corresponding phases of preceding cycles, and whether it will be expressed in an absolute decline in the main annual indices for the whole world economy, or in only a sharp relative fall of them. All that will depend on the concrete combination of the most varied factors, including whether the various countries and spheres of the world economy enter the crisis simultaneously or separately, at what time in one calendar year or another the boom phase will be completed and the fall in production growth rates begin in the main cycle-forming industries. That will also depend on the further effect on their course of development of such crisis processes of a non-cyclic character as the primary commodity, energy, and foreign exchange crises, unchecked inflation, etc. The influence and dynamics of the growth of socio-political contradictions, and of the most important trends in the evolution of the international situation, will also affect the shaping of the features of the next world cycles.

But, allowing for all these factors, one thing is certain: 219 new cyclic explosions of the world capitalist economy are quite to be expected and inevitable. Modern capitalism, though employing the whole arsenal of state-monopoly measures, is unable to avoid them.

The postwar development trends reviewed above allow us to suggest that the world economic cycle of the second half of the 70s will in all probability be completed at the turn of the decade by a new crisis phase, which will probably mark capitalism's entry into the next cycle, which can be expected to last, judging by the trends considered above, until the middle or the early second half of the 80s.

The threat of even more powerful economic upheavals than the 1974--75 crisis will continue in the future. In any case the now rapidly increasing instability of the capitalist economy, and especially of the system of world economic relations, in the present stage of the general crisis of capitalism is more and more extending the objective premises for the probability of such upheavals with serious repercussions on the living standards of peoples and therefore fraught with serious social consequences for the capitalist social system.

Study of the patterns of postwar cyclic movement in no way excludes, of course, the need for a systematic investigation of the concrete phenomena and inner logic of this movement in individual countries and industries in the context of the world cycle, but on the contrary presupposes it. But a truly all-embracing idea of the beginning of the next world cycle and of the timing of the succession of one phase by another, can mainly be got by a combined, interlocked analysis both of the long-term economic processes in capitalist countries and of the system of world economic relations as a whole in the given concrete situation.^^1^^

_-_-_

~^^1^^ A striking example of the unity of a theoretical and concrete appreciation of the outlook for the succession of a boom phase by a crisis phase is a statement made by Engels at the time when the general Marxist theory of cycles and crises was still in its development stage. In a letter to Marx of 20 April 1852 Engels wrote: `By all the rules the crisis should come this year, and apparently it will; but when one considers the present quite unexpected elasticity of the Indian market and the confusion caused by California and Australia, and also the cheapness of most raw materials, which has likewise kept the industrial product cheap, and the absence of any big speculation, one is almost tempted to prophesy a specially protracted length for the present prosperity period' (Karl Marx, Friedrich Engels. Werke, Vol. 28, Diotz Verlag, Berlin, 19(53, pp 52--53).

220

This kind of analysis is particularly urgent today when the internationalisation of production and level of the international division of labour have reached unprecedented heights. The patterns of the dynamics and periodicity of the cyclic fluctuations of any country's economy taken separately are now almost impossible to appreciate and comprehend simply from studying its internal trends of development, leaving aside their interaction with similar tendencies in other countries, and so with the long-term patterns and current peculiarities of the movement of the capitalist cycle in general. It has hardly been justified, moreover, to limit this interaction in recent years simply to the context of the industrial centres, leaving out of account the peculiarities of the effect of the break-up of the colonial system on the world cycle and the specific features of the postwar cyclic development of the periphery stemming from that.

The statistics cited above indicate that the acceleration of developing countries' industrial growth rates has so far, as a rule, encouraged a certain smoothing out of the depth of world recessions of production. During the whole cyclic development of capitalism since World War II their annual rate of industrial production, and of the GDP as a whole, has not once fallen in absolute terms below the level of the preceding years, although the range of fluctuations of their growth rates between the high and the low of each world cycle has been very considerable. The expanding markets of the developing countries at the same time favoured a shortening of the passage from the crisis phase to the boom phase.

This influence of the consequences of the break-up of the colonial system on the course of the contemporary world cycle may probably be maintained to some extent in the immediate future as well, but it is most likely to prove passing. Given further intensification of the immanent laws of the capitalist mode of production in developing countries, their economic development may already be transformed in the distant future from a smoothing factor to one consistently aggravating world capitalism's cyclic fluctuations.

The development trends of the fundamentally new industries whose origin is directly linked with the advances of the scientific and technical revolution, and in no small degree 221 with the unprecedented increase on that basis of militarisation of the economies of many capitalist countries, will in all probability operate in the same direction. The new chemical and manufacturing industries (electronics, aerospace, most branches of military production largely based on budget appropriations and government orders, etc.) played a damping role in one way or another in the first postwar decades, and still do so, in the cyclic production recessions of the industrial centres, but in recent years this role has not been so strong, and has naturally begun to decline.

The development of the technically more advanced industries, also subject to the operation of the objective laws of the functioning of capitalist production, ultimately leads to further growth of its inner contradictions that govern the dynamics and scale of world business cycles. The facts of the absolute decline in the level of production during the crisis of the mid-70s in the technically more perfected and newer industries that had continued to show quite high growth rates during the preceding postwar overproduction crises points to that. There are solid grounds for suggesting a heightened role of industries of this kind in the cyclic phases of the economy of modern capitalism.

When we make a comprehensive study of all these trends so important for understanding the structural shifts being considered and the crisis processes in the world capitalist economy, it would be wrong, however, to ignore the gradually appearing prospect of limiting the sphere of operation of trends of this kind on the world capitalist cycle within the context of the world economy because of the probable extension in coming decades of the objective premises for consolidating a mutually advantageous and stable division of labour between socialist countries and the countries of the nonsocialist world. The acuteness of the cyclic production crises may apparently be attenuated to some extent for those capitalist and developing countries that take the road of strengthening comprehensive economic and technical cooperation with countries with planned economies in every way possible. The patterns of the socialist mode of production and its international relations will inevitably have an increasing effect on world economic relations in the last quarter of the twentieth century.

As the effect of socialism and the scientific and technical revolution on the growth and internationalisation of social 222 production increases on a world scale, the task of studying the cardinal problems of the cyclic development of the capitalist system as a whole, and of its component parts, will undoubtedly become more complicated and broadened. And so long as this system exists these tasks will remain of paramount importance for study of its antagonistic contradictions, which are graphically manifested in world cyclic crises of overproduction.

[223] __NUMERIC_LVL1__ Part III __ALPHA_LVL1__ THE INDUSTRIAL
AND PRIMARY COMMODITY BASE
OF THE WORLD CAPITALIST ECONOMY __ALPHA_LVL2__ [introduction.]

Many features of the capitalist system today are connected with substantial shifts in the structure of its material production. We have tried in the previous chapters, to give a comprehensive description of the most common, mutually conditioned postwar changes in this system. This part is devoted to analysing the main capitalist industries, primarily manufacturing. The following facts indicate its role and significance. At the end of the 70s it was generating more than a quarter of the value of the GDP, three-fifths of the material production, and around six-sevenths of the total industrial production of the countries of the non-socialist world (around nine-tenths in the capitalist countries and three-quarters in the developing countries). More than 90 per cent of all the jobs in industry were concentrated in manufacturing in both groups of countries. The bulk of the goods entering international trade now are produced by it.

The postwar changes in manufacturing decisively affected the trend of development of the primary commodity industries, so that they have largely determined the most important features of today's world market, the course of the internationalising of social production, and consequently the whole system of the capitalist international division of labour.

224 __NUMERIC_LVL2__ 6 __ALPHA_LVL2__ THE DETERMINING TRENDS
IN THE POSTWAR DEVELOPMENT OF MANUFACTURING __ALPHA_LVL3__ § 1. General Results

The aim of this chapter is to investigate those long-term, reciprocally interacting trends in which the main outlines of the changes taking place in manufacturing are revealed. World War II introduced adjustments in the industrial structure of capitalism established earlier. It led, as we know, to great destruction in the economies of most European countries, and to significant changes in the balance of power between the main centres of capitalism. The 1946 volume of industrial production in Western Europe, for example, was 30 per cent below that of 1938, and in Japan more than 70 per cent below.

At the same time, however, industrial production had grown apace in the other capitalist countries and pimary commodity producers whose territory had not directly suffered from military operations. Its volume in the United States, for instance, increased by nearly 90 per cent, in Canada by more than two-thirds, and in Latin America by approximately 50 per cent. The physical volume of world capitalist industrial production was consequently 45 per cent above the 1938 level in 1948, within the present boundaries of capitalism.^^1^^

Although restoration of several of the leading industries continued over the next few years in the countries that had suffered most from the war (the industrial production of Great Britain and Italy, for example, only surpassed the prewar level in 1949, of West Germany in 1950, and of Japan in 1952), the end of the 40s can be taken as the initial period of the general postwar changes in capitalist manufacturing. _-_-_

~^^1^^ OEEC. Industrial Statistics, 1900--1957 (OEEC, Paris, 1958); UN Monthly Bulletin of Statistics, 1957, 7.

__PRINTERS_P_225_COMMENT__ 15---0170 225 It was then that capitalism's international links were restored and later rapidly expanded.^^1^^

The tendency inherent in the productive forces of capitalism toward a strengthening of the role and significance of manufacturing in material production began to manifest itself with special clarity from the end of the 40s, and was expressed in a marked quickening of its growth rates in relation to growth of the aggregate GDP of the countries of the non-socialist world. In spite of repeated, steep cyclic fluctuations, the annual growth rates of manufacturing were above 5 per cent in the postwar period. The volume of manufactures in the period considered in Table 22 alone increased (in constant prices) by 150 per cent (140 per cent in the industrial countries and 280 per cent in the developing countries).

Tablje 22 Annual Growth Rates of Manufacturing by Regions and Countries including Region/country 1960--1981* 1960--1973 1973--1981* All countries 4.5 6.1 2.0 Developed capitalist countries 4.2 5.9 1.8 North America 3.7 4.8 1.9 USA 3.8 4.7 2.0 Western Europe 3.7 5.4 1.2 Japan 8.8 12.7 2.9 Developing countries 6.5 7.7 4.6 Asia 6.7 7.9 5.1 Africa 6.9 8.4 4.4 Latin America 6.2 7.6 4.1 * Estimated Sources: calculated from UN Handbook of World Development Statistics, (United Nations, New York, 1979)t UN Statistical Yearbook, and UN Monthly Bulletin of Statistics for the appropriate years.

The world business crises of the mid-70s and early 80s led to the most substantial reduction of production growth rates in manufacturing industries of recent decades. Although __PARAGRAPH_PAUSE__ _-_-_

~^^1^^ The index of the physical volume of capitalist world trade in manufactures was nearly a quarter above the 1938 level in 1948. UN Statistical Yearbook 1973 (United Nations, New York, 1974), p 55.

226 Fig. 15 Dynamics of the development of manufacturing industry in world capitalist economy (1960=100) 300-- HEAVY INDUSTRY ALL INDUSTRIES LIGHT INDUSTRY 250-- 299-3.jpg 200-- 150-- '960 ,965 ,970 Sources: UN Statistical Yearbook and Monthly Bulletin of Statistics for the relevant years. 5975 1981 __PRINTERS_P_227_COMMENT__ 15* [227] __PARAGRAPH_CONT__ growth continued in the developing countries, its dynamics also declined markedly, especially in Latin America, after the crisis of 1974--75.

These generalised figures of course obscure immense differences in the dynamics of the growth rates of the main manufacturing industries in the various regions and countries. In fact they are only the starting point for subsequent study Oi the organically interconnected long-term trends that ultimately characterise the postwar changes in the industrial structure of the capitalist economy.

The regional features of the growth of manufacturing will be analysed below in the course of a more concrete investigation; here it is advisable to bring out the dynamics of the processes, which will enable us to picture more clearly the most general changes occurring in recent decades. These processes include, first of all, the course and changing ratio of the development rates of heavy and light industry on a nonsocialist world scale, above all in the main industrial centres where the lion's share of the total product of capitalist manufacturing is created at the present time.

The composite data of the international statistics indicate that there have been very significant long-term differences in growth of the potentials of the two most important constituents of manufacturing, i.e. heavy and light industry. In the former the physical volume of production over the period under review increased roughly by a factor of 5.7 but in the latter by only a factor of 3.4. In other words, heavy industry outpaced light in the postwar years by 70 per cent,^^1^^ which could not help leading to substantial shifts in the macrostructure of manufacturing and consequently also in the ratio of the two parts. There is an ever growing gap in the dynamics of their development. (See Fig. 15)

It would not be right, however, to consider these trends simply as features of the postwar decades. They have a longerterm character. They started in the nineteenth century when capitalism passed to the stage of large-scale machine industry, whose growth began, in fact, to govern the _-_-_

~^^1^^ It must be taken into account, in regard to this estimate, that the UN statistics include the output of a number of consumer goods, primarily consumer durables (motor cars, refrigerators, television sets, radios, etc.) in the index for heavy industry, in addition to means of production.

228 subsequent development of its industrial base.^^1^^ Under monopoly capitalism the ratio between heavy and light industry altered even more rapidly in favour of the former, although the historically determined preponderance of light industry in the total value of industrial output was still maintained right up to the end of the 1930s. On the eve of World War II light industry contributed around half of the total value of the industrial production of the capitalist world.

The further course of events, however, altered this ratio in an important way. At the end of the 1970s the weight of light industry in manufacturing had already fallen to onethird, and that of heavy industry risen to two-thirds. When we take all industry, then according to the UN statistics, the share of light industry was a little more than a quarter at that time, and that of heavy industry nearly three-fifths of the total volume of industrial production of capitalist and developing countries taken together. That is one of the most important results of the postwar changes in the industrial structure of the non-socialist world, and an extremely important one as regards its economic consequences.

When studying the shifts in manufacturing, however, we must bear the following circumstance in mind. While analysis of the preceding stages of industrial development could be limited in practice to investigation of the processes taking place in the main capitalist centres, such a limitation is no longer quite justified. Given that the increasing interaction of the forces of socialism and the national liberation movement have irreversibly broken imperialism's former allembracing monopoly in the world economy and world politics, and that the bulk of the countries of the former colonial periphery of imperialism have taken the road of national independence, the commencing industrialisation of the developing countries' economies is becoming of no little importance for a comprehensive description of the structure of manufacturing in the world capitalist economy.

_-_-_

~^^1^^ The ratio of heavy and light industry at the turn of the century was as follows in the leading countries, according to certain estimates: Germany and France 1:2.3 (1895); the USA 1:1.8 (1880); Great Britain 1:1.7 (1901); Belgium 1:1.7 (1896). See W. G. Hoffmann. The Growth of Industrial Economies (Manchester University Press, Manchester, 1958),^p 83.

229 __ALPHA_LVL3__ § 2. The Industrial Countries
and Primary Commodity Producers

What is the role and place of the two main groups of countries (industrially developed and developing) in the changing 'balance of forces' between heavy and light industries in the postwar period? The answer to that calls first of all for a comparison of the long-term trends in their industrial growth. The comparison leads to the following summary estimates.

Thf, annual growth rates of the light industry of industrially backward countries in Asia, Africa, and Latin America was 4.7 per cent in 1960--80, and of heavy industry more than 7.5 per cent. The same indicators were patently lower for the whole group of developed capitalist countries, being respectively 3.2 and 4.8 per cent. As a consequence the physical volume of light industry increased in developing countries (in comparable prices) by almost 160 per cent, and in developed countries by 170 per cent. The same tendency was to be seen in heavy industry on an ever bigger scale. The volume of production rose almost fivefold in the first group, and fourfold in the second. The crisis fall in production in the industrial centres in the mid-70s and early 80s enhanced the effect of this trend (see Table 23). The 1981 physical volume of the __PARAGRAPH_PAUSE__ Table 23 Comparative Indices of the Heavy and Light Industries of Capitalist and Developing Countries (annual averages, in percentages) Branch of industry 1960--1981 1960--1973 1973--1981* Heavy Light Capitalist countries 4.8 3.2 6.7 4.6 1.7 1.1 Heavy Light Developing countries 7.7 4.7 9.6 5.7 5.2 3.8 * Estimated Sources: Statistical Yearbook, 1978; UN Monthly Bulletin of Statittics, 1982, 8, [230] __PARAGRAPH_CONT__ output of both their heavy and their light industries was less than 15 per cent above the level of 1973. In the same years production in the developing countries continued to expand though at slower rates: by approximately 50 per cent in heavy industry and by nearly a third in light industry.^^1^^

In the first postwar years manufacturing was still growing at higher rates on the whole in the industrial centres than in the periphery of the world capitalist economy; later, however, another trend gained the ascendency. Since roughly the middle of the 50s a more or less steady rise in the growth rates of both light and heavy industries in the periphery has become a distinguishing feature reflecting the break-up of this economy's colonial structure.

Factors of two kinds have to be taken into account from the very start when we are characterising this process. In the first place there is the very low initial level of the industrial potential of most countries in Asia, Africa, and Latin America, since only a little more than 8 per cent of all the manufactures of the non-socialist world had been produced in them at the turn to the 50s.

The most impressive shifts in the ratio of the production of light and heavy industry, as regards their scale, occurred in the industrial centres. As already noted above, the output of light industry greatly predominated in the total value of their manufactures at the beginning of the century. At the end of the 1930s a certain equilibrium had been established: roughly half of U.S. industrial output came from light industry, and correspondingly around 49 per cent in West ern Europe. But by the mid-50s heavy industry already occupied a leading position, its share of the total value of manufactures being almost 60 per cent higher than that of light industry (in North America twice as high, and in Western Europe 50 per cent higher).^^2^^,'

There has been a further development of this trend in recent years. In the early 60s the ratio of the light and heavy _-_-_

~^^1^^ It must be stressed that this course of events was not an exceptional feature of the world economic crisis of the mid-70s. The trend noted had regularly been intensified in the crisis phases of preceding postwar industrial cycles as well. Analysis of this long-term trend gives grounds for supposing that subsequent world overproduction crises may affect manufacturing in capitalist countries to a greater extent.

~^^2^^ Calculated from UN Statistical Yearbook 1968 (United Nations, New York, 1969); UN Yearbook of National Accounts Statistics, 1972, Vol. Ill (United Nations, New York, 1974).

231 industries of all developed capitalist countries was estimated at roughly 1 : 1.6, and in the early 80s already at 1 : 2.1, West European production having come close to American iii this regard. This reflects the levelling process inherent in modern capitalism (sec Table 24). The quickening __PARAGRAPH_PAUSE__ Table 24 Weight of Heavy and Light Industries in Capitalist Countries' Total Manufactures (in percentages; 1975 prices) Tiranch of Industry 1960--1961 1970--1971 1980--1981* All capitalist countries 100 100 100 Heavy (I) 61 66 68 Light (II) 39 34 32 Ratio of I to II 1.6: 1 1.9: 1 2.1: 1 North America 100 100 100 Heavy (I) 66 68 69 Light (II) 34 32 31 Ratio of I to II 1.9:1 2.1:1 2.3:1 Western Europe 100 100 100 Heavy (I) 61 65 66 Light (II) 39 35 34 Ratio of I to II 1.6:1 1.8:1 1.9:1 * Estimated Sources: as Tor Table 2:i. __PARAGRAPH_CONT__ of the growth of heavy industry compared with light is also being manifested more or less intensely in the other developed capitalist countries. Thus, whereas light industry produced rather more (in value terms) than heavy in Oceania (Australia and New Zealand) in the mid-50s. the ratio had readied 1 : 1.6 in favour of heavy industry a quarter of a century later. As for Japan the ratio there had come close to the average for Western Europe at the beginning of the 80s.

There were quite considerable changes as well in the structure of manufacturing in developing countries. At the beginning of the monopoly stage of world capitalism, as we know, only light industries had developed to a certain extent in some of them (food and drink, textiles, primary processing of raw materials). And only individual countries came al all close in output of these industries to such less developed 232 capitalist powers (economically speaking) as Japan.^^1^^ On the whole countries that are now counted as developing produced around one-ninth of the output of capitalist light industry on the eve of World War II. Its faster growth in these countries in the 50s, 60s, and 70s compared with the developed capitalist countries was the reason for their share rising from one-eighth in the mid-60s up to one-sixth at the end of the 70s, and almost to one-fifth in the early 80s.

Our analysis of these trends gives grounds for suggesting that there is a real possibility of the weight of developing countries in the total output of light industry rising further to a quarter by the end of the 80s, with a corresponding fall in the proportion of the developed capitalist countries. But for all that the gap in the per capita output of light industry between the two groups of countries remains immense.^^2^^

An even great, gap was formed in the colonial period in the sphere of heavy industry. Before World War II all its leading industries were almost wholly concentrated in a few centres. In most countries in Asia, Africa, and Latin America there were, to all intents and purposes, no enterprises of this branch of industry. In only a few of them (India, Mexico, Argentina) had the first weak shoots of heavy industry, planted mainly by expatriate monopoly capital, appeared; the leading branches, however, like engineering, chemicals, etc., did not exist at all. At the beginning of World War II only around one-twentieth of all the output of capitalist heavy industry, and one-tenth of that of light industry, was produced in all the primary commodity producing countries of Asia, Africa, and Latin America.

As the colonial basis of imperialism was overthrown in many of these countries individual heavy industry plants began to be built. That was not just the result of their fight for economic independence, however; it also manifested _-_-_

~^^1^^ The volume of manufacturing production in India, for example, was § 360 million at the very end of the nineteenth century, in Argentina $ 230 million (in 1955 prices). This was equivalent respectively to roughly four-fifths and one-half of the value of Japanese manufactures at that time. In 1910--13 the productive capacity of the Indian textile industry was more than a third that of the British and rather more than the corresponding potential of the Japanese. (See Alfred Maizels. Industrial Growth and World Trade, Cambridge University Press, Cambridge, 1963, p 535.)

