File spoon-archives/marxism-international.archive/marxism-international_1998/marxism-international.9801, message 200


Date: Mon, 12 Jan 1998 14:15:50 +1000 (EST)
From: Gary MacLennan <g.maclennan-AT-qut.edu.au>
Subject: M-I: Are we sinking?


"The other issue is the extent to which the advocates of what has become
known as economic rationalism will maintain control of the policy debate".
(Graham Lloyd & John Aglionby, The Brisbane Courier Mail 10.1.98 p 23)

"We will survive...But capitalism in some parts of Asia might not.  the IMF
and western economists see traditional capitalist prescriptions as the
answer - deregulation, privatisation and cuts in public sector spending.
The people, however, will have another view, as they are already
demonstrating.  In some countries very close to Australia and crucial to
our interests we may see capitalism pushed aside by alternative systems -
religious socialism, for example, as it exists in Iran and Afghanistan."
(Denis Gastin, Managing Director of Instate and international strategic
analysis consultancy, The Weekend Australian, 10.1.97 )




Comrades


Perhaps it is the influence of the movie Titanic, which I have just seen,
but reading the economic experts in the weekend papers almost gave me a
feeling of deja vu.   Amidst all the lying and outright stupidity there is
a feeling that something is wrong and seriously so.  The table in the bar
is beginning to tilt and the rats are heading for the higher parts of the
ship.  

During the week the Australian dollar began to head down against the US
currency.  The Deputy Prime Minister hailed this as a great thing for
exporters.  The editorials similarly rejoiced.  However as the Aussie
dollar plunged to an 11 year record it seems the Reserve Bank began to have
doubts about the Deputy Prime Minister's joy and they began to buy the home
currency.  That has stemmed the slide but is at best an exercise designed
to buy time - nothing more.  The real solution would be to raise interest
rates - but in an economy, which is softening at best, the raising of
interest rates would probably have a disastrous effect.

I am not at all sure of this but I think that the real impact of a falling
dollar is not that the price of imports goes up and that this is
inflationary but rather that the value of the foreign debt is going up
dramatically.  This debt, which is a direct consequence of financial
deregulation, is mostly private.  Now for some reason which I cannot fathom
the iron law of Capital that the debts of the bourgeoisie are socialised
while their profits remain private will operate.  Accordingly the foreign
debt will have serious national repercussions.

In the meantime all the politicians are sounding as blandly optimistic as
they can and one has to acknowledge that they do seem to have a special
talent in this area.  But more and more they look like the idiotic petty
officers who walked around the Titanic telling everybody that all was well
and that normal service would be resumed as soon as possible.

However my real interest in all this economic stuff has to do with the
likely political impact.   Indonesia unquestionably has them worried.  Thus
the editorial in the Brisbane Courier Mail says 

"For Australia, the proximity of Indonesia to our shores makes the
country's precarious state a serious foreign policy and security issue."
(10.1.98 p18)

Certainly the lower orders are rioting and political time looks like it
could surge out of sync with chronological time.  In a period when
everything political seems to move at a snail's pace we are I think about
to witness the collapse of the Suharto dictatorship and a move to a reserve
position based around Megawati Sukarno.  Such a government will be
extremely unstable but it will probably take the next army dictator a while
to group his forces.

In domestic terms we should see the defeat of the Tory government at the
election due this year.  Most commentators had been predicting that Howard
would go to the polls before the Asian crisis hit Australia.  October was
nominated as the date when this would be most likely to happen.  However I
think they have all underestimated the speed at which the ship is going
down and the depth to which it is liable to plunge. It is my guess that
Labor will win the next election and that we will have an uncanny rerun of
the Great Depression.  Then the Scullin Labor gov (1929-32) presided over
the collapsing economy.

I have included two quotes at the beginning of this post which though not
typical do show some awareness among the economists that times they are a
changing. Keynes' name has once again re-surfaced but strictly at the
margins.  It seems to me that the bourgeoisie will only countenance a
return to Keynesian economics if they fear appropriation and sadly that
does not seem to be the order of the day as the Trotskyists used to say.   

Yet the seemingly logical thing to do is of course to boost demand and
dramatically so.  The current meltdown has been carefully prepared by
decades of supply side economics. However logic will not have much of a
role to play I would guess.  It is worth recalling that the initial
response to the excess capacity of the late twenties was to dramatically
increase production to compensate for falling prices, thus worsening the
fundamental problem of over production.                

The tragedy of it all is that the Left is so fragmented and weak that it
will have no policy impact. At times like this I miss Adam Rose on this
list with his militancy and his International Socialist triumphalism.
("Today we recruited five shop stewards and sold ten papers."!!!)




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