Michel Pablo

Report on International Economic
and Political Perspectives

Presented by Comrade Michel Pablo

(October 1957)

Presented at the Fifth Congress of the Fourth International, October 1957.
From Fourth International (Paris), Vol. 1 No. 1, Winter 1958, pp. 13–19.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

The report on the document titled International Economic and Political Perspectives, presented by the International Secretariat in the preparatory discussion for the Fifth World Congress, does not propose to take up again all the ideas contained in the text, but only those among them which it is necessary to develop further.

It will be followed by a section which will examine in greater detail the present economic and political situation. At the end I shall take up the question as a whole in its perspective.

First of all, I shall explain what reasons led us to present this document in the discussion for the World Congress. It was basically for two reasons: in order better to understand what has been going on in the evolution of the economy from the Second World War up until now and thus to render ourselves capable of discerning certain long-term general trends in world economy, which in their turn unquestionably influence international political perspectives; and in order to give answers to a series of questions which have been raised in the international working-class movement, including our own ranks, by the present “prosperity” which the capitalist world has for now some time been enjoying.

I shall also say a few words about the need, and at the same time the difficulty, of a deep-going economic analysis, in the course of which it is possible, and indeed sometimes inevitable, to commit errors, with quite obvious political implications.

The difficulties of a deep-going economic analysis stem from the complexity of the subject, which is determined by a multitude of factors in constant interaction and also by the constant interaction between politics and economics; and further from the inadequacy of economic documentation, both in the capitalist and in the Soviet world.

The inadequacy of capitalist economic documentation is quite explicable. What is far more surprising is that after 40 years of the Russian Revolution Soviet economic science has not reached the point of being able to make up for this lack – which is explicable by the observation that Soviet economic science has become the handmaiden of the opportunist policy of the Soviet bureaucracy.

That is how, for example. Comrade Varga has become a specialist in forecasting, now crises, now lulls, according to which was at any given moment in the interest of the policy of the Soviet bureaucracy. Statistics can be made to say anything one wishes: it suffices to choose the figures in a certain way and to interpret them in a certain manner. Our movement, with its very limited means, can naturally not be required to make up for the inadequacy in this field. For our documentation we are obliged to dip into what exists in economic documentation from either capitalist or Soviet sources.

And yet this work of deep-going economic analysis is absolutely necessary, not only for general and international political perspectives, but also for the day-by-day work of every working-class organization. For example, it is not possible for a revolutionary organization to settle on a correct trade-union tactic without having a quite deep-going understanding of the economic conjuncture which by its changes determines both this or that character of the struggles and the chances of their success or failure.

In the preface to the document, we tried to explain all these reasons which led us to draft it, and we admitted in a frank way that we had been mistaken about some economic predictions, more especially in the document of the Fourth World Congress which in fact had not foreseen the astonishing and unexpected turn of the economic conjuncture, the “boom” which from then on attained the greatest scope in the capitalist world – in the United States and also in Western Europe. In the document of the Fourth Congress we naturally had some reservations concerning the evolution of the economy toward a crisis. We did not say that the economic crisis was inevitable. We had far greater reservations in thia field than any other current in the working-class world; but unquestionably we did not foresee so spectacular a turn in the conjuncture toward a boom. For four years now the economy of Western Europe has been experiencing what can be called a classic industrial boom; and for about three years the economy of the United States has also experienced such an economic cycle.

It is for that reason that in this text we have accorded a special importance to the reasons which brought about this turn in the conjuncture, both in the United States and in Europe, in opposition to those who, in the present economic euphoria, have thought they saw structural changes in capitalism which supposedly would eliminate the possibility of crises of the classic type in the future, arid who, because of this, saw therein a disproof of the fundamental ideas of Marxism in this field. As for us, we have tried to demonstrate the extreme instability of this turn in the conjuncture and to make clear the inevitability both of new recessions and of genuine economic depressions. I refer for example to the ideas of the Labour Party’s theoretician, Strachey, who, in his recent book, Contemporary Capitalism, denies in this study of contemporary capitalism the very ideas that he put forward during the period of the 1929–1933 depression, and in reality provides the theoretical basis for the programme recently drawn up by the leadership of the Labour Party to be discussed at the Labour Party Congress that opens at Brighton in a few days, where the emphasis is no longer put on the need of deep, radical, structural changes in capitalism in order to bring about a genuine change of regime, but on the following ideas: markets and prices are at present controlled by what he calls the appearance of oligopolies, of giant monopolies; importance must be assigned to political factors, more especially to political democracy which enables the working class to direct, in an evolutionary manner, the evolution of capitalism toward a socialist society. This term, socialist society, does not even exist in this recently published work by Strachey. He replaces it by a vaguer expression: “towards a society of greater justice and equality.” It is in any case unquestionable that this capitalist prosperity in the United States and in Western Europe has much worried men’s minds – and not only in mass social-democratic organizations. (I must add that what is at present going on in Great Britain with the leadership of the Labour Party, we find again in similar form in the ideas that are germinating and in quite concrete projects, in the leading circles of the German social-democracy and of the Austrian social-democracy, ready more or less to abandon the Marxist programme and to find their place in the regime of free-enterprise society.) There has been and there continues to be a general uneasiness throughout the European working-class movement. Naturally the reality of the present-day world is seen in a fundamentally different manner by the working-class and revolutionary militants of the colonial and dependent countries who are living in a quite other economic reality. Those, however, who have to do with the present-day reality of the United States or Western Europe are obliged to raise the question of deciding whether we are not faced with a new prolonged stabilization of capitalism and to think about the perspectives of such an eventuality. I say that for these reasons we are in a sense obliged to give an answer to these questions in the text that we are now presenting to the Congress, by scrutinizing as thoroughly as we can the foundations of American prosperity as well as the reasons for the present boom in Western Europe, in order to specify their limits and perspectives.

