Organ of Alliance Marxist-Leninist (North
Volume 1, Issue 4; April-May 2003 $1.00
L L I A N C E ! " A Revolutionary Communist Monthly
IT’S THE ECONOMY THAT DRIVES IMPERIALIST WAR.
Bush and the USA capitalist class, that he represents
is in trouble. They needed a war – but this particular war is especially
good for them. After all any war drives a production boom with it. But
this war in particular is needed as the USA is in a classical capitalist
‘tight spot’. What do we mean?
1) Utilisation of
industry is down, while capacity (or potential) increases
The graph below shows a very worrying situation.
It shows that USA production capacity has been steadily rising, between
the years 1970 to 2003. In other words the capability of industrial production
is much higher than it has ever been before. This is not too surprising.
After all, as machinery gets better, and as new techniques allow faster
production, this is meant to happen. But now if it is asked “how much of
this increase in productive capacity is able to be used?” – the answer
is “much less, and getting worse”.
The graph is from the Federal Reserve Statistical
Release for April 15th 2003, and can be found at this web-site:
). Here it can be seen, that at period of recession (marked by the grey
vertical stripes) that there is a dip in the utilisation and production.
However the dip in production is outstripping that of utilisation. In other
words the capitalists are shutting off their factory production.
Graph 2 shows the same phenomenon as a precentage
- currently less than 75% of the full potential of production in the USA
is being used.
But the situation is even trickier for USA capitalists.
Because while the overall capacity for production is going up, this is
largely restricted to “other business”; and not to “production
of “finished and semi-finished processing”. Finally this collapse of
utilization especially hits hard at the high-technology industries. This
latter is especially worrying for the capitalists, since it is into this
sector that they have increasingly “placed” a lot of their eggs in the
last 15 years. But the collapse of the Silicon Valley trades - once more
revealing a lack of competitiveness. See 2 graphs below:
2) At the same time, America's Imperialist
competitors become more competitive
This lack of competitiveness, can be seen by the extent
of the trade deficit of the USA, which is worrying the capitalists. Even
from the years 1960 to 1984, this was quite dramatic. What the trade deficit
means is that the USA has to import more than it exports. Fundamentally,
this has occurred because its’ own manufacturing base, no longer provides
for its population. It certainly used to. In fact it was so large that
it enabled exports to an extent that ensured the rise of the USA to the
ranks of imperialism. This fairly dramatic change can be seen in
the share of imports into US markets between 1960 and 1984:
MARKET SHARE OF IMPORTS IN USA (%)
[From Davis, Mike Prisoners of the American Dream; Politics & Economy
in the History of the US Working Class; London 1999; p. 238]
If the American industrialists are not supplying
even their home market, but foreign imperialists are doing it – this tells
us a lot. It also explains the current concerns about the volume of the
trade deficit. Many bourgeois economic commentators point out that, after
all these goods need to be paid for. Their alarms about the deficit are
rising. For example,
“Certainly the US needs to take steps to improve the competitiveness
of its tradable sector - exports and import competing goods. ….. Japan,
for example, saw imports rise from $217 billion in 1990 to $313 billion
in 2001, a gain of 45%, which is much more than the rise in its GDP valued
in dollars. However, much of this growth was from Asian nations producing
for Japanese companies. Exports from the US to Japan in $ actually fell
from 1995 to 2002, and were little changed since 1990! Likewise, Western
Europe's imports from the US rose by less than 40% while US imports from
Europe rose 150% from 1990 to 2002. In 2001, US investment was $1646 (16%
of GDP) billion and the trade deficit was $349 billion or a ratio of over
20%. This ratio is rising. A cut of over 20% in investment would have considerable
The fuller economic background has been discussed in more detail
in a recent issue of our theoretical journal (Find at: Alliance52).
But even in the synopsis above, it can be seen that the USA imperialists
are cornered. They have lost productive competitiveness, they have
competitors nipping at their heels. One solution is to deprive their competitors
of resources – a key one being oil. A world shortage of new supplies of
oil, and a dropping rate of production of finished product oil, is
David Dapice; “Does the "Hyper-Power" Have Feet of Clay? Budget and
trade deficits make US economic strength dependent on global finance”;
Yale Global, 3 March 2003; Yale Center for the Study of Globalization.
“The Brookings Institution figure the deficit is likely to approach
$2.5 trillion. The Wall Street economists … of Goldman Sachs say that the
deficit will exceed $4 trillion by 2013. ……. To put this in perspective,
consider that all current federal expenditures now come to only 20 percent
Jeff Madrick. “The Iraqi Time Bomb - War against U.S. economy?”
April 6, 2003/New http://www.nytimes.com/2003/04/06/magazine/06BUDGET.html
"Foreign investors now have claims on the United States amounting to
about $8 trillion of its financial assets. ….. Last year, the balance-of-payments
deficit, the gap between the amount of money that flows into the country
and the amount that flows out, was about 5 percent of gross national product.
This year it may be larger still.”
Niall Ferguson, “The True Cost of Hegemony: Huge Debt - Can a global
hyperpower also be a global hyperdebtor?”; ‘New York Times’; April
3) A solution for this: corner world oil supplies
continued on page five.
"The rate of oil discovery has been falling … In America, always the
greediest consumer of oil, production has been falling for 30 years……..
In a report, Dick Cheny, drew up the USA
response in a report called the National Energy Plan - released
Americans guzzle 20 million barrels of oil a day, but now they have
to import over 60% of it. That pattern is being repeated elsewhere.
… Britain will soon be a net importer, imports have to rise, the costs
of the imports have to rise, …. In Norway the government forecasts that
in the next ten years its North Sea production will halve. In Argentina
oil production has been down for several years and in Columbia, which
was a big producer in the 90's, production is now past its peak."." http://www.bbc.co.uk/business/programmes/moneyprogramme/archive/oil.shtml
"In essence, the Cheney report makes three key points:
Therefore the USA and the UK imperialists have
decided to capture the oil reserves in order to deny their main competitors
– France, Germany, Russia, and China.
i) The United States must satisfy an ever-increasing share of its oil
demand with imported supplies. (At present, the United States imports about
…..53 percent of its total consumption; by 2020, daily U.S. imports will
total nearly …… 65 percent of consumption.)
ii) The United States cannot depend exclusively on traditional sources
of supply like Saudi Arabia, Venezuela and Canada to provide this additional
oil. It will also have to obtain substantial supplies from new sources.…
iii) The United States cannot rely on market forces alone to gain access
to these added supplies, but will also require
a significant effort the part of government officials to overcome foreign
resistance to the outward reach of American energy companies.”
Michael T. Klare; "Bush's Master Oil Plan"; Pacific News Service; April
23, 2002; at: http://www.alternet.org/story.html?StoryID=12946
Hence the new tussle between the USA and its competitors
over whether or not to shut off the prior UN sanctions. Now the anti-war
factions, have insisted that the USA must obtain UN approval in order to
get the oil flowing from Iraq. Of course, if the oil flows without the
UN approval of the conditions of any sale of oil, the USA will control
the entire reserves.
This immoral, and illegal war was all about imperialist
expansion, and it was largely driven by the parlous economic condition
of USA imperialism. Until in both the USA and UK – and in the competitor
imperialist and neo-imperialist countries like France, Germany, China and
Russia – there exist Marxist-Leninist parties to lead the workers to socialist
revolution, these war conditions will escalate.