THE WORLD, THE FREE MARKET AND THE LEFT 19
tions though well known to workers farther west; a catastrophic shortfall—$10 billion or more—in. anticipated capital investment from the West. Talk of emulating the economies of Sweden or Austria is now being replaced by gloomy perusal of the statistics of Mexico.
In the Soviet Union the best-known prophet of the free market, Stanislav Shatalin, issues denunciations of Gorbachev from his hospital bed while detachments of the K.G.B. wage war on 'economic crime/ targeting profiteers, hoarders, price gougers and other dutiful practitioners of Free Market 101.
If the world map resembles a poster, it is one displaying many of the less welcome features of the first four decades of the century. Furthermore, the world's foremost capitalist power is fighting the effects of serious recession with that negation of free-market theory, military orders from the state. In the fourth quarter of 1990 the gross national product of the United States fell by 2.1 per cent, the worst drop since the 3.2 per cent figure for the third quarter of 1983. The latest unemployment figures, for December, showed a loss of 232,000 jobs. This economic decline would have been far worse but for a December rise of 4.4 per cent in orders for durable goods, reflecting the military buildup for the war against Iraq.
Military spending will help offset the recession in the short term, as the Bush government dumps inventory onto Iraqi troops and civilians. Alan Greenspan testified to Congress in the second week of the war that its economic consequences would be slight. One week later he retracted by saying the picture would change dramatically if the war lasted longer than three months. The deficit promises to be large enough to test even the most hardened nerves: $318 billion, including as much as $1 billion a day in war costs, plus billions more in new overseas aid and debt forgiveness required to secure favourable U.N. votes and hold together the 'coalition*. And these compounding billions still do not take into account the cost of sustaining a banking system so shaky that the Federal Deposit Insurance Corporation is itself approaching bankruptcy.
Far from being on the threshold of a new world order the major capitalist powers face a period of increasing rivalry, as the rows that led to the temporary collapse of the GATT trade talks in December illustrated. It may have lacked the drama of a Scud, but the decision of the German Bundesbank to raise interest rates at the end of January sent a potent and unappetizing message to the U.S.-U.K. faction: Germany was prepared to lend money—at a profit of course—to finance the war but would not let the coalition pay for this war through cheap deficit financing.
Nowhere do the promises of a year ago look more empty than from the perspective of the Third World. The outlook was never good and, with higher prices for oil, lower prices for commodities, larger interest payments on their debt and, throughout the Near East and Southeast