Concerning more particularly the American economy, we wished to illustrate by a series of observations and figures what was the essential base that really enabled the American economy up till now to experience, not a genuine depression. but mere recessions which each time it has been able to overcome. And we think that we were able to demonstrate that it was not the intrinsic healthiness of the American economy that explains the American “miracle,” but the extraordinary proportions taken on by the aid accorded by the capitalist state to this economy. There is no question but that, without this aid from the capitalist state, the economic forces of that country would by themselves never have been sufficient to prevent recessions from being transformed into depressions as deep and catastrophic as those that American capitalism has experienced in the past, and more especially during the period from 1929 to 1939.

Concerning more particularly the recent boom in the American economy, which is unquestionably, I have already stated, a classic industrial boom, following upon the recession that the American economy went through during the 1953–1954 period, we explain it by the extent of industrial investments since that date, and also by the extraordinary increase in consumers’ credit. That is to say that, despite the already monstrously important aid of the capitalist state to the American economy, each time that this economy begins to run out of steam and enter into what is called a recession, serious additional means are required to overcome the recession. The boom that started in 1954 in the United States was sparked above all by a considerable extension of industrial investments and consumers’ credit. As for the boom in the capitalist economies of Western Europe, this is also to a considerable extent a boom due to the increase industrial investments, in the production of capital goods, and also in the production of durable consumers’ goods, which for a whole period found, both internally and externally, an increased market.

One important point in the text is that it recognizes that in fact, in the present period, the intervention of the capitalist state in the highly developed capitalist countries can, under certain conditions, produce the effect that the economy experiences, not a genuine depression, but just a recession – the essential difference between an economic crisis and a recession being the following. An economic crisis is an abrupt and rapid change from an upsurge down toward the lowest point of the conjuncture; it does not develop in a cumulative way, but. very quickly reaches the conjuncture’s lowest point. Naturally, later, by the action of new factors, it once more takes on a new upward movement; whereas the retreats that the American capitalist economy has experienced since the war have had a character which in fact distinguishes them from a depression of the classic type. To what should this phenomenon be attributed?

It is explained in the text by the observation that in fact, when economic conditions are not completely ripe for a genuine depression, the capitalist state (in the hands of the big monopolies) – which, on the basis of a now thorough experience of the way the capitalist economy runs, follows with an extraordinary sensitivity the development of the conjuncture – can intervene with a whole series of measures and produce such a result. These measures are, for example, the very great importance and elasticity of the budget, permitting in such cases an immediate increase in budgetary spending; fiscal policy in the direction of encouraging new investments; the, maintenance of credit in the sense of a regularization of expansion and a limitation of the danger of a speculative financial crash, etc.

We have seen that this interventionist policy of the capitalist state has been applied in a particularly extensive manner in the case of the United States, and in fact, up until now, it has produced effective results.

The text, while noting these facts, also specifies the reasons why these measures are totally incapable, of avoiding the deepening of recessions and their transformation finally into genuine economic crises. We refute the argument according to which capitalism might supposedly be evolving toward a factual situation where it would no longer experience economic crises but only simple recessions. On the contrary the whole analysis of the text aims at demonstrating that in reality the big upsurge of the capitalist economy tends toward a situation in which recessions will be more frequent, broader, and deeper, and, as a result, there will come a time when practically there will be no distinction between a very deep recession and a genuine economic crisis.

The chapter of the text which examines what will be the consequences of the inevitable mass introduction of new productive forces and practices, of automation and atomic energy, draws the conclusion that this technological revolution now .in process can operate only in the direction of an aggravation of economic crises. I shall not in this report amplify the reasons analyzed by the text which justify this conclusion. In any case, the most immediate perspective which the text derives from the present evolution of capitalist economy is that the “boom” is running out of steam already and that we are on the way to a new recession.

