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From The Militant, Vol. 12 No. 16, 19 April 1948, p. 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
What effect will Wall Street’s war program have upon the economies of the rest of the capitalist world and especially the countries of Western Europe? American economy, with all its vast resources and power, is still only a part of something bigger. And as part of the world capitalist system, it not only influences developments abroad but is, in turn, influenced by them.
The billions earmarked under the European “aid” program are supposed to assure Western Europe a recovery and a measure of economic stability which have thus far proved beyond reach. In one European country after another, the living levels remain not only below pre-war standards but below those prevailing in wartime.
This crisis of European capitalism is expressed most strikingly in the raging inflation, the disrupted monetary systems and chronic deficit government budgets, which still further feed the inflation.
The precondition for European recovery is a halt to inflation, a restoration of stable currency, a return to balanced budgets. This, in turn, requires at least a partial restoration of pre-war living standards. However, the most optimistic promoters of the Marshall Plan acknowledge that this is excluded. Let us cite, for example, the opinion of the weekly U.S. News and World Report, April 16.
So far as Britain is concerned, the editors of this weekly conclude as follows:
“Initial benefits from the Marshall Plan will not be enough to cover all British needs. Dwindling reserves of gold and dollars will have to be drawn on further, until the end of this year. An end to British austerity is not in sight.”
If anything this is an understatement. Far from an early “end to austerity,” the British masses are now confronted with a still further degradation of their living conditions, because the country is teetering on the edge of bankruptcy.
The British fiscal system, already inflated to the breaking point, facts the threat of losing its last remaining reserves. Let us recall that Great Britain, debilitated as she is, represents a sector of capitalism second in importance only to the U.S. Convulsions in British economy cannot pass without repercussions both on Western Europe and on the Western Hemisphere as a whole.
The prospect for France does not differ from Britain’s. The economies of both countries are in paroxysms because, among other things, they are unable to export more than they import. The projected “aid” to France, it is hoped, will keep the inflation at current levels.
But France’s unfavorable trade balance, just like Britain’s, is one of the major factors feeding her inflation. “If prices can be held in check, France has a good chance of balancing her trade by 1952,” say the U.S. News editors. A prospect of what may happen four years from now, still leaves unsolved the urgent problem of covering deficits during the current year, let alone next year or the year following. Meanwhile deficit budgets and therefore inflation will continue to rage in France.
Bleakest of all are the prospects for Italy. Again we give the floor to the U.S. News:
“Even with steady recovery during the next four years, Italy’s dollar deficit in 1952 will he running at a rate of $515,000,000 a year, almost four fifths of what it is now ... U.S. aid can keep Italy going for the time being, but there seems to be no easy way to get Italy off the American dole without risking collapse.”
For Western Germany – the key to Europe’s economic revival – there is projected a currency reform with a promise of higher rations to workers in key industries. However important the slightest improvement may be to the agonized German masses, Wall Street’s program for Germany hardly spells recovery for a long time to come.
While the Marshall Plan is ineffectual in alleviating the inflation which is tearing European capitalism apart, there is, in addition, the over-riding factor that inflation is being stepped up inside the U.S. itself.
Even before a sizable section of American industry has switched to war production, world prices of basic commodities and raw materials have resumed their upward climb. As American war economy gathers momentum, this trend will become even more pronounced.
American dollars will buy progressively less goods not only at home but also on the world market. The purchasing power of all other currencies will be driven still lower.
Every new upward twist of the inflationary spiral in the U.S. will be multiplied many times in its effects upon the highly inflated European monetary systems. Their slim hopes of maintaining, let alone lowering, their respective domestic price structures, will fall away altogether. National bankruptcy and runaway inflation will be brought that much closer.
As a long range perspective, Wall Street’s war program thus carries with it the tendency to multiply by leaps and bounds all of the existing grave dislocations in the world market, and add new ones. This will, at a later stage, rebound with shattering force on American economy itself.
The short range perspective for the masses in Western Europe, as well as those throughout the world, is not an amelioration but a general worsening of their living conditions as the result of this accelerated world inflationary process.
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