~^^2^^ According to our estimates the ratio between per capita output of light industry was roughly 12.7:1 in favour of the developed capitalist countries at the beginning of the 80s.

233 a quite important consequence of the postwar economic strategy of neocolonialism, viz., the line taken by the monopolies of several capitalist countries of establishing some of the most labour-intensive manufacturing industries, and industries harmful to the environment (basic metals, petrochemicals, etc.) in the Third World. There has consequently been a tendency since the mid-50s toward a certain strengthening of the role of developing countries in heavy industry, and although it had not led, by the beginning of the last quarter of the century, to any really serious changes in the geographical structure of the distribution of heavy industry, it calls for close attention.

The real volume of the output of heavy industry rose in developing countries by 150 per cent (in constant prices) in 1963--73 alone, and by almost 50 per cent again between 1973 and 1981. The same indices for the developed capitalist countries were respectively 80 and 19 per cent, so that the proportion of the developing countries increased in this period from 4 per cent to 12 per cent. The process presents special interest as a starting point for analysis of the outlook for a break-up of the former colonial structure of the international division of labour established in the world economy during the imperialist powers' unlimited domination.

There are many facts witnessing that in the postwar years in spite of every kind of effort by the neocolonialists, a considerable part of the heavy and light enterprises earlier existing in developing countries, or newly built in them, are outside the control of expatriate monopoly capital. The public sector and indigenous national capital of these countries are becoming more and more significant in the guidance and determination of the perspectives of national industrial development.^^1^^

The most general structural shifts in manufacturing have been considered here in respect of its two main spheres of production. They undoubtedly call for a comparative description of the development of the individual heavy and light industries, but they focus attention on many features of the present stage of the growth of the capitalist world's productive forces and so of the home markets of most capitalist and developing countries. In addition to these features, _-_-_

~^^1^^ See E. A. Bragina. Razvivayushchiyesya strany: gosudarstvennaya polltika i promyshlennost (Government Policy and Industry of Developing Countries), Mysl Publishers, Moscow, 1977.

234 however, the objective needs of the development of the world market, and the patterns of the further expansion within it of internntionalisation of social production and development of the international division of labour, are being more and more manifested in thorn.

__ALPHA_LVL3__ § 3. The Increasing Internationalisation of Production

The problem of foreign markets has an essential place in study of the deep-lying patterns of capitalism as a world system. Karl Marx, analysing their role in the formation and evolution of the capitalist mode of production, and of the international division of labour corresponding to it, wrote: 'Capitalist production does not exist at all without foreign commerce.'^^1^^ Today's international division of labour, which links various countries together in a single organism and converts capitalist society into a world socio-economic system, was built up by capital on the basis of large-scale machine industry. The whole long history of the development of the productive forces of capitalism is directly dependent on expansion of its international economic connections. Largescale machine industry

produced world history for the first time, insofar as it made all civilised nations and every individual member of them dependent for the satisfaction of their wants on the whole world, thus destroying the former natural exclusiveness of separate nations.^^2^^

The rapid growth of manufacturing in a few industrial centres of capitalism in the nineteenth century also largely determined the formation of a wide gulf between them and the rest of the world, predominantly colonial and semicolonial countries. It was in that period, when factory industry entered the stage of largo-scalo industry, that

a new and international division of labour, a division suited to the requirements of the chief centres of modern industry [sprang] up, and [converted] one part of the globe into a chiefly agricultural field of production, for supplying the other part which remains a chiefly industrial field.^^3^^

_-_-_

~^^1^^ Karl Marx. Capital, Vol. II (Progress Publishers, Moscow, 1978), p 474.

~^^2^^ Karl Marx. Theses on Feuerbach. Collected Works, Vol. 5 ( Progress Publishers, Moscow, 1976), p 73.

~^^3^^ Karl Marx. Capital, Vol. 1 (Progress Publishers, Moscow, 1978), p 425.

235

The summary tables of international statistics indicate that the tendency toward internationalisation of production continued to grow during the transition of capitalism to the monopoly stage of its development, and with the marked sharpening of ils deep contradictions, although its effect was more and more interrupted by wars and overproduction crises. In the last quarter of the nineteenth century, for instance, the physical volume of international trade in manufactured goods rose roughly by 50 to 100 per cent, while it increased by more than 120 per cent again between 1900 and 1938.^^1^^

After World War II this trend was markedly intensified. In 1948 international trade in manufactures within today's capitalist world economy was almost a quarter above the 1938 level (in constant prices). In the following decades it rose to a qualitatively new level. In 1960--79 alone its physical volume (in constant 1970 prices) rose by more than 250 per cent. This growth, of course, reflected real shifts in the internationalising of industrial production, on which we shall touch below. Here we would simply draw attention to the fact that this postwar growth in turn had a distinct tendency to accelerate in the long term right up to the crisis of the mid-70s, despite considerable cyclic fluctuations. As a result, the annual growth rates of exports of manufactures from all capitalist and developing countries taken together were almost 8 per cent in the 60s and 70s. The lion's share of these exports (around nine-tenths) came from the first group of countries as early as at the turn of the 40s and 50s.~^^2^^

Consequently, the conclusions from a survey of the postwar results of the internationalising of manufacturing over the whole world capitalist economy may primarily concern those features of it that were caused by shifts in the main industrial centres.

A most important of these peculiarities, in the light of the facts adduced above, is the, as a rule, stable rise in the growth rates of international trade in industrial goods above _-_-_

~^^1^^ League of Nations. Industrialization and Foreign Trade (Geneva, 1945), p 157; UNCTAD. Handbook of International Trade and Development Statistics 1972 (United Nations, New York, 1973), p 43.

~^^2^^ UN Statistical Yearbook 1977 (United Nations, New York, 1978), p 55; UN Monthly Bulletin of Statistics, 1981, 7:XCIV--XCVI.

236 their production rates in the world capitalist economy. That means that a bigger and bigger part of this output leaves the national boundaries, stimulating development of the international division of labour. On the whole for the period of the 50s, 60s, and 70s, the ratio of the growth rates of these two indicators is estimated at nearly 2.5 : 1 in favour of the international trade in manufactures.^^1^^

Estimates of this sort, however, still do not yield any kind of full picture of the scale of capital's internationalising of social production itself in today's conditions. The most important indicator for this process is the 'export quota', which expresses the ratio of the exports of goods of any kind to the world market and the total production of them within a country or group of countries.

The range of the fluctuations of this quota in the national production of separate countries is very considerable. The methods of calculating it are extremely varied, so that a composite comparison of the long-term dynamics of its changes by industries is greatly complicated, the more so because of the development of inflationary chaos, constant fluctuations of commodity prices and of the exchange rates of national curiencies on the world capitalist market. Special difficulties arise when we are calculating aggregate indicators for various groups of countries; nevertheless the data published by the UN statistical service makes it possible to make an aggregate estimate of this dynamics in manufacturing (see Table 25).

Table 25 Estimate of the Export Quota of Manufacturing ($ billions, in 1970 prices) 1938 1948 1958 1968 1973 1978 Production1 135 205 330 625 840 935 Exports2 24 28 58 150 240 323 Ratio P/E (percentage) 17.5 13.4 17.6 24.0 28.6 34.5 Notes: 1---excluding food and beverages; calculated on the basis of purchaser's value; 2---excluding food and beverages; in f.o.b. prices.

Sources

UN Yearbook of National Accounts Statistics, Statistical Yearbook, Monthly Bulletin of Statistics for the appropriate years.

_-_-_

^^1^^ Ibid.

[237]

Because of their extremely general character, and the differences iu the methods of calculating them, comparisons of the volume of production and exports are very approximate, and most likely reflect their comparative dynamics rathei than their size. Nevertheless the estimates obtained have considerable significance when we are analysing the main trends characterising the postwar internationalising of capitalist industrial production on a world scale. The figures in Table 25 show the marked inequality of its development over recent decades in manufacturing.

World War II greatly disrupted capitalism's historical system of international commercial and economic relations. The proportion of manufactures coming onto the world market fell very markedly, although the physical volume of international trade in industrial goods, and especially their volume of production, was already much above the 1938 level in 1948. Hence it follows that the growth of production in capitalist manufacturing industries was oriented mainly on satisfying the home demand accumulated during the war. The export quota of manufacturing later gradually began to rise, but right to the end of the 50s it remained lower than before the war. True, in real terms the export market's capacity for manufactures rose several times over. The physical volume of world trade in industrial goods was three times the prewar level in 1960. The volume of production rose similarly.

In succeeding years, however, substantial shifts occurred in the evolution of this process. There was an unprecedented jump as regards the internationalising of manufacturing. While its export quota had been around a fifth at the start of the 60s and more than a quarter at the end of them, it had exceeded a third by the end of the 70s. An even greater part of the output of industrial items will supposedly be oriented on foreign markets in the ^ future.

The quantitative changes considered undoubtedly cover qualitative shifts in the structure of the international capitalist division of labour. Study of them and of their underlying causes in turn calls for comprehensive analysis of the specific nature, role, and place of the separate leading industries and main groups of countries in the present system of world capitalist division of labour. Such an analysis is the object of the next chapters. Here, however, we must stress the value of those factors that ultimately underlie 238 the shifts noted in Table 25. An even more influential role is played by the objective" economic consequences of the contemporary scientific and technical revolution, which has primarily affected certain leading manufacturing industries and is fo'stering rapid expansion of their market. As Lenin stressed,

Technical progress must entail the specialisation of different parts of production, their socialisation, and, consequently, the expansion of the market.^^1^^

These consequences have led since the war to a particularly rapid growth on a monopoly basis of international specialisation and co-operation of manufacturing in capitalism's industrial centres.^^2^^

The qualitatively new phenomena in the internationalising of manufacturing are also determined by new phenomena in the concentration of production and capital associated with the marked activation of industrial monopoly corporations' international operations. The following facts, for example, indicate the scale of their activity. In the quarter of a century 1951--75 alone, the 180 biggest U.S. transnational corporations operating in the manufacturing industries founded or acquired nearly 14,000 branches or subsidiaries abroad (around 9,300 in other capitalist countries and more than 4,500 in developing countries). The value of the output of the overseas branches of American and British monopoly concerns was several times greater than the total exports of the USA and Great Britain in the late 70s. In the early 70s, on the whole, the volume of international intra-corporation deliveries of transnationals and multinationals exceeded 30 per cent of the total trade on the world capitalist market.^^3^^ Most of those who are studying this problem, moreover, are more or less unanimous that in the long run one must expect _-_-_

^^1^^ V.I. Lenin. On the So-Called Market Question. Collected Works, Vol. 1 (Progress Publishers, Moscow, 1963), p 101.

~^^2^^ The causes and features of this process are considered tn detail in P. S. Zavyalov's book Nauchno-tekhnicheskaya revolyutsiya i mezhdunarodnaya spetslalizatsiya proizvodstva pri kapitalisme (The Scientific and Technical Revolution and International Specialisation of Production under Capitalism), Moscow, Mysl Publishers, 1974.

~^^3^^ UN Multinational Corporations in World Development (United Nations, New York, 1973), pp 139--159; UN Transnational Corporations in World Development: A Re-examination (United Nations, New York, 1978), pp 222--226.

239 in particular a considerable strengthening of the influence and role of international industrial corporations in world business relations.^^1^^

Among other factors speeding up the internationalising of manufacturing it is also important to allow for the new phenomena in the postwar economic progress of the developing countries. Although, as we have noted, their share of world capitalist exports of industrial goods remains comparatively low, the rates of their exports of them on the world capitalist market are quite impressive (see Fig. 16). At the same time, and this is the main point, the trend considered above toward an acceleration of the general rates of these countries' economic development has led to their having become, in the postwar period, a big and growing market for the manufactures of capitalism's industrial centres. In 1979 they imported industrial wares and equipment valued at more than $ 220 billion, including $ 191.5 billion from the developed capitalist countries.^^2^^

Fig. 16 Main directions of the trade in industrial goods between capitalist and developing countries * (in billions of dollars in current prices f.o.b.) EXPORTS 54,0^ 37.5 299-4.jpg 191.5 3.5 1.0 1960 12.5 3.5 37.0 89.0 31.5 1970 1979 D - DEVELOPING COUNTRIES 223.0 C - CAPITALIST COUNTRIES * Excluding trade in food products. Sources: UN Monthly Bulletin of Statistics, July 1981, p. XCIV. _-_-_

~^^1^^ See, for example, US Senate. The Multinational Corporation and the World Economy (Washington, 1973); R. Mazzolini, European Transnational Concentrations (McGraw-Hill, New York, 1974); The Future of the United States Multinational Corporation (University Press of Virginia, Charlottesville, 1975); UN Transnational Corporations in World Development: A Re-examination, op. cit.

~^^2^^ It is necessary, when estimating these indicators, to remember that they also include the extremely varied dynamics of the rise of __NOTE__ Footnote cont. on page 241. 240

The decisive tread in the postwar trade in manufactures is the reciprocal trade of the developed capitalist countries. No small role was also played in the indices of the scale of growth, of course, by the intensifying inflationary processes. In 19(58--79, for instance, the price index for machinery in the reciprocal trade of these countries rose by 235 per cent, and that for other industrial wares (except chemicals) by 185 per cent. Even when we exclude the effect of inflation, however, it proves that the physical volume of the trade between these countries rose in these years by factors of 5.8 and 6.6 respectively for these commodity groups.

On the whole the proportion of exports of manufactures between developed countries in their total exports of same was three-quarters in the late 70s, whereas it had been more than two-thirds in the early 50s.^^1^^ For comparison's sake, we would note that this indicator was less than one-half at the turn of the century.^^2^^ The postwar extension of their reciprocal trade was ultimately due to the long-term features considered above of the internationalising of the manufacturing industries in these decades, which very graphically confirms the truth of Marx's well-known idea that

the general foundation (if all industries comes to bo genoral exchange itself, the world market, and hence the totality of the activities, intercourse, needs, etc. of which it is made up.^^3^^

There was a marked increase in the role of developing countries as importers of manufactures in the postwar period, _-_-_ __NOTE__ Footnote cont. from page 240. prices of the goods imported and exported by the different groups of countries. The movement of prices by commodities on the capitalist world market, which rose particularly rapidly during the 70s, will bo examined in detail in the last chapter of this part. Here we would refer, by way of illustration, to the following: the unit value index of machinery exported to developing countries from the capitalist centres was 210 per cent above the 1970 lovol in 1979 (UN Monthly bulletin of Statistics, 1981, 7:XLV).

~^^1^^ UN Statistical Yearbook 1972 (United Nations, New York, 1973), pp 44--45; idem, 197<J/80 (United Nations, New York, 1981), pp 52, 53.

~^^2^^ Lamartinc Yatos' estimates indicate that the weight of the manufactures exported between industrially developed capitalist countries in the total volume of their exports of manufactures was 43 per cent in 1876--80 and 45 per cent in 1913. |P. Lamarlino Yatos. Forty Years of Foreign Trade (Alien & Unwin, London, 1959), p 58.]

~^^3^^ Karl Marx. Crundrisse dcr Kriiik der politischeit Okuiioinie, Vol. 1 (Verlag t'iir fremdsp radii go Litoratur, Moscow, 1939), p 420.

241 but relatively speaking the significance of these markets still lias a clear tendency to diminish because of the more rapid growth of the trade in industrial goods between the developed countries. This trend, moreover, which reflects the deep contradictions of the world capitalist economy, is by no means a notable feature of the postwar period but has a historically longer-term character.^^1^^

At the same time it would hardly be right to confirm the inevitability, from these facts, of an intensificalion of this trend in the future. In today's situation prospects are opening up before developing countries of more favourable opportunities for consolidating their position on the world market. The successes of the anti-imperialist struggle of the oil producing and certain other primary commodity producing countries for economic independence (foreign trade included) are evidence of that. In addition, there has been a certain strengthening of the position of a number of developing countries both as importers and exporters of industrial goods on the world capitalist market. In the period 1968 to 1979 the physical volume of their exports of industrial wares rose on the whole by a factor of 4.8, while imports of machinery and equipment from capitalist countries correspondingly rose by a factor of 3.7.^^2^^ The proportion of manufactures entering world trade from developing countries also rose a bit in those years.^^3^^

Scientific and technical progress in the modern world capitalist economy, however, mainly benefits monopoly capital, and its fruits are harvested primarily by the monopolies of the leading capitalist countries. As a result the marked imbalance between the development of individual countries and regions historically inherent in capitalism, _-_-_

~^^1^^ P. Lamartinc Yates. Op. cit., pp 35--00.

~^^2^^ UN Monthly bulletin of Statistics, 1981, 7:XL1V.

~^^3^^ The export quota of the manufactures of developing countries taken together (exluding food and drink) reached 27 to 29 per cent in the late 70s (see the estimates based on the sources of Table 25). The economic crisis of 1974--75, which was accompanied with a deterioration of their position on the world capitalist market, markedly weakened their position as exporters of manufactured goods. But the slight drop in the export quota of their manufactures during the crisis was later compensated in the late 70s, and it will seemingly rise in the future.

242 especially between their various light and heavy industries is increasmg further. The revolutionary transformations in science and engineering that have taken place in the postwar decades, by further accelerating the essentially progressive Intel-nationalisation of social production, are at the same time thereby leading to a further sharpening as well of the socio-economic contradictions of the development of capitalism's industrial foundation.

[243] __NUMERIC_LVL2__ 7 __ALPHA_LVL2__ THE UNEVENNESS AND INSTABILITY
OF INDUSTRIAL DEVELOPMENT __ALPHA_LVL3__ [introduction.]

Present-day scieritiiic and technical progress, which is having an increasing impact on the main lines in the dynamics of the postwar growth of world capitalism's productive forces, is finding expression in a steady increase in uneven development of manufacturing. The structural proportions and inner connections within traditional, long-established industries are being altered, while new, technically advanced industries are arising and rapidly developing. In fact there is not now a major sphere of the economy in any capitalist country that is not being directly or indirectly affected by the revolutionary changes in science and engineering.

On the general background of the resultant shifts in the development of the productive forces of manufacturing there have been very considerable changes in its industrial structure in recent decades, and in the balance of power between the main centres and various groupings of monopoly capital. In that connection it is becoming important to study the long-term structural changes that have occurred since the war because of the continual fluctuations in the economic situation. Global analysis of these changes in turn provides a general background for bringing out and characterising the specific features of the industrial development of separate countries and regions.

__ALPHA_LVL3__ § 1. Sectoral Structure

The main spheres of the manufacturing industries in today's capitalist economy are far from having been uniformly affected by scientific and technical progress. Its influence can be clarified in practice by a more or less detailed study of 244 each industry (and its main divisions), but it would seem logical, in an initial approach to a comparative assessment of the rates of growth of all industries, to assume that scientific and technical advances as a rule have a stimulating effect on industries whose output is growing at accelerating tempos.^^1^^ Table 26 below covers all the important manufacturing industries without exception and graphically indicates the extremely wide range of their development trends. For comparison's sake we have also included the corresponding indicators for the power and mining industries.

Table 26 Comparative Growtli Rates of Separate Industries of the World Capitalist Economy (average percentages for the appropriate periods) Industry 1948--1960 1060--1973 1973--1981 Manufacturing 6.5 6.2 1.9 Food & beverages 3.9 4.3 2.7 Textiles 3.7 4.2 ---0.2 Clothing & footwear 3.6 3.0 ---0.1 Paper & printing 6.0 5.1 1.8 Woodworking 3.8 5.5 0.2 Building materials 5.7 5.6 1.5 Chemicals 8.7 8.8 2 8 Base metals 4.0 5.5 0.1 Metalworking 6.8 6.8 2.4 Power (electricity, gas) 8.6 8.0 3.9 Mining 4.2 4.4 1.2 Source: calculated from UN Statistical yearbook and UN Monthly Bulletin of Statistics for the appropriate years.

Because of the inner Jaws and unresolved contradictions of the capitalist mode of production, the growth rates of each of the manufacturing industries are clearly unstable in the period under review and repeatedly experience steep cyclic rises and falls. The general index, as already mentioned, had risen by a factor of 5.3 by 1978 compared with 1948. This level can be taken as a kind of 'demarcation line' _-_-_

~^^1^^ We must remember, here, that technical progress may not always be manii'ested in all industries in the rates and scale oi' the increase of output.

245 when the general results of the postwar growth of the separate industries are being compared.

The figures indicate that not one of the light industries cited reached this average level in recent decades, the slowest rates, moreover, being characteristic mainly of such old, `traditional' industries as textiles, clothing and footwear which played a very marked role in the aggregate output of manufacturing in the initial stages of industrial development. The main methods of production in these industries differ little at the present time in their fundamental technical solutions from those that predominated in the nineteenth century and early in the twentieth. The output of the textile industry rose by 160 per cent during the period covered by the table, and that of clothing and footwear rose by only 120 per cent, the annual growth rates being 2.9 and 2.5 per cent respectively. The indices of the food and drink industries were a little higher (annual growth around 3.8 per cent).^^1^^ It was the slow development rates of these industries that in the main determined the significant postwar decline (mentioned in the previous chapter) in the proportion of light industry in the capitalist world's total output of manufactured articles.

The paper and printing industries grew more dynamically in these years, and so did output of building materials ( annual rates 4.6 to 4.8 per cent), although they did not reach the average level of growth for manufacturing (5.2 per cent). Their weight in the aggregate industrial production of capitalist and developing countries (together with the woodworking industries, which increased their output by a factor of 3.5) has therefore also had a certain tendency to fall.

The most impressive growth rates since the war have been achieved by the chemical industry. Over the last three decades its output rose almost 8.5-fold (at a mean annual rate of 6.7 per cent); the bulk of its product, moreover, consisted of qualitatively new items not produced before World War II. The list of chemical products coming onto the world market is doubling every seven to ten years, largely because of the industry's rapid technical progress.

