The world economic crisisBy Victor PerloThis article was reprinted from the September 19, 1998 issue of the People's Weekly World. For subscription information see below. All rights reserved - may be used with PWW credits. 
Fortune headlines its lead article on the crisis: "Why the Global Storm Will ZAP the U.S. Economy." The author, Jim Rohrer writes: "The global deflationary wave let loose by the Asian financial crisis ... has started rolling around the world to weaken Japan further, demolish Russia, shake Latin America, and threaten Europe and the United States itself [and] will send European and American markets sharply down, and could easily end in a global recession." The decline in stock market prices appears to be developing into a prolonged "bear market." A significant part of the savings of better-paid workers and of those in the middle- income bracket are invested in "mutual funds." With the drop in stock prices, possible reduction in their wealth leads to lower consumption spending. But, according to Rohrer, there is a reason for optimism: the "dollarization" of the world, imposing American "standards of performance and efficiency," that, he opines, has resulted in a tripling of the rate of profit from 8 percent in 1980 to 24 percent now. What he doesn't say is that dollarization has been achieved on the backs of workers here and everywhere the corporate giants have foreign investments. Fortune addresses its articles to investors; most blue collar and clerical workers have little or no stock holdings. They will be the ones to lose most as the impending crash causes large-scale cutbacks and layoffs. Latin AmericaThe crisis has become truly global as it reaches Latin America. The United States was hit less than Japan and Germany by the crises in Asia and Russia, but will be hit most severely by crises in Latin America, the "backyard" of American imperialism. These countries are hit hard by the "price scissors": a drop in the price of raw materials, like oil and coffee, while prices of manufactured imports remain high. Since 1996 Brazil has had to pay 17 percent more for a dollar's worth of U.S. goods; Ecuador, 69 percent more; Uruguay, 34 percent more; Mexico, 31 percent more; and Canada, 14 percent more. Most of the increase has been this year and is accelerating as U.S. banks' domestic capitalists speed the shift from Latin American currencies to dollars which translates into higher living costs and more poverty. While some U.S. companies lose some exports, others gain a chance to pick up property in Latin America at bargain prices. Higher unemployment is the result of lower exports and the more rapid shift of production south of the border. The Wall Street Journal reports: "The financial tempest that has ravaged emerging economies from East Asia to Russia is now billowing closer to U.S. shores, threatening its biggest target yet: Brazil. "Since last month's collapse of the Russian ruble, Brazil, the world's ninth-largest economy, has endured its worst swoon in nearly a decade. Interest rates have surged to nearly 40 percent, and there have been temporary auto plant shutdowns by Ford Motor Co. and Fiat SpA." RussiaAmerica's "sole superpower" rulers worry most about the decisive intensification of the economic and political crisis in Russia. Mass pressure throughout Asia, Africa and Latin America is forcing governments to reject the United States-IMF prescriptions of tight money, curtailed government spending and increased favors to capitalist investors. But its outstanding impact, by far, is in Russia. Under leadership of the Communist Party, struggles of miners and other workers have shut down the railroads, carried out widespread strikes and are building up to a one-day general strike early in October. Demands are for payment of all back wages and pensions, and overthrow of Yeltsin's toady government. Movement towards reconstitution of the USSR is gaining momentum. Backed by these major struggles, Communist-led progressives in the Duma have forced out Yeltsin's chosen ministers and installed Yevgeny Primakov, the choice of the left forces, as prime minister. Other left-leaning politicians have been placed at the head of the State Bank and other key institutions. Primakov, still minister of foreign affairs, has stood up to U.S. and NATO pressures on some issues. Now the left forces are strengthened to block imperialism and NATO more effectively. The new administration's economic program defies capitalist economic prescriptions that would subordinate all positive plans to payment of exorbitant interest on foreign loans. It pledges a "New Deal" - including some measures in effect under socialism, e.g., renationalization of some enterprises and the banks. No, socialism and the USSR are not being restored - not yet. But they are in the cards as a real possibility, perhaps within the next decade.
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