pertinent today. How it is answered remains to be seen.
Paul Sweezy and Harry Magdoff . The economic crisis in historical perspective.
In last month's Review of the Month we argued that U.S. capitalism has once again, as in the 1930s, entered a period of persistent and prolonged stagnation. At the same time we expressed agreement with those who, while recognizing that many big banks and corporations are in very shaky condition, doubt that this time it will come to a 1933-type panic. The expectation of prompt government intervention--through some combination of debt moratoriums and emergency bail-outs--seems well founded. As Business Week wrote in its issue of January 27th under the heading, "When Companies Get Too Big To Fail''": "The huge U.S. corporations have become such important centers of jobs and incomes that it the government] dare not let one of them shut down or go out of business. It is compelled, therefore, to shape national policy in terms of protecting the great corporations instead of letting the economy make deflationary adjustments."
If we accept this premise, the question which we ought to try to answer is not whether the government will intervene to prevent a panic but what will happen after it is forced to intervene. What policies are being discussed in ruling-class circles? How realistic are they? What are their implications for other sectors of society, and particularly the working class? It is to questions such as these that we now turn our attention.
There is a strong tendency among capitalists and their spokesmen to see all of their troubles as stemming from an insufficiency
of surplus value. Profit (one of the components of surplus value) provides the incentive to invest, and the totality of surplus value constitutes the pool from which the capital for additional investment is drawn. Since capitalist prosperity is dependent on a high rate on investment, it seems to follow that what is needed to get the system out of a slump is above all an increase in the amount of surplus value flowing into the pockets of capitalists and other recipients of income derived from surplus value. This will provide, so the argument runs, both the incentive and the wherewithal to increase the rate of investment. The policy implications of this diagnosis are of course obvious: squeeze workers and consumers generally in favor of the corporations and the wealthy. A fairly typical example of this kind of reasoning is contained in Business Week's special supplement on "The Debt Economy" in its issue of last October 12th:
It is inevitable that the U.S. economy will grow more slowly than it has (an implicit recognition of the new period of stagnation] . . . . Some people will obviously have to do with less . . . . Indeed, cities and states, the home mortgage market, small business, and the consumer, will all get less than they want because the basic health of the U.S. is based on the basic health of its corporations and banks: the biggest borrowers and the biggest lenders . . . .
Put simplistically, as long as corporations stay healthy, they can pay taxes and provide people with jobs . . . . But when corporations fall sick, people lose jobs and stop buying. Nobody pays taxes, governments and local authorities are not financed, and everyone--corporations, consumers, federal and local administrations alike-- goes broke or gets embedded more deeply in the debt spiral . . . .
Yet it will be a hard pill for many Americans to swallow--the idea of doing with less so that big business can have more. It will be particularly hard to swallow because it is quite obvious that if big business and big banks are the most visible victims of what ails the Debt Economy, they are also in large measure the cause of it. . . .
Nothing that this nation, or any other nation, has done in modern history compares in difficulty with the selling job that must now be done to make people accept the new reality. And there are grave doubts whether the job can be done at