Social Scientist. v 10, no. 113 (Oct 1982) p. 44.

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Intensifying Contradictions between the US and its ^Allies'

THE ECONOMIC situation in the capitalist world has shown a sharp deterioration in the past one year, of which the harshest expressions are to be found in the appalling current level of Third World indebtedness, the inexorably mounting unemployment in all capitalist countries, and the persistent recessionary trend in industry. The World Bank and IMF annual reports have only brought this deterioration into sharper focus, but the facts were well-enough known in each country even before. In fact the developed capitalist countries are approaching a situation akin to the 1930's Great Slump.

From 1974 to 1980, these economies experienced slow growth or stagnation, soaring inflation and record unemployment, punctuated by two crises of overproduction, though all of them were not equally affected. While Japan made rapid relative gains, a catastrophic deterioration took place in the position of Britain, while the U S and West European countries sustained significant losses. By 1981 the all-round failure of Reaganomics, Thatcherism and monetarist policies in general had become evident; the feeble recovery from the 1980 crisis was cut short and by late 1981 economic activity was plunging into a crisis downturn. As a result bankruptcies erupted at a rate not seen since the 1930's in both the U S and Britain; there were some 7,000 bankruptcies in Britain alone in the first nine months of 1981 according to the London Press, and over 8,000 in the first four months of 1982 in the U S, which is half as many again as in the same period in 1981; this is clearly the highest rate experienced since 1933. The possibility of a major financial crash resulting from a chain of major failures has become recognised as a real danger.

With the accent on reducing inflation rather than unemployment, the unemployment rate has jumped; in the U S it has reached a record 9.8 per cent with 10 million jobless; in Japan by June 1982, it had reached 2.48 per cent, or 1.37 million unemployed. While this makes it the highest rate for Japan since 1956 when it was 2.66 per cent, it is still far below that of any of the advanced capitalist countries. Britain surpasses all others, reaching a rate of over 13.8 per cent,

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