_-_-_

~^^1^^ It is very important, when characterising the long-term dynamics of these industries' growth, since they produce consumer goods, to bear in mind as well the rates of population growth, which were around 2 per cent per annum on an average for the whole non-socialist world, according to UN data.

246

Scientific and technical advances are also accelerating development of a number of promising lines in such a complex and extremely varied sphere of production as metalworking. Quite a few qualitatively new technological processes have been developed which, on the one hand, have increased the imbalance in the development of the separate metalworking industries and, on the other hand, promoted a 6.3-fold increase in their aggregate production between 1948 and 1981 (a mean annual growth rate of 5.7 per cent). These rates, like those of the chemical industry, have shown a tendency, with very steep fluctuations from one year to another in the first postwar decades, to a marked acceleration, which has led to a rise in this industry's weight in the aggregate industrial production of the world capitalist economy.

The basic metal industries grew at the slowest rates for the main heavy industries (3.6 per cent), considerable unevenness being typical, moreover, of the different metals. In particular a lagging of iron and steel behind the non-- ferrous metals was typical of this period. A reason for their comparatively slow dynamics on the whole that strikes the eye is the fact that a not unimportant objective of scientific and technical progress today is to reduce the consumption of metal in industrial products. World overproduction crises also hit the basic metal industries harder than the other heavy industries.^^1^^

When, however, we consider their absolute growth in the long term, the postwar changes are quite substantial, especially compared with preceding stages of capitalism's development. Steel production, for instance, rose from 115 million tonnes in 1937 (within today's capitalist world) to between 470 and 500 million tonnes at the end of the 70s,^^2^^ the growth coming mainly, moreover, from long established traditional production methods. The bulk of basic metals are still produced, with individual technical innovations, by fundamentally the methods that had already been invented by the turn of the century.

_-_-_

~^^1^^ The biggest declines observed during all the postwar industrial cycles were in the rates and volumes of production in the metal industries (see Chapter 5).

~^^2^^ It is indicative that only 500,000 tonnes of steel were still being produced in 1870, around 28 million tonnes in 1900, and 36 million tonnes in 1913.

247

The trends under review led to major changes in the postwar .structure of manufacturing, the most essential of which are shown in Fig. 17. In addition to estimates of the weight of the basic industries in the aggregate production of manufacturing, we have included data on the proportion of the capitalist and developing countries in the value of the output of each industry for one and the same year.^^1^^ The figures give a graphic idea of the very substantial shifts in postwar capitalist production that are important in principle for appraising its present industrial structure. The weight of food, beverages and tobacco, and textiles in the total was almost halved (from 20 and 10 per cent to 12 and 5 per cent respectively). These two industries now yield around one-sixth of the total production of capitalist countries' manufacturing industries, whereas they used to produce approximately half at the beginning of the century.^^2^^ The proportion of chemicals more than doubled in the period under review (from 7 to 17 per cent). Even on the eve of World War II it was only 40 per cent of the weight of the food, beverages, and tobacco industry, and two-thirds that of the textile industry. At the beginning of the 80s, however, the volume of chemical production in value terms was as much as that of these two industries taken together.

The large-scale changes in the industrial structure of today's capitalist economy are also associated with a significant acceleration of the growth of the metalworking industries. While they produced a little more than a fourth of total manufacturing production in 1948, they were almost two-fifths in the early 80s. This growth was essentially a continuation of a previously noted process. Alfred Maizels's figures indicate that the proportion of metal products was less than a seventh, on an average, at the beginning of the century (16 per cent in Europe, 10 per cent in the USA, and 2 per cent in Japan).^^3^^ It has been in the postwar decades, however, that there have been essential shifts under the __PARAGRAPH_PAUSE__ _-_-_

~^^1^^ The figures above the columns in Fig. 17 indicate the proportion o[ each industry in the aggregate production of manufacturing, while the figures within each column show the corresponding share of capitalist and developing countries in this industry's output.

^^2^^ Including 50 per cent in the countries that now belong to the European Economic Community, 44 per cent in the USA, and 08 per cent in Japan. See Alfred Maizels, Industrial Gnnrtli and World Trade (Cambridge University Press, Cambridge, 1963), pp 46, 47.

^^3^^ Ibid.

248 V i g. 17 Weight, of the principal sectors in the aggregate product of I he manuf-iciuring industries of the world capitalist economy (in percentages) METAL PRODUCTS 38 CHEMICALS 17 OTHER INDUSTRIES 97 299-5.jpg BASIC METALS 9 9 19 21 22 25 27 17 18 1 20 S § co co So CO k\\\"' 1 SHARE OF CAPITALIST COUNTRIES K'X-v :-J SHARE OF DEVELOPING COUNTRIES Fuurci'x; UN S/iilisI ical Yrarliooh. Yearbook of National Accounts Statistics, and Monthly linlli'tin of Statistics for the relevant years. __PARAGRAPH_CONT__ impact of scientific and technical progress that have raised the leading branches of engineering to a qualitatively new level of development and encouraged further industrialisation of the economies of capitalist countries.

249

The relative decline in the weight of 'other industries' in Fig. 17 is mainly due to the fall in the proportion of clothing and footwear in total production, and also of woodworking and to some extent of the paper and printing industries (which fell respectively from 8 to 4 per cent, 5 to 4 per cent, and 8 to 7 per cent). A distinguishing feature of this process is the growth in the share of developing countries in the output of each of these industries, oriented today mainly on the home market. In the period under review the share of the former colonial world grew considerably in clothing and footwear, paper and printing, and the woodworking industries; in the production of building materials it rose from 8 per cent to nearly 20.

This line of development, it must be noted, was typical, in fact, of all the main branches of manufacturing. The weight of developing countries in the food industry rose from 17 to 21 per cent, in textiles from 22 to 27 per cent, and in basic metals from 3 to 13 per cent. The world crises of the 70s and early 80s, which affected the industry of the industrial centres particularly heavily, led to a further strengthening of these trends.

Analysis of the changing sectoral structure of the industrial centres indicates that those industries grew fastest, as a rule, that were closely linked with production for export, i.e. were actively involved in the international division of labour. In the 60s and 70s, for instance, the growth rates of the physical volume of the exports of the technically most advanced industries in the developed countries considerably outpaced their rates of production. The physical volume of their exports of manufactures rose much more slowly (in constant prices) in those years than exports of engineering output or chemicals. The growth rates of their chemical exports in this period, for example, were more than three times as fast as the growth rates of production. At the same time the export quota of such industries as textiles, clothing and footwear, woodworking, basic metals, building materials, etc., rose ~at qualitatively lower rates.

__ALPHA_LVL3__ § 2. Scientific and Technical Progress
and Labour Productivity

The unequal development of the leading manufacturing industries, and consequently the shifts in structure and 250 distribution of industrial capacity among the main groups of countries of the postwar capitalist world considered above, ultimately stem from the immense imbalance in the growth of productivity in the various industries. That in turn is largely governed by the scientific and technical progress in the different industries, the impact of which is felt most in the economies of industrially developed countries.

It is particularly important in this respect to analyse the dynamics of the growth of productivity in the basic industries of these countries. On the whole the aggregate volume of their manufactures increased by 142 per cent between 1968 and 1978. At the same time the number of workers employed rose by 3 per cent. As a result productivity was roughly 39 per cent (at a mean annual rate of 3.3 per cent). The total growth of productiviiy in the whole industrial output of these countries was roughly the same.^^1^^

When we are comparing the scale of the growth of productivity it is quite important to compare it with the corresponding data for a longer time interval. The Soviet economist B. Bolotin has made calculations that provide a basis for such comparisons.'^^2^^ According to his data, the mean annual growth of labour productivity in the countries that are now the industrial centres of capitalism was 2.5 per cent between 1913 and 1970 (2.8 per cent if we exclude the years of the two world wars). This growth was extremely uneven at various stages, e.g. 2 per cent in 1921--38 (4.2 per cent in 1921-- 29), while during the overproduction crisis of 1929--33 and following long depression there was a considerable drop in productivity, which did not rise above the level of the late 20s, for the world capitalist economy as a whole, even by the end of the 30s.

After World War II there was a tendency, while retaining marked fluctuations and instability of productivity growth rates in the various phases of the business cycle, toward a certain rise on the whole in this index. Introduction of the present-day advances of science and engineering undoubtedly stimulated this, but the impact of the scientific and industrial revolution has been far from the same in the various industries. The productivity growth rate in light industry, _-_-_

~^^1^^ UN Statistical Yearbook 1979/80 (United Nations, New York, 1981), pp 18--37.

~^^2^^ Mirovaya ekonomika i mezhdunarodniye otnosheniya, 1972, 3:155.

251 for instance, in 1968--1978 was 3 per cent in the developed capitalist countries, and 3.5 per cent in heavy industry.^^1^^ The increasing unevenness of the impact of scientific and technical progress is especially marked when we analyse productivity growth by separate industries (see Table 27). __PARAGRAPH_PAUSE__ Table 27 Index Numbers and Growth Rates of Labour Productivity in the Main Industries of Developed Capitalist Countries 1960--1977 including Industry Index Growtli 1960 -70 1970--77 numbers rates index growth num- rates bers (%) index numbers growth rates Manufacturing food, beverages, tobacco 180 3.5 147 3.9 123 3.0 textiles 208 4.4 158 4.7 131 3.9 clothing & footwear 137 1.9 115 1.4 119 2.5 paper & printing woodworking 162 179 2.9 3.5 139 149 3.3 4.1 117 120 2.3 2.6 building materials 203 4.3 161 4.9 126 3.4 chemicals 278 6.2 200 7.2 139 4.8 basic metals 180 3.5 154 4.4 117 2.3 metalworking 195 4.0 154 4.4 127 3.5 Power (electricity, gas) 249 5.5 188 6.6 132 4.0 Mining 170 3.2 163 5.1 104 0.6 Source: calculated from UN Ktuthlical yearbook 1U7S (United Nations, New York, 1979), pp 44--45. __PARAGRAPH_CONT__ The fluctuations were particularly steep in manufacturing in the period reviewed. The gap between tlie highest and lowest annual growth rates were very considerable: from 6.2 per cent in the chemical industries to 1.9 per cent in clothing and footwear. During the 1974--75 crisis there was an absolute fall in the level of labour productivity in almost all the manufacturing industries of capitalism's centres.^^2^^

_-_-_

~^^1^^ The average growth of productivity was much lower in all the manufacturing industries in the latest decades than in electricity generation. It was even rather lower than in the extraction industries.

~^^2^^ Productivity declines particularly noticeably in the heavy industries of capitalist countries (5.3 per cent in this period, and 12 per cent in the metal industries). See: UN Statistical Yearbook 1979/80, pp 36--39.

252

Comparison of the growth of productivity and of volume of production indicates the existence of a certain correlation between them. Production developed faster, as a rule, in those industries in which productivity growth rates were higher. The dependence, however, is by no means always a direct one, because an increase in volume of production depends to no small degree on changes in the scale of employment in an industry. In the chemical industries, for example, the number of jobs in the industrial centres increased by 5 per cent in 1968--78, in metalworking by 28 to 30 per cent, while il fell by 20 per cent in the textile industries. The productivity growth rates were much higher in most other industries. This was due in no small degree, as well, to the use of the latest chemical products and materials in the textile industry. Among the other heavy manufacturing industries, productivity rose at higher than average rates in the processing of non-metallic minerals. The index numbers in the table can be used as a compass to determine some of the main directions of development; they help us bring out several general trends of the effect of scientific and technical progress on the features of modern production in most industries.

When analysing these trends we must first of all note that there has been a more and more marked decline in the rate of flow of labour into manufacturing. In the 60s it was 1.05 per cent for all capitalist countries; in the 70s the number of workers in manufacturing even declined a bit. So the increase in output in fact came wholly from a further rise in labour productivity. This rise, moreover, was not directly associated in most industries with the advances of the scientific and technical revolution. It is still coming mainly through the taking up of separate, partial technological innovations and inventions rather than through any profound revolutionary shifts in production. The paramount factor in the taking up of such inventions in the capitalist world is not the inherent social needs of scientific and technical progress but sharpening monopoly competition and rising demands for product quality on the home market, and especially on foreign markets.

The effect of the scientific and technical revolution on the productivity growth rates of the main centres of modern capitalism (the USA, Western Europe, Japan) is undoubtedly growing. In that connection the following facts call for 253 attention. In the first postwar years the USA perceptively outdistanced Western Europe and Japan in growth of labour productivity; later, however, the trend changed. In 1960-- 76 the average annual increase in U.S. manufacturing industry was 2.7 per cent, in West German 5.9 per cent, in French 5.6 per cent, in British 3.3 per cent, and in Japanese 8.9 per cent. The change in level of employment in manufacturing was also uneven (see Table 28).

Table 28 Annual Growth liatcs of Labour Productivity in the Main Capitalist Countries (in percentages per employed person) Country 10G3-73 1973--79 USA 1.9 0.1 Japan 8.7 3.4 West Germany 4.6 3.2 France 4.6 2.7 Great Britain 3.0 0.3 Canada 2.4 0.4 Italy 5.4 1.6 Source: Economic Report of the President (Washington, D.G., 1980), p 85.

Labour productivity rose much more slowly in developing countries. In the 60s and 70s the mean annual rate of increase in their industry was considerably below that in the industrially developed capitalist countries. As a result the gap in levels of productivity continued to widen rapidly and spasmodically. So the increase in the general rate of industrial production noted above compared with capitalist countries came mainly from a marked increase in jobs in manufacturing.^^1^^

_-_-_

~^^1^^ The number of persons working in the manufacturing industries of all developing countries more than doubled in 1968--77 alone. The influx of new labour, moreover, was very uneven as between industries. In chemicals, for instance, numbers increased by 77 per cent, in basic metals by 113 per cent, in clothing and footwear industries by 37 per cent, and in mining by 50 per cent. Whereas around a fifth of all the jobs in developing countries' industry had been in heavy industry at the beginning of this period, more than a quarter were at the end of it (UN Statistical Yearbook 197!) j 80, United Nations, New York, 1980, pp 36--39).

254

That does not mean, however, that the advances of modern science and engineering have had no real effect on the uplift of developing countries' technical potential in the most progressive branches of manufacturing. There has been a growing tendency there in recent decades towards a certain quickening of the growth rates of productivity, which became quite distinct in heavy industry. From the beginning of the 60s these rates were increasing on an average by 3.1 per cent per annum, i.e. more than three times as fast as the corresponding indicator for light industry. In metalworking this rate was 4.8 per cent, and in the production of building materials 2.5 per cent.^^1^^

The boundaries of these changes, and other main postwar ones in the held of labour productivity are quite arbitrary and extremely mobile, of course. Each successive year of spontaneous development of capitalism's deep contradictions i Iroduces certain changes in our evaluation of the long-term processes and phenomena developing in the manufacturing industries of the different regions and countries of the capitalist world as the scientific and technical revolution evolves.

__ALPHA_LVL3__ § 3. Changes in Regional Structure

The postwar period could not help bringing about important regional shifts as well in the distribution of the basic manufacturing industries of capitalist countries. Given that the volume of manufactures was increasing approximately every ten to twelve years, even the most circumstantial studies of the ratio of the industrial potentials of separate countries and regions very quickly become substantially out of date. It is therefore of paramount importance to analyse the long-term trends and tendencies characterising the main directions of the changing geography of manufacturing in the capitalist world as a whole, above all in its main centres.

The most generalised indicator enabling us to judge the main lines of development of tendencies of this sort is the comparative dynamics of the growth and internationalisation _-_-_

~^^1^^ UN Statistical Yearbook 1978, United Nations, New York, 1979, pp 44--45.

255 of production. Index numbers of the production and export of the manufactures of the industrially developed countries in the regions where the bulk of their output is produced today are given in Table 29.

Table 29 Comparative Estimates of the Annual Growth Rates of the Physical Volume of Production and Exports of the Capitalist Countries' Manufactures (in percentages) Count ry Production Exports 1938-- 1953 1953-- 1963 19(53-- 1973 I 1)7(1-- 1981 North America 7.5 3 5.5 2 7 () USA 7.5 3 5.5 2 6.5 P Canada 7.5 4 6.5 1.5 8.5 (i Western Europe 2.5 0.5 5.5 1 9 5.5 West Germany 2 8 6.5 1 10 5.5 France 2 7 (5 0.5 8.5 6.5 Great Britain 2.5 3 3.5 _ 2 4.5 4 Italy 3 9 5.5 2.5 14.5 7 The Netherlands 3 6.5 6 1.5 10.5 6 Sweden 3.5 5.5 4.5 ---0.2 9.5 3.5 Japan 0.5 13.5 12.5 3 17.5 10 Sources: calculated from UN Statistical Yearbook and CN .Monthlu Hnllctin of Statistics tor ttie appropriate years.

These index numbers of course do not fully reflect either the distribution of the production capacities or the balance of power between the nationally exclusive groupings of monopoly capital. On the one hand, they do not take into account the constant underworking of plant immanent in capitalist production, which often attains a quite significant scale, especially during overproduction crises. On the other hand, as we have already remarked, the increasing international interlocking of the monopoly capital of various countries and considerable broadening, of late, of the operations of international monopolies are making it more and more difficult to define the nationality of many enterprises. Nevertheless the figures adduced make it possible to define the scale and main directions of the dynamics of the growth of manufacturing in the capitalist industrial centres, which has been changing by leaps and bounds in the postwar decades. In addition they also bring out the wave-like character 256 of this dynamics for separate countries, regions, and periods.

Each of the processes noted in the table undoubtedly stems from a complicated, multi-level set of factors of an internal and international level. When, however, we examine them in the aggregate, certain resultant lines can be discerned from the very start that primarily characterise long-term shifts in the postwar distribution of the industrial potential of capitalism's main centres. It follows from the approximate estimates in Table 29 that the physical volume of industrial output had increased more than eightfold in North America by the beginning of the 80s compared with prewar (roughly eightfold in the United States and ninefold in Canada), while the corresponding growth in Western Europe was approximately 5.5-fold, although comparatively high growth rates had been achieved in the 50s and 60s. At the same time the volume of Japanese manufacturing production rose nearly 16-fold.

Still, in spite of the unprecedeutedly rapid upsurge of Japan's industrial might, its production remains slightly lower than that ofgthe other two industrial centres of monopoly capitalism.£At the beginning of the 80s Japan's share of the production of industrial items was about two fifths that of Western Europe and a bit^ more than 25 per cent of that of North America.

At the same time there was a substantial redistribution of industrial potential within Western Europe. The countries there have not all managed to the same degree to make use of the advances of today's scientific and technical progress, or even of the opportunities presented in the fight for foreign markets by the internationalisation of production. Over the period covered by Table 29 the physical volume of manufactures rose sixfold in West Germany, fivefold in France, eightfold in Italy, nearly sixfold in the Netherlands, but by only 160 per cent in Great Britain.

Exports of manufactures have become increasingly important for the main capitalist countries. The international monopolies (primarily the very big U.S. corporations) have undoubtedly played an important role in this.^^1^^ An even greater _-_-_

~^^1^^ Over the decade 1961--70 alone the exports of branches and subsidiaries of American corporations operating in the manufacturing __NOTE__ Footnote cont. on page 258. __PRINTERS_P_257_COMMENT__ 17---0170 257 part of these exports consists of intra-corporation transfers of components and parts from one country to another.^^1^^ Even allowing for the specific character of these transfers, however, which in fact are outside the framework of normal international trading operations, these facts allow us to conclude that foreign markets have had an unusually strong impact on the unevenness of the development and distribution of manufacturing in capitalism's industrial centres.^^2^^ A marked synchronousness of the variations in production and export growth rates is noticeable as regards the North American and West European regions (see Table 29).

In general the industrial capacity of modern capitalism is still mainly concentrated in Western Europe and North America, though there has been, it is true, a tendency in recent decades for their role in a number of industries to decline. The bulk of capitalist manufacturing output, however, is still produced there. At the beginning of the period under review the countries of these regions taken together accounted for more than 80 per cent of this output, and at the end of it for around 75 per cent. At the same time there were substantial fluctuations in the ratio of production potential between them, which largely determined the specific character of the postwar development and distribution of the productive forces of capitalism. Before World War II Western _-_-_ __NOTE__ Footnote cont. from page 257. industries of other countries, for instance, rose from $ 25 billion to $ 80 billion, and were nearly three times as big at the beginning of the 70s as the exports of manufactures from the United States themselves. See U.S. Senate. Multinational Corporations. Hearings before the Subcommittee on International Trade of the Committee on Finance (U.S. Govt. Printing Office, Washington, D.C., 1973), p 407.

~^^1^^ See P. Khvoinik. International Monopolies and International Trade. Mirovaya ekonomika i mezhdunarodniye otnosheniya, 1975, 4:99--110.

^^2^^ The world business cycles, which were not reflected to the same degree in the economies of the separate capitalist countries, also led to a strengthening of this unevenness. The volume of production of manufacturing, for instance, diminished by 5.6 per cent in Great Britain in 1975 compared with 1974, by 10 per cent in Italy, by 5.7 per cent in West Germany, by 8.3 per cent in France, by 10 per cent in the USA, by 6.5 per cent in Canada, and by 10.7 per cent in Japan. At the same time the exports of industrial goods of all these countries to the world capitalist market also fell substantially (UN Monthly Bulletin of Statistics, 1982, 5,6).

258 Europe had, on the whole, surpassed North America in volumo of manufactured goods produced.

The war, and its direct consequences, by disrupting the economies of most West European countries, led to a marked weakening of their productive power in general, especially as regards their transatlantic rivals. Later, however, as had also happened after World War I, West European manufacturing began to develop much faster than American. Tin's tendency took on a long-term character and developed over the greater part of the postwar period, although by the end of the 60s its effect had begun to fade. In the second half of the next decade, especially after the 1974--75 crisis, a reverse movement began: the growth rates of Western Europe's manufacturing industries then proved to be (iO per cent lower than North America's, which found reflection in the ratio of their volumes of production and in considerable fluctuations in the relative weight of North America and Western Europe, and of other groups of countries, in the non-- socialist world.