That is a precise perspective, as precise as possible at the present stage. I shall return to this question in the second part of my report.

Another important point, of the text is that which is concerned more particularly with the economy of colonial and dependent countries. The text contains a series of observations which seem to us important, especially by the fact that, on the basis of these observations, certain revolutionary perspectives become quite clearly visible. We do not deny the feature of the process of industrialization of the majority of these countries, which has become pretty nearly general since the Second World War; but at the same time we insist on the following idea: the gap between these countries and the metropolitan countries not only does not become smaller, but widens. This gap arises both from the fact of a change in the structure of the exchanges between these countries and the developed countries, and from another fact, connected with the first, that of the increasing difficulties for these countries to proceed with large-scale industrialization by capitalist methods.

The modifications in the structure of the exchanges, which are a striking fact in the new features of world trade after the Second World War, are due to two reasons: to the fact that the advanced capitalist countries have developed the production of a series of natural raw materials which before the Second World War came from the colonial and dependent countries, and the spread in these countries of the use of artificial raw materials. That is due also to the fact that the colonial and dependent countries, to the extent that they are themselves engaged in a certain industrialization, keep quantities of exportable raw materials for their own industrial needs. Under these conditions the rate of formation of new capital in the colonial and dependent countries relatively diminishes, and, by their own resources exploited in a capitalist way, these countries are absolutely incapable of finding the bulk of capital needed for large-scale industrialization.

Let us take for example the case of India. In order to finance industrialization, India in reality resorts to the principal source of foreign loans. Thus the second five-year plan needs, in foreign aid, some 2,500 million dollars, i.e., 1,500 million dollars more than had been calculated at the outset, because of the inflation that has occurred in the meantime, an inflation due in part to the fact that the other source of financing for the plan was inevitably excessive taxation.

It is absolutely clear that, if India does not find 2,500 million dollars, it will be obliged to revise all the goals of the plan, which runs the risk of causing a genuine disorganization of the economy. This explains the new turn taken by the policy of Nehru in a desperate search for a foreign loan.

One feature of contemporary capitalism, of contemporary imperialism, is that, despite the extraordinary accumulation of capital that exists in the principal industrial countries, the export of capital is not going on at all according to the rhythm of the development needs of the underdeveloped countries: capital finds much more profitable investment, first of all as far as the United States are concerned, in the U.S. market itself, in loans to the American capitalist state, and in certain other countries which cannot be considered exactly as the least favored of the semi-colonial and dependent countries, for example Canada. A minimum proportion in reality goes to the economic development of underdeveloped countries, given the fact that for a whole period capital has to be invested, let us say, without expectation of immediate return. For example it is at present estimated that, since the Second World War, American imperialism has exported, in the form of private capital, about 30,000 million dollars; Latin America, which is the main economic region for American imperialism as the source of a series of raw materials that are decisive for the expansion of the American capitalist economy and also as a market for the export of its industrial products, received only 7,000 million dollars; and in addition the greater part of this economic aid was given to Latin America not so much to help a harmonious industrial development of these countries, which would have contributed to freeing them from the economic tutelage of American imperialism, as it was spent above all on undertakings engaged in the extraction of raw materials.

The question of the industrialization of colonial and dependent countries is unquestionably linked up with the question of their social transformation. It is very interesting to observe that that is the conclusion drawn not only by us, revolutionary Marxists, but also by American observers themselves. I refer to two studies that recently appeared in the United States on this question. First, to the book of two professors of the Massachusetts Institute of Technology, Max Millikan and W. Rostow, entitled Proposal for a Foreign Policy, in which these two gentlemen recognize American imperialism’s failure to acquire and consolidate lasting allies in the colonial and dependent countries, to gain the sympathy of the masses, and to win over the youth. They attribute this to the bad use made of its foreign aid by American imperialism, to the fact that the greater part has been spent for military purposes, and a very tiny part for productive economic goals. But when they put forward their own solution, their timidity and pettiness reflect the whole structural incapacity of American imperialism to proceed by its aid to a genuine development of colonial and dependent countries. Their proposals, addressed to the men who are directing the foreign policy of the United States, put forward a quite ridiculous figure of 2,000 to 3,000 million dollars per year, needed, according to them, to promote a policy of aid to colonial and dependent countries, while specifying that of course this aid of 2,000 to 3,000 million dollars per year must be granted under conditions which guarantee the political sympathy of these countries toward the United States, that this aid must naturally be invested in undertakings that do not compete with either American industry or American agricultural production.

Quite different, on the contrary, is the book of another professor, P. Baran, also an American, titled The Political Economy of Growth. What is interesting in this study is its conclusion: for colonial and dependent countries, the only possibility of attaining large-scale industrialization is to proceed to make changes of structure, with a system of statified and planified economy.

