Definition of crisis

[Chris Burford]

At 11:52 14/07/99 -0400, Doug wrote:
>I agree with most of what you say, Chris, except for a couple of
reservations.
>
>Chris Burford wrote:
>
>>I see this as the US managers cleverly ensuring that when "a" mass of
>>productive forces needed to be destroyed, it was Asian, especially
>>Japanese. There was some destruction in the imperialist heartland but very
>>little.
>
>Considering that Japan is routinely spoken of as being in some kind 
>of depression, a look at the actual numbers doesn't match the tone of 
>alarm. GDP growth in Japan since 1990 has averaged 1.0% a year; 1998 
>was the first year of the decade in which there was an actual decline 
>(-2.8%), and the IMF projects another 1.4% decline this year. That's 
>profound stagnation, but not the wholesale destruction of capital. 
>Peripheral Asia is where the destruction happened.

Interesting point, on which I accept you are almost certainly right. What I
think I was responding to was 1) the clear reports that the Japanese just
have to write off large amounts of bank capital (especially that due to
land values) to get their banking system moving again. 2) that in terms of
inter-imperialist rivalry a loss of tempo for even 2 or three years may be
very hard to recoup.


>Japan's stagnant, as is the EU; the U.S., while not "booming," as 
>some would have it, is growing reasonably well. So I'd reformulate 
>this saying that the core of the core - the U.S. - is doing best, the 
>periphery of the core - the EU and Japan - is stagnant, and the 
>periphery has taken almost all the lumps.

I'd buy that picture.


>>The largest mass of capital withstands the crisis best. Bits of US capital
>>had to be destroyed but only bits. The art of state management of this
>>process was to ensure it took place smoothly and invisibly. LTCM was the
>>crunch. It was *both* bailed out and discounted, in one and the same
>>manoeuvre. I stand open to correction on the details but I suggest that is
>>what happened.
>
>Actually LTCM has recovered enough to pay back its saviors, and has 
>been raising fresh investment funds.

So LTCM did not have to be discounted. But it did have to be bailed out and
speculative funds were a section of capital in the US at high risk from the
global crisis of 1998. Again you may have more specific information about
this, but I think the broad picture is not too controversial.


>The big question, of course, is whether the core of the core will 
>remain exempt from "adjustment." That all depends on whether U.S. 
>capital has securely restored its profitability and is thriving by 
>exploiting the leading edges of industry, or whether it's all a 
>bubble, and the idea that the U.S. is exploiting the leading edges of 
>industry is itself part of the bubble. I'm guessing the next 
>downturn, if there's ever another one of those, will clarify this.

Absolutely. 

But my feeling is that capitalism won't fall unless it is pushed. And the
process of making it topple over will be a complicated one involving class
struggle, detailed knowledge, democratic networking, and a shrewd
combination of strategy and tactics relevant to the different prirorities
in different areas of the world. Still we can learn fast.

Chris Burford

London