The figures that follow present some results of the longterm operation of these trends in recent decades. In turn they help throw light on matters that are of no little importance for a further analysis of the unevenness and spasmodic character of the industrial development of the main regions arid manufacturing industries in the world capitalist economy.

Fig. 18 shows particularly graphically the fall in the proportions of Western Europe and North America in light industry. Since, however, there was a simultaneous decline in the weight of these regions in the aggregate industrial production of the non-socialist world, the resultant characteristic of the value of these shifts in the individual regions requires us to allow for the changes that are taking place in the whole industrial structure of world capitalist economy, which in turn makes it necessary to attempt a comprehensive estimate of these changes.

In the period from the 50s through the 70s there was a quite clear tendency (among other long-term processes) toward a decline in the weight both of North America and Western Europe in light industry. It was due to the rapid growth of these industries in certain other regions, above all in Japan, but mainly in developing countries, whose industry increased production of consumer goods by more than 80 per cent in __PARAGRAPH_PAUSE__ __PRINTERS_P_259_COMMENT__ 17* 259 Fig. 18 Weight of groups of countries in the light and heavy industries of the world capitalist economy (in percentages) 299-6.jpg 299-7.jpg 1931 1954--1955 1980--1981 O LIGHT INDUSTRY . HEAVY INDUSTRY 1 - NORTH AMERICA (USA, CANADA) II - WESTERN EUROPE III - OTHER DEVELOPED CAPITALIST COUNTRIES IV - DEVELOPING COUNTRIES Sources: UN Yearbook of National Accounts Statistics, Statistical Yearbook, and Monthly Bulletin of Statistics for the relevant years. 260 __PARAGRAPH_CONT__ 1968--81 alone (the corresponding figures wore 40 per cent for North America and 30 per cent for Western Europe).^^1^^ Still, as Fig. 18 shows, these two regions control the commanding heights in gross capitalist production of these goods.

There have also been very marked shifts in the distribution of productive forces between the main industrial regions as regards heavy industry. In 1953 the industrial capacity of North America in this sphere (predominantly of the USA) was a little more than four times that of 1938, while it had risen by only 60 per cent in Western Europe in the same period, and by a third in other capitalist countries. As a result North American heavy industry plants were producing 50 per cent more products in the early 50s than all the other developed capitalist countries put together.

This immense superiority, however, proved quite temporary. In succeeding years there was a strong trend toward restoration of the prewar ratio of industrial potential between Western Europe and North America, largely, moreover, on a fundamentally more advanced technical basis. The average development rates of West European heavy industry in the 50s and 60s were markedly higher than North American.

The subsequent decline in the industrial growth rates of Western Europe and corresponding rise in those of the USA and Canada did not halt the long-term tendency for the gap between the two main industrial centres of capitalism in this field to close, but apparently only temporarily reversed it. At the turn to the 80s the output of heavy industry in value terms (in 1975 prices) was roughly a quarter less in Western Europe than in North America, whereas it had still been a half 25 years before. Analysis of this long-term trend gives grounds for supposing that the gap will be narrowed further in coming decades, and possibly closed.

U.S. international corporations, intensively penetrating West European manufacturing (above all heavy industry), played no small role in this, and still do, but we would not bo justified in concluding that they had a determinant influence in subsequent years on the shifts in the distribution of the basic industries between Western Europe _-_-_

^^1^^ UN Monthly Bulletin of Statistics, 1982, 8:XVIII-XXV.

261 and North America. The economic factors of the growth of West European countries themselves were decisive in that.

No comparison of the dynamics of the changes in the industrial potential of capitalism by regions and countries is adequate unless their populations are taken into account. Western Europe, as we know, considerably outnumbers North America in population: in the early 50s by around 120 million and at the beginning of the 1980s by roughly 100 million. The gap in their per capita levels of industrial development is therefore greater than the gap in absolute terms. Estimates based on UN statistics indicate that the gap for manufacturing as a whole in the mid-50s in annual per capita terms was expressed by a ratio of 5.5:1 in favour of North America (4:1 in light industry and 6.5:1 in heavy industry). Subsequently, however, the ratio altered considerably. A quarter of a century later the first area's superiority over the other's was not so significant and was estimated at 1.6:1 (1.3:1 in light industry and 1.8:1 in heavy industry). Thus, although the gap has been markedly closed, the West European 'centre of force' still lags substantially behind.

Attention must also be paid, in any analysis of postwar shifts, to the growth of industrial potential, especially of heavy industry, in the 'other developed capitalist countries'. Their weight rose in the mid-50, mainly because of the mounting economic might of Japan. At the same time this process was reinforced by the quickening development rates of the other countries in this group (especially in Oceania, i.e. Australia and New Zealand).

In per capita production of manufactures Japan and the other capitalist countries outside North America and Western Europe have come much closer to the `old' industrial metropolises of capitalism. There are enormous differences between these groups, of course. Japan, for instance, produced at the end of the 70s roughly 150 per cent more per capita than Australia and New Zealand, but considerably less than North America, and a little less than the average for Western Europe.

The 1974--75 crisis, which did not affect the various capitalist countries and regions with the same force, was attended with not inconsiderable changes in the proportions, dynamics, and distribution of production, but did not lead to 262 any fundamental shifts in the balance of economic potential between these regions and countries. The long-term trends outlined continued to affect the main lines of development of manufacturing in subsequent years.

There is consequently still an enormous difference in levels of industrial development in the industrial centres of capitalism. At the same time the mounting unevenness in the distribution of productive forces in current conditions of scientific and technical progress, and the strengthening of integration in capitalist production have promoted a certain levelling out of the differences in per capita levels of production.

An even greater differentiation has become noticeable in recent decades as regards most developing countries. Their heightened economic growth rates and a certain increase in their weight in the production of manufactured goods have in turn encouraged an objectively inevitable increase in the crisis both of the long-established and neocolonialist foundations of the imperialist monopolies' domination in the peripheral regions of the world capitalist economy.^^1^^ An idea of the significance and postwar dynamics of the growth of manufactures in the main geographical areas of the developing world can be got from the approximate estimates in Table 30.

In each of the groups in the table there are countries at various levels of industrial development. Their industrial growth rates are also extremely varied. When, however, we try to determine the main postwar shifts in the distribution of manufacturing among them, we can draw the following conclusions, which can also serve as the point of _-_-_

~^^1^^ The following Soviet works analyse the most essential aspects of this problem: V. V. Rymalov. Raspad kolonialnot sistemy i mircvoye kapitalisticheskoye khozyaistvo (The Break-Up of the Colonial System and World Capitalist Economy), Mysl Publishers, Moscow, 1966; I. A. Sokolbv. (Mirovoye khozyaistvo i revolyutsionny protsess (The World Economy and the Revolutionary Process), Mysl Publishers, Moscow, 1974; R. M. Avakov (Ed.). Razvivayushchiesya strany: zakonomernosti, tendentsii, perspektivy (The Patterns, Trends, and Outlook for Developing Countries), Mysl Publishers, Moscow, 1974; V. L. Tyagunenko. Me.zhdunarodnmje, razdclenti/e Iruda i razvivayushchiyesya strany (The International Division of Labour and Developing Countries), Mysl Publishers, Moscow, 1976; K. N. Brutents. Osvobodivshtyesya strany v 70e gody (The Liberated Countries in the 70s), Mysl Publishers,' Moscow,' 1978.

263 departure for the more concrete comparative analysis that follows.

Around nine-tenths of the production potential of Third World manufacturing are still concentrated in Asia and Latin America, from which it follows that it is necessary first of all to compare the postwar industrial development of these two regions. In the 60s and 70s industrial growth rates were rather lower in Latin American countries, on the whole, than in Asia. At the beginning of the 80s they produced almost 50 per cent more manufactures than the developing __PARAGRAPH_PAUSE__ Proportions of Light and Heavy Industry in Developing Countries Table 30 Latin America Weight of regional groups of developing countries Vn" m Asia Africa Ifl60- *980- 1960- 1980- 1960- 1980-- lggl lg8J lggl lgfll lggl In the gross product of world capitalist manufacturing 3 5.5 light industry 4 7 heavy industry 2 5 In the grosa product of the manufacturing industries of all developing countries 30.5 37.5 light industry 31 38 heavy industry 29 37 1 1.5 0.5 1.5 2 1.5 5.5 8 4 8 9 7.5 9 10 8.5 8.5 12 6.5 60.5 54 59 50 62.5 56.5 Sources: Rounded estimates from UNCTAD. Handbook of World Development Statistics, 1979 (United Nations, New York, 1980)'. UN Monthly Bulletin of Statistics, 1982, 8. __PARAGRAPH_CONT__ countries of Asia, but since their population is less than that of the latter, the per capita gap between them remains very wide. At the end of the period under review it could be expressed as a ratio of 5.7:1 in favour of Latin America (4.4:1 in light industry, and 6.9:1 in heavy industry). The emancipated countries of Africa lag even further behind. At this time their per capita output of manufactures was approximately 87 per cent below Latin America's (91 per cent in heavy industry).

The differences in level of industrial development of the various geographical regions of the Third World are not 264 __PARAGRAPH_CONT__ only quantitatively but also qualitatively greater than those between the main developed regions of capitalism, and the unevenness of developing countries' development in manufacturing tends to become greater. At the same time the deep gulf in levels of industrial development between these two main groups of countries remains, as noted above, a distinguishing feature of world capitalism. At the end of the 70s all the developing countries on an average produced 95 per cent less manufactures per capita than the industrial centres (96 per cent less in heavy industry and 93 or 93.5 per cent less in light industry). This gap will undoubtedly remain one of the most distressing consequences in the future of imperialism's and colonialism's long, unrestricted domination of the world economy and politics.

The indicators cited are not, of course, stable values for a comparative estimate of the long-term development of any group of countries. They vary continuously from year to year within certain limits during the world business cycle. The 1974--75 crisis decline in production in the developed countries, which was attended with a quite marked fall in their weight in the non-socialist world's manufacturing industry, led to a marked closing of the gap between them and developing countries in per capita production of manufactures. Subsequently, it is true, a few years of cyclic upswing again widened the gap, though not to the level of the preceding pre-crisis years.

In this respect we must bear in mind that the quickening of developing countries' economic growth rates since the war has been marked not only by the rise in their share in manufacturing noted above but also by the beginning of a comparatively new tendency toward a gradual reduction of the deep gulf in per capita production in the majority of the basic branches of both heavy and light industries established between them under colonialism.^^1^^

These are some of the resultant processes that characterise the most general features of the structure and main changes in manufacturing in the postwar capitalist world _-_-_

~^^1^^ In 70s, for instance, according to our calculations per capita production of manufactures increased in capitalist countries on the whole (in fixed prices) by less than a quarter, while it rose by twofifths in developing countries (and nearly CO per cent in heavy industry). Calculated from UN Statistical Yearbook 1979/80, and UN Monthly Bulletin of Statistics, 1982, 5:XVI-XVIII.

265 economy. They comhine extremely complicated and contradictory trends in the industrial development of the separate regions and countries. Together with very substantial structural shifts in other highly important spheres these processes largely governed the inner logic of the steady growth of irreconcilable contradictions between capitalism's system of international economic relations and the objective development needs of social production in the basic industries of the non-socialist world. Clarification of the most important directions and features of the interlocked development of manufacturing and the primary commodity industries of the main groups of capitalist countries is the point of the next chapter.

[266] __NUMERIC_LVL2__ 8 __ALPHA_LVL2__ THE PRIMARY COMMODITY SPHERE:
STRUCTURE OF PRODUCTION
AND INTERNATIONAL CONNECTIONS __ALPHA_LVL3__ [introduction.]

In the increasingly complicated set of modern capitalism's economic contradictions, those in the primary commodity sphere have taken on a very marked role. The break-up of the colonial system and the considerable strengthening since the war of the dependence of capitalism's industrial centres on imports of many types of industrial raw materials (especially of energy resources), and the rapidly expanding demand for primary commodities by developing countries' industry, the acute food shortage in most regions of the former colonial world, and the unprecedented jump (in peacetime) of world market prices for raw materials and foodstuffs are all evidence of serious disturbances of the established system of the international division of labour.

The crisis processes in this system, which are being made particularly acute by mounting inflation, more frequent cyclic slumps of industrial production in capitalist countries, the stiffening competition of international monopolies, and inter-imperialist rivalry, attained an unusual scale in the 70s for the postwar period.

The unparalleled aggravation'of capitalism's primary products problems,' especially of the energy problem, have played an important role in the development of thesejprocesses, the main causes of which have been analysed in detail in the reports of the 24th, 25th, and 26th Congresses of the CPSU, and other documents of the international communist and workers' movement.? The effective measures taken by many of the oil-producing^countries of Asia, Africa, and Latin America in their fight against expatriate monopolies' domination of their economies revealed convincingly the instability of the existing system of modern capitalism's primary commodity relations. The three slumps it 267 experienced in the 70s and early 80s have further intensified tlieir instability.

In this situation there is a growing drive in Western eco nomic (especially propagandist) literature to explain the extraordinary acuteness of the contradictions in this sphere mainly by political and economic actions of one kind or another by developing countries. The latter's fight to establish real control over their own natural wealth and resources, and to achieve real national sovereignty and a radical break-up of international relations based on imperialist principles of inequality and exploitation, is in fact largely the reason for the further deepening of the crisis phenomena in and instability of the world capitalist economy of recent years.

It is not, however, just a matter of the political and socioeconomic consequences of the breakdown of the colonial system. The roots of the process go deeper. The capitalist mode of production itself inevitably engendered, and is giving rise to, the very acute international economic issues that face imperialism today.

__ALPHA_LVL3__ § 1. Primary Commodities and Manufacturing

As the world capitalist economy developed, its primary commodity sphere was inevitably more and more internationalised. The industrial centres' need for imports and exports of primary products grew. In the imperialist stage, certain elements of `planning' in their functioning developed in this connection along with a steady expansion of the anarchy and spontaneity of capitalism's development. Lenin, noting that the free competition of individual capitalists, isolating and producing for sale on an unknown market, had become a thing of the past at this stage, wrote:

Concentration has reached the point at which it is possible to make an approximate estimate of all sources of raw materials ... [of a country and even... of several countries, or of the whole world. Not only are such estimates made, but these sources are captured by gigantic monopolist associations. An approximate estimate of the capacity of markets is also made, and the associations `divide' them up amongst themselves by agreement.^^1^^

_-_-_

~^^1^^ V. I. Lenin. Imperialism, the Highest Stage of Capitalism. Collected Works, Vol. 22 (Progress Publishers, Moscow, 1964), p 205.

268

This proposition of Lenin's retains all its theoretical significance and topicality in today's stage of the general crisis of capitalism. It needs amendment now, of course, because finance capital has been more and more clearly losing its former monopoly positions in the world economy and world politics in recent decades. Even with a certain growth of the `planning' noted, it is becoming more and more difficult for the imperialist alliances to boss the show and share out the raw material resources of developing countries uncontrolled.

The shifts in the postwar structure of manufacturing studied above have had a decisive effect on other branches of material production and with capitalist countries' increasing dependence on foreign commodity markets, have acquired certain specific features that are in turn the result of broad-scale, very contradictory processes in the basic industries of both capitalist and developing countries. These features also predetermined many of the modern trends in the development of agriculture and mining, viz., the industries that produce primary commodities that are, for the most part, later processed by industry.^^1^^

When the dynamics of social reproduction is analysed, all types of primary product, including food and fuel, are usually lumped together in a single group, which makes it possible to compare the basic trends of their movement with other aggregate indicators of the growth of society's productive powers. The UN statistics enable us to make this comparison for the whole postwar capitalist economy, and it indicates above all that the growth of the commodity sphere as a whole has been relatively slow (see Table 31).

The non-socialist world's real production of primary commodities had increased by roughly 150 per cent at the beginning of the 80s compared with prewar. Although growth was higher on an average than before the war, it was extremely uneven and spasmodic. In the 50s and early 60s, for example, and in the 70s, its rates were substantially below the mean growth of population. For the whole period covered by Table 31 the annual growth of production of primary commo-- __PARAGRAPH_PAUSE__ _-_-_

~^^1^^ The output of these industries on the whole embraces a group of commodities that are extremely varied in purpose and use. Some of them (e.g., a considerable part of food and fuel) are used directly without further industrial processing, but the bulk of them serve as primary raw materials for manufacturing industries.

269 Table 31 Dynamics of Hie Growth 01 Output of Primary Commodities and Manufactures* 1958 1070 (1().-J8=100) (M)58 = M 1081 (1970--100) Index numbers Primary commodities 145 145 Manufacturing 240 210 120 140 Annual Growth Rates (in percentages) Primary commodities 2.5 Manufacturing (i.O 3.1 6.3 1.7 3.2 * Rounded figures Source: calculated from UN Statistical Yearbook and NU Monthly Bulletin of Statistics for the appropriate years. __PARAGRAPH_CONT__ dities was a little less than half the rate, on the whole, of manufacturing. As a result there was a substantial weakening of the role of primary products in the total GDP of the world capitalist economy. Where on the eve of the war its share had been only a little lower in comparative prices than that of manufacturing, the proportion of the latter was more than 200 per cent higher at the beginning of the 80s.

These generalised results indicate cardinal changes in the structure of material production over a historically short period; and of course call for further refinement and analysis, especially since the steady deepening of crisis processes in recent years is more and more graphically demonstrating the bankruptcy of state-monopoly capitalism's attempts to deal with the very acute economic and social issues stemming from these processes (including its world economic relations with developing countries). This course of events confirms the legitimacy and justice of the fight that is growing in most liberated countries to build their own industrial base and to oppose the neocolonialists' drive to maintain the primary commodity orientation of their economies.

The production of primary commodities will be developed further in the old colonial periphery in the future, and there 270 will doubtless be a tendency for it to expand in absolute terms. The growth rate will most likely, as before, slightly exceed population growth in the foreseeable future and at the same time naturally lag behind the dynamics of manufacturing. This tendency reflects the natural process in the development of the productive forces of a relative reduction of the role of primary commodities in material production. Engels, developing Marx's statements on the law of the tendency of the rate of profit to fall, drew attention to the fact that 'the portion of value deriving from raw and auxiliary materials must decrease with the increased productivity of labour'.^^1^^

Every one per cent increase in the production of primary commodities in the world economy in the postwar period was related to a more than two per cent growth of the output of manufacturing. In our view that ratio, which characterises an objectively operating tendency, allows us to suppose that manufactures may surpass primary commodities by at least 4:1 by the end of the 80s (in value terms in constant prices). That supposition is also reinforced by the steady growth of output of artificial substitutes for natural raw materials.

At the same time analysis of the long-term trends of world economic development indicates that demand for raw materials, resources of which are far from limitless, is steadily increasing, so that the inter-imperialist struggle to grab and re-distribute their sources is intensifying, a consequence of which was, essentially, the unprecedented aggravation of the primary commodity problems in the postwar period. These contradictions had ultimately been resolved throughout the preceding history of imperialism at the expense of the peoples of economically backward and weak countries. Now, however, when the overwhelming majority of the countries of the old colonial world have achieved genuine national independence and have taken the road of active struggle for economic independence, monopoly capital can no longer resolve these problems in the way it used to. In its struggle to divide and re-divide spheres of profitable application of capital it is also forced to allow for the existence of the Soviet Union and a powerful socialist community that has _-_-_

~^^1^^ Karl Marx. Capital, Vol. Ill (Progress Publishers, Moscow, 1978), p 2G1.

271 become a reliable buckler protecting all the peoples of the world, including the peoples of liberated primary commodity producing countries, against imperialism's aggressive intentions.

Fidel Castro, First Secretary of tho Central Committee of the Communist Party of Cuba, addressing the 25th Congress of the CPSU, had good grounds for declaring:

Had it not been for the Soviet Union, in conditions of a shortage of raw material resources and of an energy crisis the capitalist powers would have unhesitatingly launched a partition of the world. Had it not been for the Soviet Union, it would have been impossible even to conceive of the measure of independence now enjoyed by small states, the successful struggle of the peoples for the return of their natural riches under their control, or the fact that their voice now resounds impressively in the concert of nations.^^1^^

It is not possible, from the available statistics, to accurately determine the weight in the total volume of production of that part of^the output of primary commodities thais industrially processed for the capitalist economy as a wholeIt can only be estimated for separate groups of the commodities produced by the mining industry and by agriculture.

__ALPHA_LVL3__ § 2. The Mining Industry and Farm Production

The production of minerals still remains the main source of materials for the leading manufacturing industries and power supply. The stimulating effect of these industries on mining is beyond doubt. The physical volume of the extraction of minerals rose fourfold in the present capitalist world between 1938 and 1978 (oil and gas tenfold). Analysis of the postwar economic development of both the industrial countries and the Third World allows us to conclude that a further rise in the role of minerals in the non-socialist world's output of primary products is inevitable.^^2^^

_-_-_

~^^1^^ Fidel Castro Ruz. Speech at tho 25th CPSU Congress. In: Our Friends Speak (Novosti Press Agency Publishing House, Moscow, 1976), p 34.

~^^2^^ We must boar in mind here that this development underwent considerable fluctuations during the cyclic movement of capitalist economy. During world industrial crises tho proportion of minerals in __NOTE__ Footnote cont. on page 273. 272

How is the mining industry distributed between the two groups of countries? It is very pertinent to clarify this point because of the steady rise in the liberated countries' struggle for equality in international economic relations and against the diktat of international monopoly capital. Quite important shifts have become noticeable in this respect in recent decades (see Table 32).