The difficulties which imperialism now finds in answering the needs of colonial and semi-colonial countries are all the graver in that they coincide with a new phase in the development of the workers’ states, of the U.S.S.R. in particular, which has begun to compete in this field.

What is now going on in the Middle East is particularly demonstrative of this new feature, with quite obvious political implications. Let us take Syria, for example, to which the U.S.S.R. has just granted the amount of a loan solicited for years by Syria from the Bank of Reconstruction, and with conditions broadly adapted to the real needs of the country: a serious long-term loan, at very low interest, with purchase of Syria’s agricultural surpluses.

The disadvantage at which imperialism finds itself in the race for winning colonial and dependent countries, stems from its very nature: what imperialism is incapable of doing is to grant long-term loans at low interest for projects of economic development which are chosen, not by itself and its experts, but by the country concerned itself; it is to export industrial equipment and technicians aiding the industrial development of the country, and in branches of the economy which are, let us say, competitive with its own. In this race, the workers’ states, thanks to their very structure, are in infinitely more favorable conditions, and can in fact win the competition. It is another question how far the Soviet Union can push this competition, that is, what is the scope of ihe reserves in capital and materiel it has at its disposal in this field.

If we reflect about the struggle which is now going on in the Middle East, and the chances of one side and the other in that race, and on the race’s revolutionary political consequences, we must understand that, because of the single fact that in these countries there is a solid incrustation of American oil trusts, there arises an additional obstacle to imperialism’s aiding a genuine industrialization of those countries. Because, from both the economic and the political point of view, such an industrialization would become a danger to the oil monopoly. What was really ideal for imperialism in those countries was their current feudal aspect, with nomads feeding themselves on dates amid Biblical scenery.

It is obvious that, beginning with the moment when those countries are transformed and! become modern industrial countries, from the economic and political point of view the first idea of the masses will be to seize the absolutely extraordinary wealth constituted by their oil, which must aid the internal development of their own countries, and thus to produce a death threat to the monopoly privileges of imperialism in that region. These observations consequently open the perspective of a long and explosive crisis in the Middle East, a region which will more and more tend to escape from imperialism’s control. And the question is, certainly, to see whether imperialism will accept letting this region, an economically and strategically key one, in fact escape from it.

Before finishing with this subject, I should like to examine a paragraph in the text concerning the consequences of the loss of colonies for metropolitan countries.

In reality, this loss has a real effect on these countries only when the colonial and dependent countries are liberated under a proletarian social regime that wrenches them structurally out of the capitalist circuit. If not, this loss is not immediately so very catastrophic. Imperialism continues to maintain important economic residual positions in these countries. Liberation in this form, moreover, unquestionably produces for a period a speeding-up of the process of industrialization, extends for a period the industrial countries’ markets for capital goods and other industrial products. With this form of liberation of colonies, under a national bourgeois regime, the loss of these countries really affects imperialism only in a longer perspective, when the developing native bourgeoisie will corner for itself the market for raw materials, the market for industrial products, and the market for capital.

I do not mean, however, that the loss of colonies does not immediately strike important blows at the economy of metropolitan countries. We may take the example of France. At present the French Union obtains the following advantages for France: approximately 2% of French agriculture works for the French Union, a little less than 7% of industry works for the French Union, and a proportion in the neighborhood of 50% and over of the aviation and merchant marine of France works for the French Union. But above all due to the franc zone, France saves annually about 500 million dollars in foreign exchange by the purchase of a whole series of products which it would otherwise be obliged to buy elsewhere in strong currencies. It is obvious that the breaking-up of the French Union would immediately strike a very important blow at the French economy.

Concerning the economy of the workers’ states, the text includes a series of observations of a certain importance. We particularly stressed two points. One which specifies that the Soviet economy has entered a new stage, that of, let us say, its rationalization, which must take into account the labor costs, raw materials, and manufacturing costs – considerations concerning which a whole series of problems have arisen that must be solved. The Soviet bureaucracy is trying, especially since Stalin’s death, to solve them by its own methods. But the new economic realities and needs involve a whole series of political implications; they require more imperatively than ever the democratic participation of the masses in the management of production and in the political life of the country. There is one of the factors which is urging on the political revolution now in gestation in the U.S.S.R., but which furthermore opens an era of new rapid progress in the Soviet economy.

It is unquestionable that the U.S.S.R. in particular has absorbed in a much faster manner than the capitalist countries the new technological revolution of automation and atomic power, and that in this field the U.S.S.R. has already achieved quite serious and indeed astonishing advances. British specialists who recently visited the U.S.S.R., for example, were surprised by the advances of automation in the machine-tool industry. They confessed that, in this sector, quite fundamental for industrial development, Russia has an absolutely sensational lead over the present state of the same industry in Britain. Unquestionably there may also be attributed to the existence of a vanguard industry in the U.S.S.R. the very latest achievements, with political implications that are quite obvious and very important, of the intercontinental missile.

