The family photo showed them beaming, those Finance ministers of the world's 10 richest imperialist nations; after four months of monetary disorder and of uncertainty over the future of the international money system, the capitalist world economy had finally been reconstituted, with new exchange rates between all the imperialist currencies So great had been the panic in the cabinets and ministries that the principals involved appetred to be happy even with the miserable compromise reached in Washington. But the fact was that, notwithstanding a reshuffle of exchange rates, not one of the fundamental causes of the crisis had been removed.
A compromise reflecting the change in power relationships On August 15, 1971, had come the Nixon ultimatum; on December 18 a compromise was reached after laborious negotiations. *Neither winners not losers", Nixon said.
The compromise reflected the shifts of force in the imperalist world over th preceding decade.
Capital secured a general revaluation of all the rencies against the dollar. Though some * 15.5 percent in the case of the yen and 12.5 deutschemark-they were generally below tration had hoped for. They will and reduce exports of will encourage the capital to the U.S. spite all Nixon's promises and boasting, the dollar emerges well and truly devalued, against gold and st all the currencies which are not following it in devg. This devaluation will reduce the already shaken confidence of the bankers of the world in the stability of the made a loss in putting its reserves into French francs before that currency was devalued.) For those semiindustry which they sell abroad.
The Monetary Crisis is still with us The international monetary system remains in crisis. The two main causes of this crisis are by no means eliminated. The dollar is still not convertible compared with gold. It the capitalist central banks continue to avoid the dollar as a reserve currency and how can they not, after such editorial note The article on Engineering on pages 6 & 7 of this issue makes a critical analysis of the AUEW policy on the two issues that will be fought out in the engineering industry during the early part of 1972. The first of these is the current wage claim lodged by the Confederation of Shipbuilding & Engineering Unions (SEU) whose policy is determined by the AEUW, the largest of the 18 unions under its umbrella. Because of the specific effects that a severe economic recession has on the engineering industry, traditional piece-rate bargaining is no longer adequate to the task of pushing up earnings, the upward drift of which levelled out at the end of 1970. This article disputes the tactic that the bureaucracy of the AUEW have adopted-of sticking to the traditional pattern of "two-tier" bargaining, explained below. The upward push of earnings of the most militant and best organised workers in Britain has come to a halt and the present CSEU claim does not seriously confront this problem. But there is The Red Mole Jan. 10 1972 Page 2 La devaluation-the international capitalist economy will continue to be without an international currency.
Secondly, American inflation continues to roar ahea largely because the Nixon administration wantsarall costs to stop the recession from deteriorating into a grave economic crisis. The American balance of pay. ments deficit will also persist, if slightly eased.
In this regard it must be made clear that the 10% import surcharge imposed by Nixon on August 15, has proved a lightweight in slowing down the flow of imports attracted into the US by the high domestic liquidity.
It has produced a rise in prices touched off by the rise in import costs. Also, certain imports, notably in the machines field, cannot be replaced on the domestic market as the American industry does not produce parts for equipment made in Germany or Japan.
would be to back up gold with an international reserve money which would be totally independent of any country's national economy; a money of the central banks, administered by a central bank of the central banks utopia. Such a scheme would need the precondition of a world capitalist government, independent of the great imperialist powers; that is to say, competition among the petition has intensified since the start of the crisis in the world money system.
List states of the Common Market reinforced by Britainwhich has not ceased to align itself with them during the currency, or even take over from it. But that is not for tomorrow, or even for the day after tomorrow.
Monetary Crisis and Economic recession The capitalists of Europe and Japan did not dare cut off the branch on which they crouched. To respond to the whach, by its effects on world trade and aggravation of the American recession, would have ended by smashing their own markets. a second, and probably more explosive, issue.
The unions have finally withdrawn from the 50 year old York Procedure Agreements, and from January onward there will be no agreed procedure in firms federated to the Engineering Employers Federation (EEF)-the vast majority of British engineering concerns. This is in line with the policy of reinforcing the shop floor power, which pushed up piece-rate earnings, by attempting to gain adequate domestic bargaining structures which the York Agree ment was designed to exclude. The bureaucracy of the AUEW has now told its members to negotiate these new structures locally. i.e. with individual firms. But here again, the same specific effects of the recession on the industry have worked to strengthen the employers' hand in relation to their workers to a degree unknown since before the War, and for this reason the AUEW tactic is far less effective than a national action would have been. Indeed it is a positively dangerous tactic for present conditions have enabled the The most rational way out of the impasse, for the capitalists, and next spring.
according to strietly objective rules. But that needs a global imperialists would have to disappear. Instead, this very comFalling a global solution, all the imperialist powers can hope for is a slow growth in the role of special drawing rights (the distributed proportionally according to the morale that the richest countries get the most). The imperial.
crisis-will meanwhile seek to create a common money which, all other things being equal, could join the dollar as a reserve of certain success. imperialist country. own terms.
for the newly-strengthened employers to achieve these terms and the Industrial Relations Act may well provide what the EEF needs to define them. New domestic structures on the EEF's terms could in turn provide the instrument for achieving their strategic objective-the elimination of piece-work as a precondition for further capital investment in the event of economic upturn.
If this article appears to reach alarmist conclusions this is because it pursues the logic of the present situation. The clash may well be headed off by frasty compromise, but for reasons argued this may prove impossible. Today, with the compromise reached in Washington, they put on a brave face for a bad job. With the exception, that is, of the German industrialists, for whom it all means their third revaluation in a short space of time. They fear a massive invasion by cheap American goods and a relative deeline in German exports.
France Soir had the triumphant headline "Crisis and unemployment avoided" The demagogy even from a paper of that sort, astonishes one. Far from having been avoided, employment in France has reached a 20-year record leve nd this even before the recession has struck. The recessic (which is to say the crisis) threatens France not only as a consequence of the money crisis but as a consequence of the West German recession, which is mounting. There was not the slightest sign, the day after December 18, of a turning point in the West German recession. On the contrary, there was every sign that it would continue through the winter The fact is that the international economic situation is not a result of the monetary crisis, but preceded it and to some extent speeded up the monetary showdown. The causes of the current recession go deeper: a slowdown in technological innovation, surplus capacity in key industries such as metals, cars, petrochemicals and synthetic textiles, shipyards and no doubt electronics; the fall in profit levels and the showdown in investments which follows; the growing gulf between productive capacity and purchasing power, which is worsened by the growing indebtedness of managements and firms. In short, we are seeing all the classic contradictions of capitalism, whose immediate manifestations may be in some measure controlled by monetary and financial manipulations but which cannot be thereby eliminated or, in the long term, averted. In these conditions, the two prophesies made after August 15, remain valid. Firstly, the international bourgeoisie would attempt to see that the workers footed the bill. The offensive against jobs and real salaries is becoming more generalised. The vigorous riposte of the West German metal workers hem agonising. The system born in Washington will not -Ernest Mandel 20.12.71
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dollar. (Several East European governments will suffer a loss because they had unwisely converted their reserves into dollars. In the same way, the Chinese government
colonial countries who will likewise devalue their money, the dollar devaluation will more or less increase the price of imports of raw materials and of the products of light
Nixon ultimatum with massive reciprocal measures would have been to run the risk of touching off a chain reaction
EEF to speed up their own strategic line of march*. This certainly includes the creation of domestic bargaining structures-but on their
The open-ended situation prevailing from January onwards, may well provide the occasion
demonstrates that this offensive is by no means assured Secondly, international competition of intensifying and sapping the basis of any agreement, including monetary. The Bretton Woods system lasted 25 years, five of
ast a decade. Its break-up will be at stake the moment there is a recession or social upheaval in a major