Table 32 Tlic World Capitalist Extraction Industries (in 1975 prices) Developed countries Developing countries Industry 1938 195:i 1 !)<>:! 11173 MlSl 11)38 1953 1903 1973 1981 Percentage share of Ihe grou/> in the extraction industries All brandies 70 67 53 41 45 | 30 33 47 59 55 Oil & gas 62 49 30 21 28 | 38 51 70 79 72 Weight of oil £ gas in the extraction industries of each group of countries (percentages) Oil and gas 22 32 33 42 52 | 44 67 80 92 90 Other typos of minerals 78 68 67 58 48 I 56 33 20 8 10 Source: calculated from: UN Handbook of World Development Statistics, 1979 (United Nations, New York, 1980); UN Statistical Yearbook and Monthly Bulletin of Statistics for the appropriate years.

The figures in the table indicate a considerable increase in the imbalance in the development of mining in the main groups of countries. On the eve of World War II the bulk of _-_-_ __NOTE__ Footnote cont. from page 272. the output of primary products begins to fall, especially in economically backward countries. In 1975, for instance, the physical volume of tho mining production of all countries of tho capitalist economy declined by 7.3 per cent in absolute terms as against 1974 (1.1 per cent in the industrially advanced countries, and 10.9 per cent in the developing countries), while tho volume of farm production rose by 2.7 and 4.5 percent respectively. UN Montlily Bulletin of Statistics, 1982, 5:XVI-XVIII; UNCTAD. Handbook of Trade and Development Statistics, 1979 (United Nations, New York, 1979), p 524. Similar tendencies also manifested themselves during the cyclic slump of the early 80s.

__PRINTERS_P_273_COMMENT__ 18---0170 273 the production of minerals was still concentrated in the industrialised capitalist countries, mainly in North America and Western Europe, which produced more than fourfifths of the total. In other words, their manufacturing and power industries were then based primarily on raw materials produced in the industrial centres of capitalism.

During World War II, however, and in postwar years, a tendency had already begun to assert itself toward an enhanced role for the primary product periphery. Subsequently this trend noticeably intensified in 1953--73, which led to the proportion of the developing countries rising from 33 per cent to 59 in the decades considered. An ever bigger part of their raw materials was directed, of course, to meeting these countries' own needs, but the lion's share was earmarked for export to developed capitalist countries.

There are grounds for considering that, even allowing for the relative decline in the weight of mining in total world production, and a certain decline in recent years in the weight of developing countries in mining, especially of energy materials, the industrial centres of capitalism will increasingly experience an acute need to get various minerals from them. It must be remembered, moreover, that many of the easily accessible deposits in the developed countries are exhausted while there are significant, economically more efficient deposits in Asia, Africa, and Latin America. Allowing for that the share of developing countries in the world capitalist extraction industries will continue to rise.

This process was displayed particularly clearly in the oil and gas industries in the first postwar decades; at the beginning of the 80s around one-half of all the output of the extraction industries of developed capitalist countries, in value terms (in 1975 prices), and more than nine-tenths of that of developing countries, was coming from them. Whereas more than three-fifths of the oil and gas extracted in the 30s was produced in developed countries, mainly in the United States, only a little more than a quarter was produced by them in the 70s and early 80s.

With the break-up of the colonial system and the struggle of the oil-producing countries everywhere against expatriate monopoly capital domination of their economies, this course of events foreordained aggravation of the energy problem in the world capitalist economy.

274

The industrial centres' declining opportunities to supply themselves with minerals from their own resources are an important objective factor furthering an extension of economic ties between them and the primary producers, but the monopolies' drive to utilise the advantages of the international divisions of labour in their own narrow interests is leading with the same objective inevitability to a further aggravation of the industrial centres' problems of mineral supplies. The repeated outbreaks of the energy crisis in the 70s essentially reflected the crisis of the whole historically established raw material structure of the international capitalist division of labour based on a colonial foundation.

Other evidence of the steady growth of deep structural contradictions since the war is the long-term development trends in agriculture. We shall examine these trends from the angle of the changes in the dynamics and ratio of the volume of production in developed and developing countries (see Table 33). Agricultural production rose much more slowly in recent decades than the other basic industries. Its annual rates were under 2.5 per cent in 1950--78, and __PARAGRAPH_PAUSE__ Table 33 Agricultural Production in Capitalist and Developing Countries Index Percentage Weight share of farm (percentage) production In the GDP All 1960--61 100 100 10 1970--71 165 100 7.5 1980--81 205 100 6 Developed capitalist countries 1960--61 100 56 6.5 1970--71 150 53 5 1980--81 180 49 4 Developing countries 1900 100 44 31 1970 180 47 22 1980--81 250 51 17 Sources: calculated from UN Statistical Yearbool:, FAO Production Yrurbooft, FAO Monthly Bulletin ot Statistics for the appropriate years. __PRINTERS_P_275_COMMENT__ 18* 275 __PARAGRAPH_CONT__ much lower than in mining,'not to mention manufacturing, and only a little higher than the average growth of population. As a result the proportion of^ farm production in the aggregate social product of the non-socialist world fell by more than two-fifths (roughly from 36 to 20 per cent in developing countries and from 7 to 4 per cent in capitalist countries).

This trend by no means signified that the capitalist world's need for farm produce was falling. On the contrary, the crisis phenomena in this sphere have been becoming more and more acute in recent decades, the food shortage in the overwhelming majority of developing countries is growing, and the inequality in the distribution of agricultural resources among the individual countries and groups of countries is getting worse. According to capitalist sociologists and economists hundreds of millions of people do not get the necessary minimum of food and live on the verge of starvation. Around 800 million people exist in such conditions in developing countries. In only seven countries of the non-- socialist world do exports of food exceed imports. Studies made by the UN Food and Agriculture Organisation (FAO) in the 70s showed that the international food situation remained extremely difficult and uncertain, especially in developing countries, where the caloric intake of food was a third lower than in capitalist countries.^^1^^

The distinctly slow growth of the agrarian sphere compared with other sectors of capitalist material production is a process that is not simply inherent in the postwar period. Lenin remarked that the lag of agriculture behind industry was 'one of the most profound causes of disproportion between the various branches of the economy, of crises and_ soaring prices'.^^2^^ The field of operation of this historical tendency is now being further intensified and broadened. A comprehensive analysis of its consequences and of its features in various countries is extremely important for a proper estimate of the prime causes of the acute aggravation of the capitalist world's raw material and food problems and of the _-_-_

~^^1^^ For further details see FAO. The Fourth World Food Survey (FAO, Rome, 1977), The State oj Food and Agriculture 1980 (FAO, Rome, 1981).

^^2^^ V. I. Lenin. New Data on the Laws Governing the Development of Capitalism in Agriculture. Collected Works, Vol. 22, p 94.

276 spasmodic fluctuations of market prices for food and agricultural raw materials.

The development of the contradictions analysed in the foregoing sections has inexorably led to an aggravation of the `traditional' and newly arising crisis situations in the agrarian sector of the world capitalism. In that connection the following phenomena deserve attention. At the beginning of this century Lenin, characterising the level of capitalism's productive forces in agriculture, noted that 'capitalism in agriculture is at a stage more akin to the manufactory stage than to the stage of large-scale machine industry'.^^1^^ In recent decades there have been big changes in the farming of developed countries (which has been decisevely transferred onto the basis of machine industry), that have opened up fundamentally new opportunities for raising the productivity of farm labour.

Under the domination of monopoly capital, however, this has not led to any real change in modern capitalism's per capita volume of farm production. According to the UN statistics the general growth rates of farm production were lower in the industrial centres in the postwar period than in the developing world as a whole (about 3 per cent). Consequently the physical output of farm produce more than doubled in the latter, where there are still considerable survivals of pre-capitalist relations of production in many regions, while it rose by three-quarters in the main centres of capitalism.

It is extremely difficult to determine the proportion of farm output that is raw material for manufacturing industries. Some estimate that around a fifth consisted of nonfood produce, the bulk of it processed, in the 70s, but one cannot conclude from this that the role of agriculture as a supplier of industrial raw materials has declined. A feature of the primary commodity sphere is that more and more of its output is processed in the food and beverages industries. In recent decades these industries have grown roughly four times faster in the developed countries than their agriculture's production of primary foodstuffs, and three times faster in developing countries.

Analysis of all these changes calls for clarification of the place of this commodity group in the modern international _-_-_

~^^1^^ Ibid., p 99.

277 division of labour (the structure of which has undergone very substantial shifts). See Fig. 19 on p. 280.

The international trade in primary products has not expanded as rapidly as trade in manufactures. As a result there has been a marked reduction of its proportion in the total exports of the non-socialist world (see Table 34). But that does not mean that the tendency toward internationalisation of social production is not seriously affecting the primary product sectors of capitalism. Furthermore, it has been having a growing influence on the course of their development, especially in recent years. The approximate estimates of UN statistics enable us to get a general idea of the ratio of the dynamics of the growth of production and of foreign trade in primary commodities. When we examine them as a single group, international trade in them rose 50 per cent faster (in constant prices), in the years covered by the graphs, than their production. In other words, effective demand for them on the world market expanded much faster than on the home markets of countries taken separately. Is that a specific feature of recent years alone?

For all the conditional nature and lack of comparability of the international statistics, we can still conclude that the growth of foreign trade in primary commodities was faster in the earlier decades of this century (with the exception of part of the interwar period, especially the years of the 1929--33 cyclic crisis and following depression). Its physical volume in 1936--38 was a bit more than double the 1900 level, while production increased by 77 per cent.^^1^^ In contrast to recent decades, moreover, a tendency toward a marked quickening of the growth rates of trade in primary commodities compared with international exchange of manufactures was typical of the past.^^2^^ After World War II this trend was no longer manifested.

The consequences of the war were most heavily reflected in the international trade in primary products. Its restoration was much slower and more difficult than that of trade __PARAGRAPH_PAUSE__ _-_-_

~^^1^^ See Alfred Maizels. Industrial Growth and World Trade ( Cambridge University Press, 1963), p 80.

~^^2^^ Over the 60 years 1876--80 to 1936--38 trade in primary products rose by a factor of more than 3.7 while that of manufactures rose less than 190 per cent. League of Nations, Industrialization and Foreign Trade (Geneva, 1945), p 157.

278 Table 34 Role of Primary Commodities in World Capitalist Exports Volume of exports ($ billions) Percent ase share In the total volume of exports Percentage share In exports of primary commodities In 1970 prices, f.o.b. Primary commodities (less fuel) 1938 29 50 88 1948 24 38 83 1958 37 34.5 79 1968 59 25 74 1979 110 24.5 76 Fuels 1938 4 7 12 1948 5 8 17 1958 10 9 21 1968 21 9 26 1979 34 7.5 24 In current prices, f.o.b. Primary commodities (less fuel) 1938 9 44 84.5 1948 24.5 46 83.1 1958 33.5 35 75.5 1968 54 26 72 .5 1979 250 17 47 Fuels 1938 1.5 8 15.5 1948 5 9 17 1958 11 11.5 24.5 1968 20.5 10 27.5 1979 287 20 53 Sources: calculated from UN Statistical Yearbook 1976, p 55; idem., 1979 ISO, p 5J; UN Monthly Bulletin of Statistics, 1981, 7: XLIV-XLVI. __PARAGRAPH_CONT__ in manufactures. The physical volume of foreign trade in them reached the 1938 level only in 1953, while international trade in manufactures was by then already more than double that level. Many capitalist countries had been forced in war conditions to adopt a course of maximum self-supply of raw materials, inter alia by the creation of artificial substitutes. This line was more or less maintained for several years after.

279

The powerful postwar upsurge of the national liberation movement in the primary commodity producing periphery of the capitalist world and the cold war unleashed by aggressive circles of the imperialist powers furthered this course of events. Consequently, right up to the early (JOs, as Fig. 19 shows, a greater part of raw material production than before the war was designed for home consumption. Later, however, because of the objective needs of capitalist countries' economics, the growth rates of the primary product trade accelerated and noticeably exceeded the dynamics of production.^^1^^ A tendency began to prevail on the world capitalist market, compared with the national markets, toward a faster expansion of trade in primary products.

Fig. 19 Dynamics of the physical volume of production of farm produce and raw materials and the world capitalist economy's trade in them * 900-- 800-- 700-- 600-- 500. 400. ---PRODUCTION ---EXPORT OF FUt-LS ---EXPORTS OF FARM PRODUCE AND RAW MATERIALS (MINUS FUF.LSI 299-8.jpg 300- 250-- 200-- 150-- io eo 19F8 1:174 1977 1980 *In 1970 prices Sources: UN Statistical Yearbook and Monthly Bulletin of Statistics for the relevant years.

Fuels have a special place in this process. The steady growth of the industrial centres' need for energy resources, and their _-_-_

~^^1^^ World production of primary products increased by two-fifths between 1963 and 1978 (in constant, prices), while international trade in them more than doubled. (UN Statistical Yearbook 1979/80, p 51).

280 reorieutation of their fuel balance from coal to oil and gas raised their interest in supplies of fossil fuels from abroad. The development of big new oilfields in the Near East and certain other areas of the developing world, the low cost of getting the oil, and the huge profits of the monopolies from investment in their oil industries, in turn created favourable conditions for a rapid development of international'trade in fuels. The expanding demand of the chemical industry for fuels also stimulated this process.

In contrast to other commodities the physical volume of the international trade in fuel was already above the prewar level at the end of the 40s, and by the mid-70s was 8.5 times higher (in current prices 190 times higher). As a result the role of fuels in international trade increased significantly in the postwar years (see Table 34).^^1^^

The huge growth of the proportion of fuels'in current prices in the 70s is an important consequence of the oil-- producing countries' anti-imperialist struggle to establish effective control over their own natural wealth. But oil and gas were no exception in this respect. World food prices and non-food prices rose by four-fifths and two-thirds respectively in 1973--80^^2^^. This rapid growth of prices was not, however, stable. The prices of many raw materials, especially those exported by developing countries, fell somewhat under the impact of the crisis of the mid-70s and preceding ones. During the subsequent cyclic upswing prices again rose markedly. Such steep fluctuations of prices for primary commodities had not been known hitherto in the postwar history of this market.

__ALPHA_LVL3__ § 3. The Breakdown of the Traditional Structure
of the International Division of Labour

The growing instability and contradictoriness of world economic development is graphically reflected in the changes in the structure of the trade in primary commodities. The fact that there arc serious differences between the most _-_-_

~^^1^^ A trend toward a rise in the importance of fuels in international trade, it should be noted, has not just been manifested at today's stago. According to the available figures, the weight of fuels in international trade was around 5 per cent on tho eve of World War I (A. Maizcls. Op. oil., p (56).

~^^2^^ UN Monthly Bulletin of Statistics, 1982, 2:168.

281 important value characteristics of these long-term trends in both constant and current prices must be taken into consideration right at the start of study of them, although both the one and the other reflect one and the same process. The volume of exports of primary commodities (without fuels) rose, for instance, by 220 per cent (in constant prices) in 1978, compared with 1938, and 26-fold in current prices. The corresponding growth of exports of manufactures was 11-fold and more than 70-fold. The marked disproportionality of the changes in the relative weights in constant and current prices is due to serious disturbances in mechanism of supply and demand previously established on the world market in the separate commodity groups, disturbances largely caused by the unprecedented expansion of international monopolies' operations on that market.

The rapid rise of prices for raw materials and food during World War II and the first postwar years, which considerably exceeded the increase in cost of manufactures, led in particular to the proportion of primary commodities in international capitalist trade falling markedly at the end of the 40s in constant prices, compared with prewar, but rising rather in current prices. The long period of falling prices of primary commodities that followed, in contradistinction to the rise in prices of manufactures, fostered another trend, viz., for the proportion of the former to begin to fall faster in current prices than in constant ones. This tendency was interrupted in the early 70s by the steep rise of world prices for most types of primary commodity (which will be considered in more detail in the next chapter). One can hardly expect that this tendency will return, at least in the foreseeable future.

All that makes it extremely difficult to clarify the postwar dynamics of the share of primary commodities on the world capitalist market. Still, we can calculate from the UN statistics that the export quota (ratio of export to production) of these commodities fin constant prices) was around a fifth before World War II. After a certain fall at the end of the 40s and the early 50s it again began to rise and was more than a quarter at the beginning of the 60s; 15 years later it was approaching two-fifths.^^1^^ Thus, if we take _-_-_

~^^1^^ Calculated from UN Yearbook of National Accounts Statistics 1972 (United Nations, New York, 1973); UN Statistical Yearbook 1979/80, pp 5, 21, 51.

282 it that the degree of development of the international division of labour can be characterised by the export quota of the production of any commodity, it follows from our figures that it was higher for the primary commodity sphere than for manufactures right up to the late 70s.

The extreme aggravation of the problems of; the world capitalist market, especially by the impact of the economic slump in the mid-70s and early 80s, during which there was a considerable disruption both of the established structural connections and value and commodity proportions in the reciprocal trade of capitalist and developing countries, made it extremely difficult to investigate the long-term development trends of their foreign trade. As we have already remarked, some time is still needed in order to evaluate the role and effect of capitalism's cyclic development in the 70s on these trends with sufficient reliability. But if we try to clarify the resultant lines of the longer-term changes in the two groups' trade in primary commodities, we can draw conclusions about the shifts that occurred in recent decades in the structure of the primary commodity sphere of the international capitalist division of labour. Some features of the indicators of this type of shift are summarised in Table 35.

The considerable enhancement of industrial countries' role as exporters of raw materials (except fuels) immediately strikes the eye. Exports of primary products to developing countries, moreover, have expanded particularly rapidly, so that the dependence of the latter's industry on imports of materials from the industrial centres has not only not weakened in postwar times but has markedly increased.

At the same time, though on a smaller scale, the industrial centres' need to get industrial raw materials from the former colonial periphery has also risen. The physical volume of their imports of primary commodities from developing countries increased by 40 per cent in the period covered by the table. The main growth in their imports, however, still, came from their own reciprocal trade, which expanded in volume by roughly 80 per cent. The growth rates of this trend of trade in minerals and agricultural commodities reached 8 per cent on an average in the 60s and 70s.

Under the scientific and technical revolution developing now in the main capitalist countries, their economies' need __PARAGRAPH_PAUSE__ 283 Table 35 Dynamics of the Physical Volume of Capitalist and Developing Countries' Trade in Primary Commodities (1900 = 100; in export prices, f.o.b., of 1970) Imports Exports of all countries of developed capitalist countries of developing countries 1970 1979 1970 1979 1970 1979 I. All countries primary commodities (less fuel) 150 210 145 195 food 155 250 160 240 fuel 230 310 265 330 II. Developed capitalist countries primary commo 180 135 175 375 280 235 dities (less fuel) 155 230 150 food 170 290 180 fuel 145 200 230 210 295 315 210 150 110 470 290 190 III. Developing countries] primary commodities (less fuel) 140 170 135 food 130 180 135 155 160 150 115 160 285 190 205 fuel 245 325 280 355 Source: calculated from UN Monthly Bulletin of Statistics, 1981, 7: XLVI. __PARAGRAPH_CONT__ for imports of natural primary commodities for industry is thus not simply not declining but has a distinct tendency to expand. In the last two decades imports of raw materials from abroad had to be increased by 8 or 9 per cent for every 10 per cent increment of manufacturing production. In developing countries the growth of manufacturing has gone hand in hand with a corresponding increase in the physical volume of primary commodities of more than 10 per cent.^^1^^ That gives grounds for assuming that, as industrial capability rises, the demand for the main types of minerals and _-_-_

~^^1^^ UN Statistical Yearbook 1979/80 (United Nations, New York, 1980), pp 5, 56, 57.

284 agricultural commodities will also increase further in both groups of countries. According to our estimates this demand may lead to an expansion of real international trade in primary commodities on the capitalist market of at least 50 per cent by the beginning of the 90s compared with the early 70s, given maintenance of the trend noted. Developing countries' needs for such commodities will evidently expand faster than the world average.

Quite important shifts have occurred in the structure of the international division of labour in the trade in food. Its physical volume increased by more than 150 per cent in the period reviewed. This process was also distinguished by a heightening of inequality in trade between capitalist and developing countries. Food exports from the former rose by 190 per cent, so that the overwhelming majority of developing countries, which used to be very important suppliers of food to the foreign market, have been converted, or are being turned, into net importers. Rising population growth rates and the retention in many of them of backward farming methods have markedly intensified their dependence on foreign sources. The physical volume of their food imports from capitalist countries rose by nearly 140 per cent, and their reciprocal trade in food by nearly 70 per cent. The most dynamic trend in the postwar international trade in foodstuffs, however, was the trade between industrial capitalist countries, which increased in volume by 160 per cent. The annual growth rates of this trade in the 60s and 70s were around 6.0 per cent.

These trends fostered a deepening of the already immense imbalance in the distribution of foodstuffs within the world capitalist economy, and an increasing concentration of food resources in its centres. The growth of this imbalance through the operation of this economy's antagonistic development patterns inevitably led to the rise of a food crisis, which was aggravated to an extraordinary extent in the 70s. According to the FAO the developing countries will have to import 85 million tonnes of cereals in the mid-80s, i.e. three times as much as in 1969--72.^^1^^ In 1975--80 alone they imported cereals from developed capitalist countries valued at more than $~41 billion.^^2^^

_-_-_

~^^1^^ See The Guardian, 17 October 1974.

^^2^^ UN Monthly Bulletin of Statistics, 1982, 2:XXXVI.