The idea stressed by the text is that, in the decade that we are beginning, these advances of the economy of the workers’ states will bring them closer and closer to the level of the economy of the capitalist states, even the most developed ones, and that there is approaching the decisive test between the two systems, including on the economic plane. We are of course not saying that this will happen in the first years of this decade. It will come about, if nothing else interferes, on the basis of the present rhythm of evolution, rather more toward the end of the decade. The text quotes a series of extrapolations which were made on the basis of present data, of present rhythms, not by Marxists, not by pro-Soviet persons, but by bourgeois specialists.


I now begin the second half of my report.

Concerning particularly the present economic and political situation and its perspectives, I have just said that, on the economic plane, for a certain time now we have been seeing that the “boom” has been in fact running out of steam, both in the United States and in Western Europe. I do not mean that we are yet witnessing a genuine recession, I mean simply that the generally continuing rate of expansion is more limited than in past years, more limited than in 1956, 1956 having been marked by a rate of expansion already less high than that of 1955, the culminating year of the “boom,” as it now appears.

The slow-down in economic activity, now generally noted by all bourgeois observers, is already more serious in the United States than in Europe itself, and more serious in Europe than in the Scandinavian countries (with the exception of Norway), and, partly, more serious in Britain than in countries such as Germany, France, Italy, Belgium, Holland, and Austria.

I should like to use a certain number of documents to show the evaluations either by capitalist organisms or by private observers concerning the recent evolution of the world economic situation. For example, the economic report of the United Nations, which was made public in July, notes a rate of increase in production less than that of previous years, while pointing out that the rate of increase in industrial production was in 1956 less than that in 1955. In Western Europe, the rate of industrial expansion was at an average of 4% in 1956 as against 9% in 1955. In the United States, the 3% rate of increase of 1956 was a third of the increase of 1955. The only exception in 1956 was that of Japan, whose industrial production increased more than in 1955. We say that economic expansion continued in 1956 but that, in a number of Western European countries and in North America, its rhythm slowed down compared to that of 1955. And it is noted that in fact this slowing down of activity is already greater in the United States than in Europe.

A more recent bulletin of the Deutsches Wirtschaftskonjunktur Institut observes that the economic expansion of the Western world has again slowed down in the first six months of the present year. What is important, and is confirmed from other sources, is that it attributes this slow-down in expansion precisely to a shrinking of the cause that brought about the “boom,” viz., a notable lessening of industrial investments.

This observation has been repeated in the more recent report published two weeks ago by the United Nations, which notes this general slow-down in the economic activity of the capitalist world and which contrasts it with the much more favorable results of the progress of activity in the workers’ states and particularly in the U.S.S.R. I believe that you are all aware that, concerning specially the situation in the United States, the general opinion is that we are witnessing the beginning of a new recession. Unquestionably one of the reasons for this new situation in the United States is the fact that, for lack of the stimulus of new budgetary expenditure and also of a greater increase in consumers credit, sharply cut back in order to face up to inflation, the other lever of expansion which has operated in the last years – industrial investments – is now also much less powerful. Thus the thousand largest industrial firms in the United States have reduced by 29%. compared to last year, the investments planned for this year and next year. As for the annual start-off of one of the key industries of the United States, the automobile industry, that was expected at this period with the launching of new models of cars for 1958, it has not yet occurred, the automobile companies having stocks of about 800,000 1957 cars not yet sold.

I think then that it is a question not of the perspective ol a recession still to come, but of one already here in fact, especially concerning the situation in the United States.

If we now examine the picture of the economic situation in Europe, we see similar phenomena, though up till now to a lesser degree and varying from country to country.

Germany unquestionably keeps the lead, followed by countries like Norway, Austria, Belgium, Holland, Italy, in part even France, to the case of which I shall return. To the side of these we find countries like Sweden, Denmark, partly Britain, Greece, and Spain.

About the case of Germany, I want to say that even there the rate of expansion of economic activity has been slowing down for more than a year now. In Germany, however, a new resource has appeared which can still for a period stimulate economic expansion: the country’s rearmament. Though part of the expenditure for rearmament is spent in foreign countries, a large part remains devoted to domestic production. Furthermore, we must not forget that the German economy was been built up with exports as the main basis of its expansion. In the case of a general recession throughout the capitalist world, it will be one of the countries that will suffer the most.

