BY DOUG LORIMER
In GLW #545, Kieran Latty claimed "that the world economy grew continuously between 1950 and 1974, seemingly contradicting Karl Marx's prediction of continuing crisis".
If by this, Latty meant that Marx predicted capitalism would suffer permanent negative or zero growth, he is wrong. What Marx predicted was that capitalist economies would suffer periodically recurrent economic crises of overproduction (nowadays called recessions).
The continuous expansion of the world economy between 1950 and 1973 was still punctuated by periodic recessions in each of the developed capitalist countries, though not by any internationally synchronised recessions until 1974-75.
Latty claimed that the 1950-73 "boom" was the result of high military expenditures, adding: "By wasting huge amounts of resources, military expenditure slowed down the rate of capital accumulation to a level the world economy could absorb. In this way, it offset Marx's prediction of falling profit rates caused by capital accumulation proceeding quicker than economic growth."
Latty also claimed that "throughout the boom of 1950-74, states such as West Germany and Japan began to challenge the US economically" because they had lower military expenditure than the US.
Between 1950 and 1973, the average rate of growth of the value of output of goods and services (GDP) of the developed capitalist countries was 4.9% per year (compared with 1.9% per year in the 1913-50 period).
Throughout the 1950-73 "boom", the average rate of accumulation of the stock of fixed capital in the developed capitalist countries was not lower than this, but higher — 5.5% per year. (By contrast, during the 1913-50 period, the rate of accumulation of the stock of fixed capital was 1.7%, i.e., lower than the rate of GDP growth.)
Under developed (monopoly) capitalism, in which most industries are permanently afflicted with under-utilisation of productive capacity, a "modest" level of permanent arms production does not waste resources from the point of view of the big owners of capital.
For example, for the owners of General Dynamics (the largest US "defence" contractor), the capital they invest in plant, equipment, raw materials and the hiring of workers to make F-16 jet fighters, Abrams tanks, nuclear-powered submarines, Aegis-class destroyers or munitions and gun systems is not "wasting resources", but a means of accumulating capital.
The capitalist state's contracts to capitalist firms for the production of weapons ensures a higher level of employment of resources in a whole series of industries (particularly raw materials, heavy engineering and electronics) than would otherwise be the case. For example, in May 1957, the US News and World Report calculated that the US aircraft industry (which at the time employed 800,000 people) and the electronics industry were largely dependent upon military contracts.
Armaments contracts provide monopoly corporations with a guaranteed field of profitable investment of part of their surplus capital (capital which otherwise would not be productively invested) and thus accelerates, rather than slows, capital accumulation.
It is true that throughout the 1950-73 "boom", the US capitalists lost ground to their competitors in western Europe and Japan. However, this was because the latter were accumulating capital at a faster rate and were doing so on the basis of lower wage costs. Between 1955 and 1970, the capital stock in US manufacturing rose by 57%; in the major European countries the rise was 110%, and in Japan it was around 500%.
Latty buys into the liberal-pacifist myth that the relative decline of the US capitalists in the world market was due to the higher level of military spending in the US compared with western Europe and Japan (an average of 9.4% of GDP in the US in the period 1952-70 as against 3.9% in the rest of the developed capitalist countries).
However, it was precisely the US industries which benefited most from military contracts (and US government-funded research and development — 80% of which went for space and military purposes) — aerospace and electronics — that maintained their competitive position in the world market.
From Green Left Weekly, July 23, 2003.
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