285 F i g. 20 Main directions of the commodities trade between capitalist and developing countries (in billions of dollars at 1963 f.o.b. prices) ni^UL i tin.' I MAW MATERIALS (WITHOUT FUELS) 299-9.jpg tXPORTS IMPOFiTS EXPORTS IMPORTS 69.8 59.5 83.0 C C 299-10.jpg D D FOODSTUFFS 299-11.jpg 299-12.jpg 2,2 1960 C - CAPITALIST COUNTRIES 1979 D - DEVELOPING COUNTRIES Source: UN Monthly Bulletin of Statistics, July 1981, p XCIV.

An estimate of the long-term changes in the geography of the exchange of primary industrial commodities, food, and fuels between the main groups of the capitalist world is expressed in Fig. 20. It indicates first of all that there has been a significant expansion in the volume of the capitalist, world market's primary commodity connections. The weight of the industrial countries in total exports of minerals and agricultural primary products rose in the years shown (in current prices) from approximately 50 to 70 per cent.

The capitalist countries still dominate imports of these commodities. At the end of the 70s and at the beginning of 286 the 80s they imported more than four-fifths of all the industrial primary commodities entering world trade. There was a correspondingly very substantial decline in the share of developing countries in exports of th'ese commodities, especially to the leading industrial capitalist countries. The international trade in foodstuffs increased over the same period almost eightfold in current prices. The lion's share went, as before, to capitalist countries. More than threequarters of the food exported by developing countries, in turn, also went to capitalist countries. The weight of these imports in the latter's total imports, however, fell correspondingly from 49 to 34 per cent. On the whole capitalist countries' per capita food imports were almost ten times as high as those of the whole group of developing countries at the end of the period. The role of the capitalist centres as suppliers of food to the developing countries markedly increased. At the end of the 70s around three-quarters of the latter's food imports came from capitalist countries, primarily the USA. The bulk of it consisted of unprocessed commodities, with cereals occupying a bigger and bigger place. Major changes have occurred in the trade in fuels, which have affected the whole previously established system of capitalism's world business relations. In literally a few years the international trade in fuels reached qualitatively new levels. In recent years it has exceeded the level of trade in minerals and agricultural primary products by roughly a factor of 3.5 (in value terms).

The problem of the dependence of capitalist countries' economies on supplies of energy resources, above all oil (which has become at the same time a very important primary commodity for the chemical industry) became especially acute at this time. Their imports of fuels increased 30-fold in the period covered by Fig. 21 (roughly 35-fold from developing countries). A considerable part of this trade is in oil products. In the early 50s the industrial centres absorbed around two-thirds of all the fuels coming onto the world capitalist market, and at the end of the 70s more than fourfifths. The geography of the import of fuels also altered substantially. There was a marked reduction of reciprocal trade in fuels between industrial countries. The developing countries consequently became their main sources of energy resources. At the end of the 70s the capitalist countries had begun to import fuels to a sum exceeding imports of all other 287 primary commodities and food from all developing countries. At the beginning of the 50s, it should be noted, fuels were less than a fourth of I ho total of such imports (see Fig. 21).

The demand for fuels from the bulk of the developing countries that do not have energy resources of their own continued to expand steadily, as well, though not so fast. Their imports rose 20-fold in value terms in the period reviewed. In recent years their supplies have come mainly, moreover, from other developing countries rather than from developed capitalist countries as before.

These shifts in the international trade in fuels in a situation when the exporter developing countries have begun an active light to end the monopoly position of expatriate capital in their economies have aggravated modern capitalism's energy problems in an unprecedented way. The energy crisis has been reflected extremely painfully in the balance of payments of the overwhelming majority of both developed and developing countries and in the whole system of their external economic relations. Confirmation of that will be found in Table 3(5, which shows the effect of rising oil prices on their balance of payments.

Table 36 The Balance of Payments on Current Account o£ Developing and Capitalist Countries 1970--1973 Group of countries (yearly 1974 1975 197G 1977 1978 1979 1980 1981* averages) 1. Capitalist countries 15 ---13 16 ---2 -5 31 -35 -77 ---63 2. Developing countries: oil exporters 3 68 35 40 32 5 68 121 109 oil importers ---12 -37 -46 -32 ---28 -36 -37 -53 -61 * Estimated Sources: UNCTAD. Handbook ol Trade and Development Statistics 7979 ( United Nations, New York, 1979): UNCTAD IV. Recent Trends in International Trade and Development. World Economic Outlook, 1967-- J977 (Nairobi, 1976), p G; The UECD Observer, 1981, 7.

Never before has a price rise in any commodity group in international trade caused such a substantial change in the aggregate indices of countries' foreign trade in such a short 288 time. The outbreak of the energy crisis of the 70s quite clearly demonstrated the high degree of internationalisation of world production of energy resources. Any major disturbance in one of the links of this chain (world prices for the main energy resources included) is fraught with very grave consequences for both the current situation and the outlook for the development of world capitalism. It is therefore clearly not enough to reduce analysis of the energy problem, or the other primary commodity problems, simply to a study of the concrete measures taken by any one group of countries or international monopolies in the field of economic policy. Broad processes like this have to be examined together with all the mounting crisis phenomena in the sphere of price formation in world capitalist economy.

[289] __NUMERIC_LVL2__ 9 __ALPHA_LVL2__ THE AGGRAVATION OF PRIMARY COMMODITY PROBLEMS
AND WORLD PRICES __ALPHA_LVL3__ [introduction.]

The deepening of irreconcilable contradictions in the primary commodity sphere reflects many of the essential features of the current development stage of world capitalism, including its whole established international price system. The increasing instability of world prices is an objective process analysis of which provides the key to understanding a number of complicated, specific phenomena in the capitalist economy as a whole.

The consistent intensifying of this instability has found concentrated expression in feverish commodity price fluctuations and jumps on the world capitalist market. In the 70s these prices rose roughly fivefold on the whole, and those of minerals eightfold. At the same time the price level of manufactures almost trebled. The price rise for primary commodities was thus much higher on the whole in that decade than for manufactures.

The rise was not, however, steady. Under the impact of the world cyclic crisis of the mid-70s, for instance, the prices of most primary commodities fell slightly while those of manufactures, mainly from the developed capitalist countries, maintained their previous rising trend, though not so strongly as before.

There is an organic dependence between world prices and price formation within countries engaged in international trade. This comes out particularly graphically under the 'galloping inflation' that has gripped the economies of most capitalist and developing countries today. It is by no means, however, a direct relationship, and in recent years has been reflected at different times and in an extremely varied way in the movement of the prices for various goods and groups of commodities in international trade (see Table 37).

290 Table 3? Growth Rates oi World Export Prices by Basic Commodity Groups Annual rates jn [icrcontages of the previous year Commodity group 1970* 1974"~1975 197(i~1977~1978~1979~198° All groups 1.5 19 8 2 9 10 19 19 Manufactured goods 2 33 12 0 9 15 14 11 Primary com-- modities 1 33 ---2 0 10 2 29 47 minerals 1 48 4 5 9 1 40 68 agricultural primary com-- modities ---0.5 22 -13 12 11 6 21 5 food 1.5 23 ---6 5 14 1 12 17 Sources: calculated from UN Statistical Yearbook 1978 (United Nations, New York, 1979); UN Monthly Bulletin of Statistics, 1982, 2,

There has never been such a dynamics and variation of world commodity prices, except during world wars. It has also been unusual since the war.^^1^^ The rise in primary commodity prices, especially of energy sources, in the 70s and at the beginning of the 80s, unprecedented in scale and economic consequences, has become particularly important in this connection.

Was it a short-term phenomenon, or a long-term one? In other words, was it simply the consequence of the current situation in international trade? Or was it the result of deep (i.e. qualitative) shifts in the established price-forming process on the world market? It is important to pose this question, in our view, especially in order to clarify the outlook for the development of essential elements in the structural crisis of the commodity sphere.

_-_-_

~^^1^^ There is much evidence of this in the international statistics. See, for example: League of Nations. Industrialization and Foreign Trade (Geneva, 1945); I. B. Kravis and R. E. Lipsey. Price Competitiveness in World Trade (National Bureau of Economic Research, New York, 1971); UNCTAD. Handbook of International Trade and Development Statistics 1979 (United Nations, New York, 1979).

__PRINTERS_P_291_COMMENT__ 19* 291 __ALPHA_LVL3__ § 1. The Historical Background of the Problem

Continuous fluctuations of prices in bolii international and home trade are characteristic of tiie capitalist economy at all stages of its evolution. In the period of free competition they reflected the spontaneously formed market mechanism of supply and demand, through which the law of value operated and which ultimately levelled out world prices in accordance with the international cost of production.

In the monopoly stage, with the rise of a system of monopoly prices, price formation hecame a much more complicated business. The dominant position of finance capital in the world economy gave it the chance to raise the prices of some commodities arbitrarily and to depress the prices of others. While such arbitrariness was more or less levelled out through the competition of monopolistic groups, the export prices of the output of economically and politically dependent primary producers were in practice formed out of their control on the world market.

The objective patterns of the levelling of average rates of profit and prices of production remained the main regulators of price formation at that stage, but for the goods of the most monopolised industries (mainly manufacturing) prices acquired a tendency to rise above the international price of production, which became, as a rule, their lower limit. In contrast to that the prices of unmonopolised industries (mainly primary commodities) displayed a tendency to oscillate at a level below the international price of production, a situation that could not help having a detrimental effect on the economies of industrially backward commodity producers.

A special UN study of the long-term trends in the movement of world prices of primary products exported by underdeveloped countries concluded that

In general, price fluctuations have resulted in less-favourable terms of trade for under-developed countries. The secular trend in prices of primary commodities relative to prices of manufactured goods was downward from the latter part of the nineteenth century to the eve of the Second World War.^^1^^

_-_-_

~^^1^^ UN. Relative Prices of Exports and Imports of Under-developed Countries (United Nations, New York, 1951), cited from UN. Instability in Export Markets of Under-developed Countries (United Nations, New York, 1952), p 1.

292 Fig. 21 Dynamics of the price indices of industrial goods and primary products (mean annual price level for 1886--90=100) 299-13.jpg

Sources: League of Nations. Industrialization and Foreign Trade (Geneva, 1945), p 157.

[293]

The prices of primary commodities were particularly unfavourable compared with those of manufactured goods when the economic situation deteriorated, as is clearly indicated by graphs based on League of Nations statistics (see Fig. 21). The considerable, steady fall in prices in prewar years was a reflection of the worst cyclic crisis (1929--33) in the history of capitalism and the ensuing protracted depression.

It would be wrong to see the mounting effect of the monopoly price mechanism on world market prices, however, as a __PARAGRAPH_PAUSE__ Table 38 Terms of Trade: Manufactured Goods to Other Primary Goods (Unit value indices: 1963 = 100) Year Terms of Trade Year Terms of Trade 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 115 109 106 103 103 100 103 105 100 97 93 90 93 93 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 144 123 107 105 95 102 100 100 102 128 146 155 152 136 133 122 113 138 Note: The terms of trade were obtained by dividing the unit value Index of exports of manufactures (f.o.b.) by the corresponding unit value Index of the prices of all other goods ( Industrial and agricultural primary products, fuels, and food). Source: UNCTAD. Handbook of International Trade nnd Development Statistics 1972 (United Nations, New York,'1972), p 43. __PARAGRAPH_CONT__ constant deterioration of the terms of trade for primary commodities and a steady lowering of their prices in 294 relation to finished goods, a conclusion confirmed by estimates of the ratio of the prices of manufactures and primary products in international trade (see Table 38) in the early decades of the century.

Because of concrete circumstances of one kind and another, the terms of trade were more favourable in separate periods for various types of primary commodity and food, or for this whole commodity group in general, compared with manufactures. On the eve of World War I, for instance, the ratio of world prices was relatively more favourable for primary commodities than at the beginning of the century. Before the 1929 crisis the terms of trade also tended to be in their favour compared with the early 20s.

As a rule, however, these relatively short periods were again succeeded by years of a protracted deterioration of the state of the world market for primary commodities; this deterioration was particularly distinct in years of a general decline in the prices of all the main commodity groups, including manufactures. At the end of the 1930s the average unit world price of exports fell, on the whole, by roughly a quarter compared with the early 1920s.

This tendency toward a general decline in prices in international trade, we must stress, can hardly be considered a specific feature just of the interwar years. The facts indicate that it was also displayed earlier in one way or another. Its effect, of course, was extremely uneven for the various commodity groups and was repeatedly interrupted. The separate periods of a marked rise in the first decades of the twentieth century, during cyclic booms and bursts of military rivalry, still did not play a fundamental long-term role in international trade.

The processes traced in Fig. 22 will be even clearer if we take the initial period of the transition from free competition to monopoly as the base for our calculations. World prices of manufactured goods in 1911--13 were only slightly above the average level in 1876--80, while those of primary commodities were correspondingly a little lower. According to the League of Nations data, the average price index for all types of primary product in 1936--38 was about half the level of 1876--80, and that of manufactured articles "almost a quarter below.^^1^^

_-_-_

^^1^^ League of Nations, Industrialization and Foreign Trade, p 157,

295

All that provides ground for the following conclusion: during the long evolution of monopoly capitalism, right to the outbreak of World War II, a tendency prevailed for the most part in international trade toward a certain lowering, rather than an increase, in world prices, especially those for primary commodities.

__ALPHA_LVL3__ § 2. Postwar Trends

One of the economic consequences of World War II was an immense rise in the foreign trade prices of the main types of export goods. The general unit value index of exports in 1948 was more than 160 per cent above the 1938 level (roughly double for manufactured articles and 140 per cent for fuels and other primary commodities, including 220 per cent for food). The ratio of the prices of manufactured articles to primary commodities'tended markedlytin favour of the latter. But later, for roughly two decades, pricing began to develop in another direction on the world capitalist market.

After a certain decline at the beginning of the 50s the prices of manufactures began gradually to rise, while those for most primary commodities had a tendency to decline to the end of the 60s. The dominant, more favourable line of the movement of prices for manufactures in the earlier stages of capitalism's development again largely gained the ascendancy, although it was not so pronounced as over most of the preceding decades (see Fig. 22).

The terms of trade for primary commodities consequently deteriorated markedly at the end of the 60s compared with the end of the 40s. If we take the ratio of the unit value of exports of manufactures to the corresponding index for all types of primary commodity in 1948 as 100, it was 112 in 1959 and 127 in 1969. At the end of this period one and the same quantity of raw materials and food could buy roughly a quarter less manufactures (in value terms) through international trade than at the beginning.^^1^^

Still, the ratio established soon after the war between the current prices for the main commodity groups in international trade did not alter essentially in any way in this period. In any case it was rather more stable than in the interwar years. But it was in the first postwar decades that _-_-_

~^^1^^ UNCTAD. Op. cit., p 43.

296 the real shifts occurred in the structure of material production and in the system of modern capitalism's international business connections that created the objective conditions __PARAGRAPH_PAUSE__ F i g. 22 Movement of prices on the world capitalist market by groups of goods (1938=100) * 1400 1300-- 1200-- IfiTO1000-- 900-- 800-- (;OOD AND RAW MATf RIALS (OTHCR THAN FUtLI FUtL MANUt ACTUH^U GOODS 299-14.jpg 700-- 600 500 299-15.jpg 400 300-- 200-- 100 ]M[-r-][---r-X-r-X......,-r-, , , , , . 1938 48 53 59 63 64 G5 66 G7 68 69 70 71 72 73 74 75 1976 * In export prices f.o.b. Sources; UN Statistical Yearbook and Monthly Bulletin of Statistics for the relevant years. 297 __PARAGRAPH_CONT__ for consistent growth ot the deep-seated contradictions in the whole world capitalist pricing system.^^1^^

The fact that these changes were not quite adequately reflected in the structure of world commodity prices for a certain time was directly linked with the fact that monopoly capital, as before, held all the main levers in these years for affecting price formation in world capitalist economy, including those controlling the price level of the various types of primary commodity entering world trade. The best known example of this control was the long stabilisation of world prices for fossil fuels (above all oil) at a monopolylow level. The comparatively stable level of prices for raw materials for the basic metal industries and certain other products of the mining industry (in particular such a specific product as gold) is indicative in this respect.

The operation of the state-monopoly price-control machinery, however, came more and more into contradiction with the actual processes taking place in world economy, which inevitably involved a danger of serious subsequent disturbances in the system of this machinery's functioning. The contradictions piled up, while the former opportunities of the monopolies of the leading imperialist powers to dictate .their terms in trade with other countries were more and more reduced above all with socialist countries, but also with many developing countries.

The significant sharpening of the crisis of capitalism's monetary and financial system (based on the leading role of the U.S. dollar) at the end of the 60s and early 70s stimulated a further intensification of inflation.^^2^^ To combat it capitalist governments gave preference in their home prices policy, as a rule, to various fashionable theories of Western economists of the neo-Keynesian school, according to which an inflationary prices policy (and when necessary deflationary) should, if pursued by governments in regard to home prices within the separate countries or limited groups of countries, benefit capitalism in the long run. They did _-_-_

~^^1^^ Let us recall that in 1950--70 the physical volume of international trade within the modern limits of capitalism increased roughly fourfold, and the GDP by 140 per cent (manufactured articles by 190 per cent).

^^2^^ These inflationary processes, it must, he noted, had developed latently within the national economies of most capitalist countries over a number of preceding years and were initially directed and programmed to quite an extent by state-monopoly measures.

298 not normally, however, allow either for the objective inevitability of a sharpening of old contradictions and rise of new ones on the world market, or for the inevitability of cyclic crises of all capitalist business. While some capitalist theoreticians did not ignore these processes, they, too, in any case, clearly underestimated them. The internal levers of state-monopoly control, in the view of most modern capitalist economists, would be quite adequate to achieve the goals of a national counter-crisis policy posed by them.^^1^^

The course of world capitalist economy in the 50s and 60s, it would seem, fed hopes of some success in the inflationary policy in regard to prices pursued by the main capitalist powers. `Creeping' inflation, contained initially within certain limits, was accompanied with a certain quickening of their economic growth rates, and no, in any way long, farreaching disturbances of a cyclic character were experienced then. At the same time the level of world prices continued to remain relatively stable, in spite of inflation in separate countries, and the industrial centres acquired primary commodities as before at comparatively low prices.

Between 1953 and 1969 the level of world export prices rose by only 7 per cent (14.9 per cent for finished goods), while it even declined by roughly 3 per cent for primary products, except fuels. Domestic wholesale prices rose much faster in the same period in most capitalist countries.^^2^^ This position, however, could not last long. A new major price explosion was maturing on the world market with objective inevitability.

The graphs in Fig. 23, based on 1948, give a clearer idea of the character and determinant trends of the postwar movement of prices for the leading commodity groups in interna-- _-_-_

~^^1^^ The essence of these theories, and their actual groundlessness, have been examined in detail in several chapters in the following Soviet monographs: N. N. Inozemtsev et al. (Eds.). Politicheskaya ekonomiya sovremennogo monopolisticheskogo kapitalizma (The Political Economy of Modern Monopoly Capitalism), 2 vols. ( MyslIPublishers, Moscow, 1975), and A. G. Millikovsky and S. M. Nikitin (Eds.). Ekonomichesky rost v usloviyakh monopolisticheskogo kapitalizma: problemy i protivorechiya (Economic Growth under Monopoly Capitalism: Problems and Contradictions), Nauka Publishers, Moscow, 1975.

~^^2^^ UN Statistical Yearbook 1978 (United Nations, New York, 1979), pp 51, 542--547.

299 Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1982/WCE326/20070620/326.tx" __EMAIL__ webmaster@leninist.biz __OCR__ ABBYY 6 Professional (2007.06.20) __WHERE_PAGE_NUMBERS__ bottom __FOOTNOTE_MARKER_STYLE__ [0-9]+ __ENDNOTE_MARKER_STYLE__ [0-9]+ Fig. 23 Price movement o£ groups of goods on the world capitalist market (10^8=100) * 326-1.jpg * In export prices f.o.b. Sources: UN Statistical Yearbook and Monthly TSulletin of Statistics for the relevant years. [300] __PARAGRAPH_CONT__ tional trade. They convincingly indicate that the early 70s were really marked by qualitatively new phenomena in the development of inflation on the world market. Inflation was markedly manifested from the late 60s and early 70s, and showed above all in an accelerating rise in the prices of "manufactures, and later of primary commodities. The 1970--71 economic crisis that swept many of the leading capitalist countries not only demonstrated the bankruptcy of counter-cyclic inflationary prices policy but also stressed with new force the failure of their ruling circles' counting on the effectiveness of the capitalist economic recipes of state control of the main economic processes worked out in the postwar period.

The chain reaction of rapid, unrestrained growth of domestic prices that developed in the industrial centres at the turn of the decade to the 70s (and also in many countries of the primary commodity periphery) could not help being ultimately reflected in world market prices. The general unit value index of world exports rose by 20 per cent in 1972 compared with 1969, which was almost four times its growth in the preceding fifteen years. At the same time, however, inflation increased even faster on the home markets of capitalist and many developing countries than on the world market, especially for manufactures.

Over the next few years a trend began on the world market that calls for close attention and study. The growth rates of international trade prices rose steeply. By the beginning of the 80s the general world price index was more than three times as high as in 1972. The dam in the price machinery of capitalist business that had held the level of world prices down for a long time, especially for primary commodities, was broken. These prices, which had had a stabilising effect on inflation over the two preceding decades, were converted in a very short lime into an essential factor stimulating inflation of the capitalist economy.

__ALPHA_LVL3__ § 3. National and World Prices

`Galloping inflation' on the home markets of capitalist countries, which gave a powerful impulse to the spontaneous price explosion in the international trade in separate commodity groups in the 70s and early 80s, itself began to 301 become more and more dependent on these prices. A kind of feedback arose. The unprecedented rise in world prices began to break up and distort the already inadequate system of state price control on the national markets. A kind of vicious circle of interacting external and internal inflationary factors was created within world capitalist economy. The objective inevitability of a strengthening of this reciprocally stimulating influence was predetermined by the rapid internationalisation of capitalist production.