As for inflationary drives, which we noted both in the document we are now presenting and in a series of other documents of the International, inflation or the threat of inflation continues. It is the case both in the United States and generally in Europe. On the case of the United States I should like to insist a little further. In my opinion, the inflation now going on in that country shows that the American economy has reached a certain ceiling beyond which the economy cannot be stimulated by a very serious new increase in budgetary expenditure without running the risk of a grave inflation. This danger of inflation is now seriously limiting the use of this stimulant in the United States. There is a big discussion in the United States around this question, some maintaining that the phenomenon of inflation is caused by the fact that the workers’ productivity is not rising in a way parallel to the steady rise in the cost of labor brought about by the pressure of the unions; that is, naturally, a means of asking for the blocking of salaries, and simultaneously strengthening a drive of the employers against the trade unions. The unions answer, with Reuther as spokesman, that if there is inflation it is because prices are going up, which is of course an explanation that makes no sense, since Reuther does not attack the root of the evil.

The deeper reason for the present inflation in the United States is the extraordinary public and private debt. I might give some figures on this question. From 1947 to 1956, U.S. governmental expenditures were more than half a trillion dollars, 533,000 million dollars, 70% of these expenditures having been used for military purposes, i.e., either for military expenditure or for paying military debts. This is an astonishing figure, but to understand what it means, it must be compared – because it remains abstract in the imagination – with, not the expenditures, but the total budgets of whole decades for a whole series of European countries. I give this figure in order to show the extent of these expenditures and to explain the stimulant received for years by the American economy; but this on the other hand explains the scope of the phenomenon of inflation and the real dangers of inflation now existent in the United States. For the single fiscal year ending 30 June 1956 the total of governmental expenditures of the federal state and of the individual states reached more than 114,000 million dollars. These sums come from taxes and loans. At present the public debt of the United States has gone above the ceiling of 275,000 million dollars, this sum being piled on top of a private debt that goes beyond a trillion, i.e. a million million dollars!

These figures simultaneously demonstrate both the extent to which the inflationary stimulant has played a role in. the economic activity of the United States, and the danger – beginning at a certain moment – of such economic “prosperity.” They also explain why, despite the quite real danger of bringing about a recession, strict measures have been taken to check the inflationary process. This explanation demonstrates that American imperialism’s resources, in the form of constantly increasing state expenditures, have their limits.

Inflationary phenomena are grave not only in the United States but also in European countries. They have already had certain, effects. For some weeks now we have been witnessing a very grave financial disequilibrium in some European countries, which has brought about a devaluation of the French currency, which has weighed enormously on the pound sterling (so that the Labourites are calling for the summoning of the House of Commons to discuss Britain’s financial situation), which has brought about the weakening of the Dutch florin and the Danish crown, and which is developing in reality toward a general devaluation of European currencies (apart from the rather special case of Germany).

It is obvious that this situation constitutes a bottleneck for the continuance of Europe’s economic expansion, with one series of European countries lacking foreign exchange to keep up their imports, and another series of countries, such as Germany, and Belgium, undergoing the repercussions of such a situation in the field of their exports. Furthermore, the inflation which is now building up in Europe is again striking a very serious blow at savings and the continuation of a plan of investments.

Unquestionably we are faced with a turn in the postwar economic situation, a turn from the “boom.” We are not now yet in a position to evaluate all the consequences of this situation, or the scope of the ebb which is beginning, but we can observe in a very clear way that it is in fact a question of a turn, of a new step backward in the economic progress of the capitalist world. It was, furthermore, inevitable that the “boom” would develop dialectically, creating through and because of “prosperity” the situation of a new imbalance. One of the reasons which in the past has had weight in checking the economic activity of Western Europe, the question of the dollar deficit, has appeared again; hidden during a period by America’s aid to Europe and by the better balance of trade of the European countries on the one hand with the United States and on the other with the colonial and dependent countries, it has once more become visible.

Apart from the fact that the exchanges of the metropolitan countries with the colonial and dependent countries have developed in the way I explained in the first part of this report, to the degree to which America is trying to face the danger of a recession by an unquestionably more powerful effort than in the past in the export field, and to the extent to which the “boom” of the European economy has to be supported by increased imports, of which a large part come from the United States themselves, the dollar deficit has reappeared. That shows that in reality this dollar deficit is a characteristic of the new structure of world trade in the post-war capitalist world, i.e., that it is not a transitory cause but in reality far more a structural cause.

The foregoing is how immediate economic prospects concerning the capitalist world can be summarized.

Now a few words concerning the parallel development of the economy of the workers’ states. The last report of the United Nations observes that, despite a certain slowing-down in the expansion of economic activity in these countries compared to previous years, they maintain their lead over capitalist countries thanks to the far greater lessening of activity that has meanwhile occurred in the capitalist countries. In this connection, according to Soviet figures, this year’s production increased more than expected, i.e., the rate of 7% was surpassed, to rise to a rate of 10%.