In this connection the profound alarm with which capitalist politicians and economists have begun to draw attention to the problems of `exportable' and `importable' inflation is understandable. While the dependence of the movement of domestic prices on world ones used to make itself mainly felt in the much weaker economies of developing countries, it is now, at this stage of the internationalisation of social production, affecting the formation of the whole pricing system in the industrial centres.

There are also qualitatively new phenomena in the movement of world and domestic prices. One of the most important patterns in the preceding economic history of capitalism, as we know, was that a tendency toward a lowering of prices, especially those of primary commodities, used to begin to gain in importance on the world and domestic markets on the eve of cyclic overproduction crises, and usually ceased to operate during the next upswing. The figures and estimates given above indicate that the growth rate of prices for most of the main commodities remained very high during the cyclic movement of the capitalist economy of the early 70s, even in the periods of low business activity. Capitalism has thus come up against the problem of the combination of a slump and inflation. President Ford of the United States, recognising this in his message to Congress in 1975, said:

In 1974, most of the world's economies were beset by problems flowing from the unprecedented combination of recession and inflation. Additional pressures, including precipitous increases in energy costs and disappointing harvests, further strained the world economy, particularly in the areas of trade and monetary flows and adjustments.^^1^^

_-_-_

~^^1^^ International Economic Report of the President. Transmitted to the Congress March 1975 (U.S. Govt. Printing Office, Washington, D.C., 1975), p 111.

302

The combination of a decline in production growth rates and precipitous inflationary growth of prices is a phenomenon that has arisen comparatively recently. In it the deep contradictions and growing instability of capitalism's world economy are clearly manifested.

Inflation has grown to unheard-of dimensions. Since 1970 prices in the developed capitalist countries have risen on average by 130 per cent, and since 1975 by 50 per cent. The inflation curve is getting steeper.^^1^^

Table 39 gives a concrete idea of the scale and rates of inflation.

Table 39 Dynamics of the Growth of Domestic and Export Prices in Capitalist and Developing Countries (yearly averages, in percentages) Group of countries Consumer Prices Export Prices 1961--1970 1971--1980 1961--1970 1971--1980 Developed 3.5 8.5 1.5 12 USA 2.5 7.5 2 9 Japan 5.5 9 0.5 4 West Germany 2.5 5 1 6 France 4 9.5 2.5 11 Great Britain 2.5 13 3 16 Italy 4 14 0.5 16 Canada 2.5 8 2.5 11 Developing 3 18 15 21 oil exporters 2.5 12.5 0.2 33 others 3 19.5 2 12 Source: calculated from ,UN Statistical Yearbook, World Economic Survey, Monthly Bulletin of Statistics, and IMF International Financial statistics lor the appropriate years.

The general trend and syiichronousness of inflation does not, however, exclude sizeable differences in the way it is manifested in separate regions and countries. Over the last of the periods covered by the table the growth rates of consumer prices roughly doubled in the USA, rose by a factor of 3.5 in Great Britain, by 60 per cent in West Germany, 270 per cent in Italy, 150 per cent in France, and _-_-_

~^^1^^ L.I. Brezhnev. Report of the Central Committee of the CPSU to the 26th Congress of the CPSU. The 26th Congress of the CPSU. Documents and Resolutions (Novosli Press Agency Publishing House, Moscow, 1981), p 26.

303 140 per cent in Japan. There were also substantial changes in the dynamics of inflation in developing countries. Between 1971 and 1980 the annual rise of consumer prices in the latter was 18 per cent, whereas it had been only around 3 per cent in the preceding decade. The same sum of money could buy only about 20 per cent as many consumer goods in these countries at the beginning of the 80s as at the beginning of the 70s.

Average statistics, of course, smooth out the considerable and rapidly extending differences between the inflationary price rise by countries and groups of countries, but on the whole the rates of 'galloping inflation' were roughly twice as high in developing countries in the 70s as in capitalist ones. The ratio of the dynamics of price rises between the two groups of countries used to take another direction; in the developing countries they rose more slowly in the 60s as a rule. The new wave of inflation struck the developing countries at the turn of the decade to the 80s. In 1979--80 alone consumer prices rose in them by more than two-thirds (one-fifth in the oil-exporting countries and four-fifths in the oil-importing ones).^^1^^

A comprehensive estimate of inflation requires the ratio of national and world prices to be taken into account; without that it is practically impossible to bring out many of its features clearly enough. It will be clear from Table 39 that export prices (which in the main determine the level of world prices) have risen faster on the national markets as a rule in the past decade. Inflationary tendencies have thus been spread along trade channels from some countries to others. They have undermined the importers' efforts to stabilise national prices, have led to a greater rise of prices in importing countries, which in turn has fostered a rise in the price level of their exports, and so on. In general a kind of vicious circle of the interaction of internal and external inflationary factors has arisen, in the forming of which the precipitous growth of prices for the exports of industrial and oil-producing countries has acquired special importance. The national economies of the economically less developed countries have proved specially sensitive to the effect of inflation imported from outside.

For all the immensely specific character of the ways that _-_-_

~^^1^^ International Financial Statistics, September 1981, p 43.

304 'galloping inflation' is being manifested in separate national markets, and the lack of comparability of its statistical indicators in the overwhelming majority of countries, there are several common features characterising the connection between internal inflation and the dynamics of the movement, of world prices, among which we can distinguish the following. (1) The biggest price rises in these countries have been when the inflationary spiral of the world market reached an unprecedented height. (2) There has been a change in the ratio of domestic prices in both home and international trade in favour of a number of primary commodities. (3) The wholesale price indexes for imported goods have in many cases exceeded the aggregate domestic wholesale price indexes.

A seeming paradox arose in international trade then, viz., a quite stable increase in the average growth rates of the world price index, especially for primary commodities, compared with the wholesale prices for the same goods in most countries of the capitalist economy. For manufactured goods, however, this gap was not generally as wide as for primary commodities, especially oil and oil products.

It would hardly be right to reduce study of the reasons for the rise of this phenomenon to a description of the current features of a given stage of the world market's development. It evidently calls for a comprehensive study of longer-term trends in pricing in both the domestic and the international trade of the main groups of countries. And that in turn calls for clarification of the postwar movement of prices for each of the main commodity markets separately, which is far beyond the purpose and possibilities of the present work.

Still, the figures and curves adduced earlier allow us to conclude that the shifts in the dynamics of world prices do not stem just from the intensification of inflation in the national economies of the overwhelming majority of countries. The rates and character of this inflation do not make it possible to say in any full way why the price level of the main types of primary commodity in world trade rose several times in the period considered. It is not enough to explain the substantial fluctuations in the ratio of world prices of primary commodities and manufactured goods in those years simply by inflationary processes. It is very definitely necessary to clarify the specific way the __PRINTERS_P_305_COMMENT__ 1/2 20---0170 305 monopoly price mechanism operates on the world market. Was there any real disturbance of the system of price fixing in international trade itself in the years considered? It is becoming of paramount importance for study of the probable trends in the movement of world prices in a more or less long outlook to pose this question. In that connection it is necessary to turn to the problem of the operation of the monopoly price mechanism for primary commodities in world trade. Quite important changes have taken place in its functioning in recent years.

__ALPHA_LVL3__ § 4. Monopoly Prices and the Liberated Countries

Monopoly capital, having established its complete domination over the raw material resources of colonial and dependent countries at the turn of the century, dictated the prices of primary products for several decades. The postwar collapse of the colonial system did not lead immediately to the elimination or even to a marked weakening of this domination. The emancipated countries were not in a position in the early postwar years, because of their economic dependence on the industrial centres, to exert any real influence on the international price system. It remained, as before, under the unrestricted control of the leading monopoly groupings.

A change in the role of developing countries in the capitalist price system was, however, inevitable. Quantitative changes built up gradually that were to pass into qualitative ones, especially where the newly free countries had succeeded in substantially limiting the operations of expatriate primary commodity monopolies and getting fairer prices for the primary products they exported. Convincing evidence of that is the success of the oil-producing countries in their fight to establish real control over their natural resources. The publisher of the West German Aussenpolitik, Heinrich Bechtoldt, had good grounds for stating that

Both the nationalisation and the oil price explosion could be foreseen by experts a long time in advance... The Arabs had already once tried to use oil as a weapon in 1967 following the Six-Day War. There was then still no talk of a price explosion.^^1^^

The oil-producing countries' subsequent fight against the dominant position of expatriate monopoly capital in _-_-_

~^^1^^ Aussenpolitik, 1974, 25, 3:308.

306 their economies had a marked and varied effect on price formation in international trade.

Their gains led, much more than those of other groups of developing countries, to the monopoly price machinery for primary commodities backfiring badly at the beginning of the 70s. The industrial centres' dependence on supplies of oil and other energy sources from developing countries, which had been growing in recent decades, in turn made for a disturbance of the operation of this machinery on just one sector affecting the whole set of world capitalism's primary product connections with special force.

A situation was created that has been characterised everywhere as the 'energy crisis'. This crisis, developing on a general background of a sharp aggravation of all modern capitalism's main raw material problems, was associated in the first place with the structural changes in international trade arising from the weakening of the imperialist powers' colonial-raw material monopoly in the world economy. During its evolution the bankruptcy of monopoly capital's old, traditional methods of economic diktat, and also of some of its neocolonial methods, began to be more and more clearly demonstrated.

What happened on the oil market in the 70s? During the preceding decades of this century the Western monopolies, as we know, completely dominated the oil industry of the capitalist world. In the colonies and dependent countries their domination was founded in its time on dictated concessions distinguished by the length of their terms (60 or 70 years or more) and the huge areas possessed by the oil companies. The exploited countries, as a rule, received comparatively small fixed sums, or `royalties' for the concessions. Right up to the beginning of the second half of the century almost all the concessions in colonial and dependent countries were in the hands of eight major oil monopolies, linked together in an international cartel. They in fact decided the fate of the world oil market and were able arbitrarily to fix both the volume of oil extracted and its prices.

In the 50s and 60s the members of the cartel were forced more and more to abandon the old concession conditions to some extent, under the pressure of the new sovereign states (relying on the all-round support of the countries of world socialism) and of the consequences of the intensification of inter-imperialist rivalry. Initially the principle of a 50:50 __PRINTERS_P_307_COMMENT__ 20* 307 sharing of the profits began to be introduced (profits, true, from the monopoly-low, `posted' price set by the oil companies themselves). But individual countries had then already succeeded in wringing agreement to a certain participation in the sale of their oil from foreign capital.

We must also note here the role played in undermining the oil cartel's monopoly positions in the Near East of the competition of big Western `outsiders', which grew rapidly with the break-up of the colonial system. The contracts signed by the national oil companies of Egypt and Iran in 1957 with the Italian public company ENI became of considerable importance. Under them the profit was shared 75:25 in favour of the oil-producing country.^^1^^

Similar principles underlay several subsequent agreements with Western oil companies. Their role, however, and that of royalties still remained comparatively small as a price-fixing factor for several years. Only at the beginning of the 70s was there a marked turning point in this respect. The oil-producing countries began to be transformed into __PARAGRAPH_PAUSE__ OPEC Members' Income from Oil Table 40 Country Ayerage price of oil per barrel (dollars) 1974 1979 1980 1970 Saudi Arabia 0.83 6.54 17.52 28.77 Iran 0.86 8.40 22.89 35.08 Venezuela 1.09 10.62 16.76 24.96 Libya 1.09 13.89 21.61 38.83 Kuweit 0.83 7.73 23.77 37.46 Nigeria 1.09 8.92 21.03 35.44 Iraq 0.96 10.15 19.71 31.62 United Arab Emirates 0.92 6.68 19.52 31.74 Algeria 0.91 10.57 21.76 35.90 Indonesia 0.67 6.52 19.03 32.40 Qatar 0.92 8.46 22.32 35.18 Sources: Petroleum Economist for the appropriate years. _-_-_

~^^1^^ In contrast to the traditional concessions ENI undertook to bear all the costs of exploration if oil was not found. When oil was discovered the outlays were to be shared equally by ENI and the government of the country, which received half of all the oil from the newly discovered oilfields.

308 __PARAGRAPH_CONT__ the real owners of their oil wealth, as the growth of their income from oil produced on their territory in the first half of the 70s in particular shows (see Table 40).

As will be seen from the figures the oil-producing countries were not, by any means, able to wring equal concessions from the oil monopolies. Saudi Arabia, the United Arab Emirates, and Indonesia had the lowest income per barrel of oil produced, and Libya, Venezuela, Iran, and Algeria the highest. On the whole, however, the income of the 11 OPEC members per barrel rose roughly tenfold in this period, and their total receipts from oil by a factor of 11.5 (from $ 7.7 billion in 1970 to nearly $ 90 billion in 1974), most of them coming not from royalties and income tax but from direct sale of the oil received by their governments as their share of the production of oil. In these years, consequently, there was a breach on many sectors of the system of monopoly-low oil prices built up by imperialism over many decades. The whole course of subsequent events demonstrated that, in spite of monopoly circles' immense efforts to maintain this system in today's conditions, the outlook for a return to the old diktat is becoming as Utopian for the monopolies as to expect the oil-producing countries to refrain in future from active participation in the fixing of prices on the world market.

This reality has begun to be more and more clearly recognised in the West. The influential American journal Foreign Affairs, noting the substantial changes in the system of fixing world oil prices, and in the trading terms, wrote in 1974:

The first key fact that must now be recognized is that the position of the international oil companies has changed completely over the past few years. Up to about 1969 the major concessionholding companies still could determine levels of production, investments, exports and prices. Moreover, they still possessed substantial bargaining leverage in their negotiations with producing countries, largely by virtue of the surplus producing capacity that obtained in the Middle East and even in the United States... All this is now gone.^^1^^

Moreover, as the journal said, the producing countries have now deprived the international companies of all these rights, and the latter have lost their leverage in them. The British economic press had repeatedly said that since _-_-_

^^1^^ Foreign Affairs, 1974, 7:693.

309 the number of producing countries in which production has been or was intended to be nationalised was growing, the traditional concessions would be liquidated, and with them the posted prices that had been fixed for the companies' accounts with the governments of the producing countries.

Many statements appeared in the Western economic literature from which it was obvious that the old mechanism for operating monopoly-low prices not just for oil but also for primary commodities in general had already lost its former effectiveness, and that the era of cheap colonial commodities was over, never to return, while the newly emancipated countries' national sovereignty over their resources was acquiring a more real economic meaning in price formation on the world capitalist market.^^1^^

The changes in the price level of other types of primary commodity in the 70s were less significant than those of oil. But as nationalisation of expatriate raw material monopolies proceeded in many primary-producing countries the tendency to organise processing of their own primary commodities gathered strength.

Several groupings of countries exporting primary products and foodstuffs have been organised in the past ten or fifteen yeajs, in addition to OPEC. They have the same aim, viz., to get juster prices for their exports, a rise in income tax from enterprises belonging to expatriate monopoly capital, the establishment of effective control over the latter's operations, and so on. The groups include, for example, the International Bauxite Association, the Intergovernmental Council of Copper Exporting Countries, and the Union of Banana Exporting Countries, etc.

The tendency to form such organisations was specially stimulated by the clear success of OPEC's struggle. The New York Times Magazine had to make the following very characteristic recognition of this:

But while the O.P.E.C. action has left the industrial countries (the developed capitalist countries---Auth.) frustrated, angry and suspicious of one another, the rest of the world has greeted the oil-price increase as an act of justice. Even the poorest countries, for whom the new prices are an impossible burden, have _-_-_

~^^1^^ In the early 80s, for instance, the OPEC countries' income from exports more than doubled as compared to the mid-70s and exceeded $ 200 billion as compared to $ 100 billion in 1975 (UN Monthly Bulletin of Statistics, 1982, 4:106).

310 pointedly refused to make common cause in public with the industrial world against the producers' cartel.... Indeed, encouraged by the success of the O.P.E.C. nations, they are now dreaming of creating their own cartels and forcing the industrial world to pay more for all the other raw materials it needs, from bauxite and copper to the humble banana. For them, the real lesson of the oil-price increase is that the poor and dispossessed have finally turned the tables on the rich and are forcing a redistribution of the world's wealth.^^1^^

All this means that the features of the 70s movement of world commodity prices came about not only through the operation of exclusively economic factors but also reflected the changes at present taking place in the balance of political power between the main groups of countries in the capitalist economy.

It by no means follows, however, that the developing countries' anti-imperialist struggle for genuine independence has already decisively altered the balance of power between them and imperialism in the field of price-fixing or in other areas of the world economy. The tendency considered is simply evidence of the beginning of this struggle's transition in the 70s to a qualitatively new phase. It is developing in conditions in which Western monopoly capital still has an immense economic potential and considerable means of socio-political and economic pressure on the developing countries, and still holds the key positions in the capitalist world economy. This struggle, too, will undoubtedly be protracted and stubborn.

It is significant that the price increases on the capitalist oil and other commodity markets did not lead to a reduction in the incomes of the commodity monopolies in these years, but rather to a precipitous rise in them. According to the Chase Manhattan Bank, for instance, the profits of the biggest U.S. oil companies rose on an average by 70 per cent a year at the height of the energy crisis and so doubled in 1973--74, reaching $ 22 billion. In the following years the monopolies' incomes reached record new heights. Those of U.S. corporations concerned with processing energy sources (oil and coal) alone increased by 560 per cent between 1970 and 1981 and were above the annual level of nearly $ 100 billion at the end of this period.^^2^^ There were considerable increases as well _-_-_

~^^1^^ The New York Times Magazine, 15 December 1974, pp 13,76.

~^^2^^ Economic Report of the President (U.S. Govt. Printing Office, Washington, B.C., 1981), p 329.

311 in the incomes of other groupings of Western primary product monopolies, which, in dominating the world market, first skimmed off the cream from the rise of prices, and in fact gambled on raising prices. The increase was laid mainly on the ordinary consumer and the working masses of both capitalist and developing countries.

A faster growth of prices of products exported by the industrial countries remained the determining trend as a rule in the movement of world prices for most types of primary commodity at the end of the 60s and in the early 70s. Only in the mid-70s did the general index of price rises for commodities exported by developing countries slightly surpass the corresponding index for developed capitalist countries. That happened, however, mainly because of the increase in oil prices.^^1^^

As exporters of primary commodities the developed countries remained in a more favourable position on the world market than the developing countries both during a decline and an increase in their prices. It is also quite wrong to suppose that all the proceeds from exports remained at the disposal of the primary-producing countries themselves. The fact is that the foreign trade of most of them is still largely under the control of expatriate monopoly capital. And it is impossible to equate the nominal sums of their export receipts, calculated from the customs returns, and their real income from exports of primary commodities. There still remains a great gap between them, even since the break-up of the colonial system.

We must remember, above all, that many developing countries by no means yet get the full export proceeds in practice, when their exports are made by enterprises controlled by expatriate monopolies, but as a rule only part of it, often, moreover, only in the form of royalties. It needs to be noted in this connection that while a greater or less unity of the prices for commodities dealt in on the world market used to be characteristic under free competition, a plurality of prices arises under the domination of monopoly capital. There are simultaneously several different price levels for the same commodities on today's world market. This considerable and ever growing difference, which is the result of the operation of various spontaneous factors, _-_-_

~^^1^^ UN Monthly Bulletin of Statistics, 1981, 7:XLV.

312 depends primarily on the balance of strength of the trading partners, and so favourable conditions are naturally created for the powerful monopolies to dictate prices.

In addition, the developing countries are forced to pay considerable tribute to expatriate monopoly capital under such items of 'invisible exports' as insurance, freight, etc. There are also oilier levers that expatriate capital employs in the price field, including monopolies' buying up of the commodities of petty producers at extremely low prices, all sorts of brokering, forward contracting, cartel agreements to maintain low purchasing prices, false entry of stock changes, and so forth, which enable the price of internal purchases to be differentiated from export prices. The prices of commodities often snowball on the way from the exporter to the consumer, and a great gap arises between the prices declared to the customs and the real prices that the consumer pays.

Commodity-producing countries suffer immense losses from the constant fluctuations of the prices of goods exported and imported by them, fluctuations that are not only linked with spontaneous changes of supply and demand on the world market but also reflect the speculative policies of international monopolies endeavouring in every way to employ the price machinery in international trade to put the maximum possible pressure on weaker business partners. This machinery remains a kind of gigantic pump within the international capitalist division of labour even since the break-up of the colonial system, that helps monopoly capital suck up the wealth created by the labour of the people of economically backward primary-producing countries.

__ALPHA_LVL3__ § 5. Imperialist Price Policy for Primary Commodities

The long-term trends in the movement of world prices considered above are making themselves felt through all kinds of fluctuations of the current state of the world capitalist market. Steep, continuous rises and falls of prices for the various commodities entering world trade have always been an inherent aspect of capitalism's world business relations. It is through them that the law of value ultimately affects the forming of world prices in accordance with the international price of production. Explanation of the patterns and specific features of these fluctuations over a long period at __PRINTERS_P_313_COMMENT__ 21---0170 313 any stage of world capitalism's evolution is therefore objectively an inevitable component of the study of this process.

With capitalism's transition from free competition to monopoly the amplitude of short-term price changes on the world market, especially for primary commodities, widened noticeably. At the beginning of the 50s UN experts made a study of this problem for the first half of the century that gives a very clear idea of the scale and dynamics of the swings of world prices.

The amplitude of the movement of annual prices alone (from the highest to the lowest average percentage fluctuations per year) was about 11 per cent for 25 commodities during 1901 to 1913, 15 per cent during 1920 to 1939, and 18 per cent during 1946 to 1951.^^1^^ For many commodities (cotton, rubber, copra, tin, etc.) it was 20 to 25 per cent: the average figures, moreover, hid even more substantial changes within a year.