It is obvious that we must be ready to draw all conclusions, on the level of the activity of our sections, from the analysis of the economic conjuncture. It is obvious that the change in the conjuncture – were it only in the aspect of an aggravation of inflation and a certain threat of unemployment, and especially an attempt by the bosses to block salaries, the only means by which the various bourgeoisies in a tough spot will now try to correct the situation, all this occurring after a period in which the workers, aided by full employment, had got in the habit of considering that their demands could be very easily met – makes clear a perspective of very broad-scale struggles. This conclusion is already illustrated by what is going on especially in a country like Britain, situated in between prosperity and decline.

As for the present political situation: concerning the international situation, international relations, in the sense of relationships between the workers’ states and imperialism, remain always crystallized around two questions: the situation in the Middle East, and the question of disarmament.

Let us first examine the second question, that of disarmament. We have already said in the past that any conditional compromise on the disarmament question through the discussions that have been taking place would not have any bearing on anything essential, and that we must not be taken in by these discussions which in reality covered up – and indeed did not even cover up at all – a faster and more unbridled race than ever toward generalized atomic armament. We now are confronted by the obvious breakdown of the disarmament discussions, which in reality were ended by the spectacular announcement by the Soviet Union of the intercontinental self-guided missile. In the history of disarmament negotiations, the recent discussions were the most extraordinary, interrupted by the detonations of atomic explosions by one side and the other. In reality there is in question here, not a discussion on disarmament, but a test of strength at the level of the atomic age and of intercontinental missiles. It is obvious that, beginning with the accomplishment of such technical progress, the adversary has but a single thought: to bridge the gap which he now observes between himself and his adversary and to surpass him by discovering the “absolute arm” – an arm that is “absolute” in the sense of being able to destroy the adversary while guaranteeing an effective defense against the missiles coming from the enemy. We have had the A-bomb, the H-bomb, we have the intercontinental missile, we shall have the anti-missile missile. The absolute arm is an illusion, a mythical idea, to the degree that there is no limit to technical progress. Anyway, the disarmament discussions have been closed by the discovery of a still more powerful arm, which unquestionably, in the hands at the moment of the workers’ states, of the U.S.S.R., will weigh in an extraordinarily powerful way on the formation of the immediate political conjuncture. We see this in a quite clear manner already when we take up the situation in the Middle East.

It is plain that what made the international situation emerge from an appearance of appeasement was on the one hand the events in the Soviet glacis and on the other the October–November 1956 events in the Middle East. Beginning with that period, we have been penetrating little by little into a new stage in the cold war, in reality a sharper one than in the past, since we never saw, after the Second World War. the Soviet bureaucracy take the attitude that it took during the Suez war by launching genuine ultimata; nor did we witness on the part of the Kremlin so firm an attitude on the question of Germany, saying now in a very categorical manner that there is no question of reunifying Germany other than by a discussion between the two German states themselves, and by launching the idea of a Federation of the two socially different German states. We have never seen the Kremlin act in the way it did in the affair of Syria, by indicating unequivocally to the Turkish government that, if it launched an attack against Syria, Russia would intervene, and that the war thus begun in the Middle East would not be a limited war; following the movements of the U.S. atomic fleet in the Mediterranean by the movements of its own warships; and the Soviet generals and admirals becoming so talkative and writing so openly in the press that by their armies and their warships they were going to defend Syria if it were attacked.

After the Suez crisis, we witnessed the Jordan crisis and the way in which American imperialism conceived the Eisenhower Doctrine, i.e., in the sense of a genuine test of strength in the Middle East. We were a little surprised, we even said, when the atomic fleet of the United States was heading for the Syrian coast, at the weakness of the Kremlin’s reaction at the time. Now the reasons are plain, this weakness stemming from the fact that in Russia at that time there was going on a struggle between two clans in the leadership of the Soviet bureaucracy. But an unvarying characteristic of Kremlin policy in recent years is that it is not disposed to retreat, particularly in the Middle East, a region that is in fact central and in which the antagonism between the two blocs of states is now concentrated. The Kremlin got its own back for the Jordan coup by the Syrian coup, and as a result the trial of strength in the Middle East has risen to a pitch of paroxysm.

I cannot sketch out concrete perspectives concerning developments in this region. It can be said only that it is a new illustration of the explosive character of the period in which we are living. In this test of strength between the two sides, each takes the maximum risks, i.e., risks that lead it to the “brink of the abyss.” We may admire the agility of these acrobats who. up until now, have shown the ability to reach the brink of the abyss without plunging into it. But this is obviously not reassuring about the predominantly very explosive character of the situation. I am absolutely in agreement with the opinion of Comrade Bulganin and the opinion of Mr Bevan that a war begun in the Middle East would be very hard to confine to the Middle East, and that the situation – as Khrushchev said to Bevan – is again in fact tense, extraordinarily tense, and that it is as such that it must be understood and followed.