In the period 1901--50 as a whole, for instance, the average range of within-year fluctuations (from maximum to minimum) was roughly 30 per cent for 15 commodities. From that it follows that the scale of these fluctuations from the high of one year to the low of another could exceed 40--45 per cent for these commodities. As a rule the prices of primary commodities had a tendency to marked growth during upswings and to a marked fall during downswings.^^2^^

How, then, did events develop in this respect on the postwar capitalist market? Steep fluctuations of world commodity prices continued to be characteristic of most of the capitalist commodity markets with a general tendency for them to fall in the 50s and GOs. The range of prices between the highest and lowest annual averages for all commodities was around 28 per cent in those years, and for fuels around 10 per cent.^^3^^

At the same time there was a specific feature in the fluctuations of annual commodity prices in the first postwar decades compared with the preceding `peacetime' periods of _-_-_

~^^1^^ UN Department of Economic Affairs. Instability in Export Markets of Under-developed Countries (United Nations, New York, 1952), pp 10--11.

~^^2^^ Ibid., pp 15--18, 22, 23.

~^^3^^ International Bank for Reconstruction and Development. Commodity Trade and Price Trends, EC 10fi/75 (Washington, D.C., 1975), pp 26--96.

314 the development of world capitalist economy. Above all, the fact that there was no i-ignilicant rise in commodity prices for nearly 20 years to the end of the GOs after their precipitous rise at the start of the 50s is worth noting. Even in separate years of high business activity commodity prices remained comparatively low, the prices of fuels, moreover, displaying great stability. The synchronism quite clearly manifested earlier in the movement of the annual prices of separate commodities during the first half of the century weakened.

The subsequent shakiness of the whole capitalist price machinery in the 70s was marked by an extraordinary strengthening of the spasmodic character of the amplitude of price fluctuations in the international trade in manufactures as well as raw materials. The gap between the highest and lowest annunl average changes in the prices of commodities exported by developing countries (except fuels), for instance, ranged from +36 per cent (1974) and +15 per cent (1980) to---14 per cent (1975) and---7 percent (1981). The corresponding figures for the manufactured goods exported by capitalist countries ranged from +15 per cent (1979) ami +11 per cent (1980) to---5 (1981).^^1^^

UN statistics characterise the main postwar trends in the fluctuations of average annual commodity prices on the capitalist world market. In the postwar period, for example, as before, the state of commodity prices changed more often and much more extensively than that of manufactured goods. That was due not simply to the long-term patterns of pricing on the world market but also to a host of short-term tactical measures by the various monopoly groups in the course of their competition for maximum profits at any particular moment.

The international corporations consistently endeavour to shift the burdens associated with price fluctuations onto the economically less developed countries by affecting commodity prices through temporary cancellations or reductions of orders, by building up immense `buffers' or strategic stockpiles of many of the most important commodities, and by resorting to various speculative operations and other methods of `regulating' supply and demand for commodities in world trade.

_-_-_

~^^1^^ Monthly Hulh'tin oj Statistics, 1982, 3:XXII, 184.

__PRINTERS_P_315_COMMENT__ 21* 315

This policy in relation to the commodity-producing periphery, as pursued after the war above all by American monopoly capital, was quite frankly described by Clarence B. Randall in the early 50s:

In times of business recession we cut off our foreign buying almost overnight, thus bringing unemployment and distress to areas that may depend for their sole support on the commodity in question. Then when prices begin to go down under these pressures, we drive home our advantage mercilessly and buy all that we can at the bottom of the price dip. However, when converse conditions prevail and our demand greatly exceeds world supply and prices begin to skyrocket, as they always do under wartime conditions, we immediately impose price controls.^^1^^

All these measures inevitably reduce the export receipts of the producing countries and systematically deprive them of means that could be an important additional source for improving their national economies and the living standards of their people. Both the falls in world commodity prices, and the rises, have their most serious effect mainly on the economies of these countries.

Fig. 25 also indicates an essential feature of price formation in world trade in recent decades, viz., the existence of a quite marked synchronism between the annual fluctuations of world prices and the cyclic development of capitalist production. This connection was traceable throughout the preceding history of world business cycles, as was convincingly confirmed by the studies made in their day by E. S. Varga and L. A. Mendelssohn.^^2^^

During the greater part of the postwar period there has clearly been a relatively close dependence of the dynamics of world prices on the cyclic movement of production. The crisis decline in production growth rates at the end of the 50s, for instance, went hand in hand with a marked tendency for prices to fall on the world market, especially those for fuels and many other primary commodities. The upswing that began then caused a growth, albeit moderate, of world prices. A new slowing of production growth rates in the second half of the 60s also led to a certain lowering of the level of world prices.

_-_-_

~^^1^^ Clarence B. Randall. A Foreign Economic Policy for the United States (University of Chicago Press, Chicago, 1954), p 62.

~^^2^^ See E. S. Varga (Ed.), Op. cit. and L. A. Mendelssohn, Op. cit., Vol. 1.

316

Later, however, the imbalance in the dynamics of world price movements and the physical volume of production increased. It is clear from the figures adduced above that world prices continued to rise in 1970--71 and in 1974, when there was a marked lowering of economic growth rates in the industrial centres. What the prospects will be for a further development of this unusual phenomenon can only be judged, needless to say, from further study of the course of events. At the present time, however, it would be wrong to reduce its analysis to the separate factors of the current market situation. Its genesis was logically linked with both the rapidly developing inflation on the home markets of the world capitalist economy and the start of an active struggle by many developing countries for economic independence from the domination of their economies by Western capital.

At the same time it is impossible to disregard the singleminded policy of monopoly capital on the world market. During the earlier postwar years it stuck to a line of artificially lowering commodity prices. Since the beginning of the 70s this long-term line has been undergoing changes. As `galloping' inflation developed, the international commodity monopolies, including the leading Western ones, began more and more obviously to take the road of raising commodity prices in every way in both home and international trade.^^1^^

All these factors, in their interaction and opposition, inevitably, determined the concrete market situation that underlay the price explosion noted in the early 70s and so the essential changes in the terms of trade that we have noted between primary commodities and manufactured goods. Because of the spontaneous action of the objective laws of the formation of international prices of production in international trade, however, these shifts could not develop steadily. The influence of opposing trends also strengthened, primarily those associated with the continuing crisis lowering of production growth rates in the industrial centres. A marked slowing of the growth rates of world prices began to be noted, and there was a fall in many items _-_-_

~^^1^^ The international commodity monopolies, it must be stressed, succeeded in skimming the croam from this, as the considerable rise in their profits in the 70s witnesses, even during the crisis of the mid708.

317 (particularly primary commodities) in 1975 below the level previously reached, which was later succeeded by a new rise, especially in 1977--80, and a new fall in 1981.^^1^^ All that encouraged a marked extension of the range, and heightened the rate of the fluctuations of world prices, and consequently growth of their instability as well, which was brought about in no small way by the crisis phenomena that were continuing to mature in the whole monetary and financial sphere.

A drive, employing the machinery of monopoly prices and stock exchange speculation, to shift the burden of cyclic crises onto the shoulders of the people of other countries, above all of economically less developed ones, has always been typical of the foreign economic policy of capitalist countiios. The authors of one of the United Nation's world economic surveys once gave a quite instructive description of this policy. Analysing the results of the world crisis of 1958 they wrote:

It is necessary to boar in mind that however valid may be the national considerations governing the tariff and tax policy of the industrial countries, it still remains true that, to the extent that the burden of such measures falls on under-developed countries, they constitute a tax by high-income countries upon those with low income. The world has come to recognise not only the futility but also the international impropriety of cyclical ' beggar-my-noighbour' policies.^^2^^

The course of the economic crisis of the mid-70s was visible confirmation that this policy has not been abandoned. In implementing it, however, the capitalist powers are now forced to allow for the incontestable fact that their monopoly positions in the area of pricing have been weakened, while the mounting fight of the developing countries against their discriminatory policy and for the fixing of fairer prices on a long-term basis for the commodities exported by developing countries is creating new knots of explosive contradictions between the two groups of countries. At the same time the increasing dependence of the economies of the industrial countries on external supplies of fuels and other commodities due to the accelerated internationalisation of their production is making for a contraction of their old _-_-_

~^^1^^ UN Monthly Bulletin of Statistics, 1982, 4:XX-XXI!I.

~^^2^^ UN World Economic Survey 1958 (United Nations, New York, 1959), pp. 11--12.

318 opportunities for following an unrestricted policy of diktat in the area of world commodity prices.

The struggle against this policy is one of the aims of the ever increasing anti-monopoly movement in developing countries to establish a new international economic order. The 26th Congress of the CPSU gave a principled evaluation of this movement. The report of the Central Committee noted:

In the mid-seventies the former colonial countries raised the question of a new international economic order. Restructuring international economic relations on a democratic foundation, along lines of equality, is natural from tho point of view of history. Much can and must be done in this respect. And, certainly, the issue must not bo reduced, as this is sometimes done, simply to distinctions between 'rich North' and 'poor South'. We are prepared to contribute, and are indeed contributing, to the establisnment of equitable international economic relations.^^1^^

So far we have been considering world price fluctuations on the basis of annual averages, bnt these, as we have already remarked, are only a sort of statistical result summarising many changes of prices throughout the year. The estimates used in Fig. 26 indicate tho scale of these changes by separate quarters, and graphically illustrate the growing instability of world prices in the 70s for all the main commodities, especially for farm products and fuels.

The quarterly fluctuations are built np in turn from monthly, weekly and daily average prices for the commodities concerned. They are the consequence not only of spontaneously formed relations of supply and demand on the world market but also of the selfish, deliberate policy of various monopoly capital groupings gambling now on a rise now on a fall in prices. As the internationalising process deepens this policy has a more and more disastrous effect on the economies of both the industrially backward and industrially advanced countries. It is no accident therefore that the search for ways of dealing with the problem of stabilising world prices undertaken simultaneously, though from different standpoints, by both the commodity-producing countries and the developed capitalist ones has become more active in recent years.

The broad trends considered in this chapter call for a more concrete study of the features of the price movements of _-_-_

~^^1^^ L. I. Brezhnev. Op. cit., p 21.

319 separate commodities, but their analysis already allows us to pose the following questions about the future directions of the dynamics of commodity prices. Needless to say it only makes sense to project them into the future in connection with the shifts in the present-day structure of the international division of labour examined above.

The steep fluctuations of prices in the world capitalist economy, which reflect the deepening of the crisis of the whole system of imperialism's international economic relations, will probably increase in coming years. But we cannol conclude from this that there are no practical prospects of fighting to stabilise world prices. Common efforts to create conditions preventing the monopolies' uncontrolled operations can yield definite positive results corresponding Lo the urgent interests of the peoples of all countries. At the same time one can scarcely expect a return of world prices to the level of the first postwar decades. The price trends examined have a long-term character at bottom and stem from shifts in the structure of production and international economic connections of modern capitalism that are governed by the operation of objective economic laws. They are also consequences of the precipitous growth of inflation, which is becoming an inseparable feature of the crisis development of capitalist economy in our day.

It is inevitable that there will be a contraction in the future of the area of operation of the monopoly-low price mechanism for primary commodities as the developing countries' fight for economic independence grows in intensity. In that connection there are good grounds for suggesting that the new phenomena noted in relation to the price level for primary commodities and manufactured goods may also J)e more or less irreversible tendencies. It is quite probable in the long run that the leading capitalist countries will become more dependent on imports of primary resources that are in short supply.

Developing countries' achievement of effective control over their natural wealth, and the establishment of a fair and mutually advantageous ratio of prices for primary products and manufactured goods in international trade, should help improve the world economic situation. The USSR and the other countries of the socialist community are doing everything they can in this respect to support the emancipation struggle of the countries of imperialism's 320 former colonial periphery, to support the legitimate strivings and determination of the new slates to get rid of imperialist exploitation, to dispose themselves of their national wealth, and to take part without discrimination of any kind in the solution of pressing international economic problems.

__*_*_*__

The postwar aggravation of the contradictions of the modern world capitalist economy is one of the most important trends in the natural process of the deepening of the general crisis of capitalism. Analysis of the structural changes that have taken place in it in recent decades clearly confirms the need to strengthen the anti-- imperialist struggle of mankind's progressive forces to create a world economic system based on equality, and truly mutually beneficial international economic and political co-- operation. The drive to build such a system corresponds to the objective needs of the present historical situation and the national interests of all the peoples of the world.

Real progress toward the development of such co-- operation, within which the objective conditions will be moulded to guarantee lasting peace on earth, avert a new world war, and cope with other vitally important matters, can only be made on Leninist principles of the peaceful coexistence of countries with different social systems. In his speech on the GOth anniversary of the October Socialist Revolution in Russia, Leonid Brezhnev said, speaking of the urgent need for all nations to fight for a solution of these global problems:

Our world today is socially heterogeneous---it is made up of states with different social systems. This is an objective fact. By its internal development and by its approach to international relations the socialist part of the world is setting a good example of how the major problems facing mankind can best be solved. But, needless to say, it cannot solve them for the whole of humanity. What is needed is purposeful effort by the people of every country, broad and constructive cooperation by all countries, all peoples. The Soviet Union is wholehearted in its desire for such co-operation. In this---if one looks deeper---lies the essence of the foreign policy course that we refer to as the policy of peaceful coexistence.^^1^^

_-_-_

~^^1^^ L. I. Brezhnev. Report at the 60th Anniversary of the Great October Socialist Revolution (Progress Publishers, Moscow, 1978), pp 43--44.

321

The global problems that are now engaging all mankind's attention include the following: the need to provide food, raw materials, and energy sources for the world's growing population; overcoming of the economic backwardness of Asian, African, and Latin American countries caused by colonialism; maintenance of the environment and protection of man from the many perils that further uncontrolled technical development threatens him with. All this calls for a rational, collective approach to the search for ways of coping with the tasks of establishing systematic international co-operation and really progressive world economic relations today.

That, however, necessitates safeguarding peace on earth. As it was stressed at the 26th Congress of the CPSU

If there is peace, the creative energy of the peoples backed by the achievements of science and technology is certain to solve the problems that are now troubling people. To be sure, new, still loftier tasks will then arise before our descendants. But that is the dialectics of progress, the dialectics of life.^^1^^

_-_-_

~^^1^^ L. I. Brezhnev. Report of the Central Committee of the CPSU to the XXVfth Congress of the Communist Party of the Soviet Union, p 41.

[322] __ALPHA_LVL1__ CONCLUSION

The world economic system of capitalism has gone through several stages during its long formation and evolution, but never before has it undergone structural changes so considerable in scale' and consequences in so short a period as since the war. For all their extraordinary diversity and variety they arc ultimately, through interacting and interlocking, links in a single chain of world events. Therefore, in addition to all-round, detailed study of each of these links taken separately, there is a real need to study them as a complex. The fundamental principles of the Marxist-Leninist methodology of investigating social development provide the theoretical basis needed for such an analysis.

The various concrete trends in the `self-movement' of the world capitalist economy considered above not only bring out in the aggregate the most important shifts inits postwar structure of production and international division of labour but are also in fact various forms of the manifestation of broader tendencies that reflect both the course of the steady deepening of the crisis of the last exploiter formation on earth and the objective economic needs of the growth of the productive forces of the countries of the non-socialist world. None of them are developing in isolation from the main direction of social progress in our time, viz., the historically inevitable liquidation of all forms ol exploitation of man by man and of some countries by others through the transition from capitalist society to socialist on a world scale.

The Great October Socialist Revolution in Russia, which opened the age of the general crisis of capitalism, at the 323 same time laid the foundation for the disintegration of its previously all-embracing world economy. The disintegration has intensified especially in recent decades since the formation of a world socialist .system and the taking of the road of national independence by countries of the colonial world led to final collapse of the imperialist powers' omnipotence in mankind's global economy, and the field of operation of the laws of the capitalist mode of production has been more and more restricted by socialism.

The growth and internationalising of social production within the ever contracting limits of the world capitalist economy, as is clear from the data we have analysed, in no way further extension of the socio-economic basis of capitalism. Furthermore it is they that have largely determined the intensification of its instability and the development everywhere of the capitalist social system's inner contradictions. The acuteness of capitalism's social problems has not simply not lessened since the war but on the contrary has become unprecedented. A continuing rise of the anti-imperialist struggle of the peoples of the emancipated countries for genuine independence, further growth of the insoluble contradictions between labour and capital and between the overwhelming majority of nations, headed by the working class, and the monopolistic oligarchy in capitalist countries, mass unemployment, political instability, world economic upheavals, increasingly frequent cyclic overproduction crises, the shakiness of the international monetary system, and unrestrained inflation---such are the characteristic features of modern capitalism's world economy.

The fundamental conclusions of Marxism-Leninism that growth of the productive forces of capitalism does not mean consolidation of its position as a world social system have been confirmed. The class antagonisms, and the socialist and national liberation revolutions that are eroding its imperialist basis are not imported from outside, but are the natural consequence of the steady deepening of its decisive contradiction, viz., that between the ever increasing social character of production within it, and imperialist methods of appropriating social labour. In developing production capitalism itself creates the material conditions and objective premises for revolutionary struggle by the 324 broad masses of the people of non-socialist countries for a radical restructuring of society, for complete abolition of the still enormous survivals of the age of imperialism and colonialism both in their own countries and on an international scale.

Analysis of the results of the development and internationalisation of the productive forces in the postwar world capitalist economy, on the one hand, and the growth within it of deep crisis phenomena, on the other hand, gives a graphic idea of the existence of a quite definite connection between these processes. This dependence will undoubtedly remain in the coming, really foreseeable period. It is forcing state-monopoly capitalism (and will) to resort more and more broadly to a policy of social manoeuvring at the expense of the reserves made available by scientific and technical progress and by improving the efficiency of production. With steady consolidation of the international position of socialism, the growing strength of the fight of the workers in capitalist countries for their vital rights, and the continuing rise of the anti-imperialist movement in emancipated countries, modern capitalism is forced to adapt itself in every way to (for it) an unfavourable world situation, and to search for new opportunities both to prevent a further collapse of the capitalist economy and to stabilise it. To that end the monopolies are trying more and more actively to resort to a policy of neocolonialism and state-monopoly methods of programming and regulating the economy, and to employ international economic integration in their interests, and so on. But none of this is yielding the desired results.

The postwar development trends in both the industrial and the primary commodity areas of the modern world capitalist economy graphically indicate the objective inevitability of growth of its irreconcilable contradictions. With all the conviction of incontestable historical facts they emphasise the lack of perspective for a system of international economic relations based on exploitation of man by man and of some countries by others. As Leonid Brezhnev noted in the report of the Central Committee to the 25th Congress of the Communist Party of the Soviet Union:

It is farthest from the Communists' minds to predict an 'automatic collapse' of capitalism. It still has considerable 325 reserves. Yet the developments of recent years forcefully confirm (hat capitalism is a society without a future.^^1^^

Marxist-Leninist economics, in bringing out the deep causes of the inner contradictions in world capitalism's development, has always attached great importance to studying the international relations of production and the single world economy formed on them. The founders of scientific socialism paid great attention in their day to the pattern of this system's functioning under the undivided sway of the capitalist class in the world economy and politics. But the logic of the investigation, and even more the conclusion that capitalism lias a transitory character, forced them to look to the future, to estimate the outlook for the internationalisation of social production (progressive in its very essence) in the next historical period.

Lenin made a very big contribution to the theoretical posing and development of this problem. Basing himself on a Marxist analysis of the real needs of progressive growth of mankind's productive power, he concluded that it was necessary, when fighting for an alliance and unity of the working peoples of various countries, to bear in mind the tendency to create a single, generally regulatable world economy as a whole.

This tendency has already revealed itself quite clearly under capitalism and is bound to bo further developed and consummated under socialism.^^2^^

This line of development was not simply examined on the plane of world economy. Lenin saw it primarily as part, albeit paramount, of a broader tendency, constitutionally inherent in a certain level of development of society's productive forces, toward the internationalising of all the main areas of social affairs in general. Stressing the manysided character of this, he wrote:

_-_-_

~^^1^^ L. I. Brezhnev. Report of the CPSU Central Committee to the XXVth Congress of the CPSU (Novosti Press Agency Publishing House, Moscow, 1976), p 49.

~^^2^^ V. I. Lenin. Preliminary Draft Theses on the National and the Colonial Questions. Collected Works, Vol. 31 (Progress Publishers, Moscow, I960), p 147.

326

already under capitalism, all economic, political and spiritual life is becoming more and more international. Socialism will make it completely international.^^1^^

As the historical competition between the two opposing social systems develops and the economic, political, scientific, technical, and cultural links between them expand, these theses of Lenin's become more and more important and topical. They bring out a very essential aspect of the scientific approach to analysing the main outlook for the development of world relations today. In fact they formulate the idea of the sequence of the development, under the general crisis of capitalism, of trends toward a consistent limiting, and then final overcoming, of the imperialist capitalist class's monopoly position in these relations by socialism, the world economy included. This sequence began to make itself particularly felt in the postwar period.

The postwar changes in the structure of the world capitalist economy not only indicate, \vith the persuasiveness of historic, objective facts, the consistent growth within it of crisis trends that threaten the very existence of the capitalist social system but also pressingly demonstrate the need today to mould a new world system of international division of labour. The building of such a system, corresponding to the tasks of the progressive growth of the productive forces of all countries without exception, would help resolve many vitally important problems. An urgent one of these is to ensure lasting peace, security, and genuinely mutually advantageous co-operation between nations in conditions of peaceful coexistence and economic rivalry of the two opposing social systems.

_-_-_

^^1^^ V. I. Lenin. Theses on the National Question. Collected Works, Vol. 10 (Progress Publishers, Moscow, 1977), p 246.

[327] __ALPHA_LVL0__ The End. [END]

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