I should like to speak in a somewhat more detailed way about the particular situation in certain countries of the world, but the time therefor is, unfortunately, lacking. It will be necessary, anyway, in this discussion or in that on the activity of the International, to stress particularly the situation in certain countries that seem the most interesting from the viewpoint of revolutionary perspectives. In Europe, the situation in Britain, France, and Spain; in the Far East, the situation in India and Indonesia; in Latin America, the situation in Argentina, Chile, Bolivia, and Colombia.


Before ending, I want to clarify a little what is said at the end of the text: that the economic and political perspectives therein foreseen will have meaning only if the coming decade is one in which there is not a major perturbation in present economic and political trends. Naturally, here it is a question rather of a theoretical abstraction, for the fundamental character of the period that we have lived in since the last World War, and more especially since the beginning of the Korean War, has not changed, because from the viewpoint of the deep forces that explain this character, they are accentuating their antagonistic advance. It is a question of a period subject to abrupt changes, to highly explosive situations, putting on the order of the day the question of a decisive struggle between the two social camps. It is within the framework of these reasons that we must place the question of the prospect of war. We have learned in our movement, let us say beginning with the Third World Congress, when we speak of war. to understand that it is a question of the resistance, which we consider still inevitable, made by imperialism to the advance of the world revolution. The revolutionary Marxist notes that every important advance of the world revolution is at present made only through an armed struggle with imperialism. This world is still a world of struggle, of a sharper and more savage struggle, of what is in reality a death-struggle. When we speak of the dangers of war, we speak in reality of “dangers” in another way than before the Second World War, when war was visualized only as the result of a situation created by the previous crushing of the proletariat. The war then meant a defeat of the proletariat.

We now reach the contrary, war not because of the weakening or crushing of the proletariat, but because of its strength and of the advance of the Revolution. Naturally, armed struggle, with present-day arms, is a monstrous eventuality, and there is no normally constituted human being, no-one not either sadistic or insane, who would wish for and want to make the triumph of the world revolution emerge from the atomic mushroom. But what we desire is one thing, and reality is another.

Reality, since the Second World War, has been marked by the struggle between revolution and imperialism which has taken on everywhere an aspect of armed struggle. We were the first in the international working-class movement to note, beginning in 1950, at a date when the general opinion was that American imperialism would remain all-powerful, that the global relationship of forces had changed in favor of the revolution. Since then, facts have proved us right. This idea has now become so common that there are people who go entirely over to the other extreme, thinking that imperialism is no longer capable of resisting the advance of the revolution. We cannot express ourselves before the working-class movement like individuals who are making a bet. If we are responsible toward the working masses, we cannot tell them that the relationship of forces has so changed that the advance of the world revolution will from now on be carried on in reality thanks to the peaceful retreat of world imperialism. We see, on the contrary, that at each grave deterioration of the relationship of forces to the detriment of imperialism, at each very serious advance of the world revolution in the world, the question of imperialism’s resistance, including: armed resistance, to this advance is always raised. It is certain that in such a case, given the existence of atomic weapons, the struggle can be quite dangerous for the future of humanity. But on the other hand, there are more and more being created conditions which will permit a rapid disarming of imperialism when it prepares its attempts to resist the advance of the revolution by force.

The best manner, the best way, of answering all these problems, for us, is to bring about the conditions in which the resistance of imperialism will be weakened the maximum possible by carrying out an effective revolutionary struggle everywhere. We have never considered that the “war danger” constitutes a sort of continuous process in a straight line which increases every day. The situation, on the contrary, must be understood in the way I have explained, as a situation which is always subject to abrupt changes; which, at the moment of an abrupt change, when certain conditions are combined, becomes explosive and raises the question of war, only to undergo then a certain lull that lasts for a certain period. We must furthermore, of course, take into account in our analyses quite immediate perspectives, and determine, whether we are in the critical and explosive situation or if we have once more entered for a time into a stage of lull.

It is entirely correct to take into account a series of factors which up until now limited and, we may say, braked the irresistible drive from one side and the other toward the decisive clash.

What had a certain braking role was the factual improvement in the economic situation of capitalism, which has been going on for several years now, the conservatism of the Stalinist leadership which is afraid of the role of the masses, also the fear of atomic war in both camps.

But these brakes are only relative compared to the deeper causes setting these camps in opposition and urging them toward a decisive struggle.

It is only that which explains why, despite the existence of brakes, the period is constantly interrupted by crises which lead to highly explosive situations, putting in fact on the order of the day the question of a decisive struggle!

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Michel Pablo
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Marxist Writers’

Updated on: 3 August 2015