By Michael Pröbsting
Note by the Editor: The following document is a slightly abridged translation of a German-language pamphlet which comrade Michael Pröbsting wrote in 2004. It was first published as a pamphlet of the Austrian section of the League for the Fifth International (LFI). It was republished in the German-language Journal of the LFI “Revolutionärer Marxismus” No.35 in 2005. It was translated and published in the same year in “Fifth International” Vol.1, No.2 (the English-language journal of the LFI).
Comrade Pröbsting – a member of the international leadership of the LFI – was bureaucratically expelled from this organization in April 2011 together with other comrades a few weeks after they formed a faction in opposition against the increasing centrist degeneration of the LFI. The expelled comrades built immediately after their expulsion a new organization and founded together with sister organizations in Pakistan, Sri Lanka and the USA the Revolutionary Communist International Tendency (RCIT) in April 2012.
We republish this document because, while it was written nine years ago, its fundamental analyzes of the inner contradictions of European imperialism are still valid and have been proven correct.
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The United States rules the world economically, politically and militarily. Michael Pröbsting analyses the pressure on the European imperialist powers to form a bloc to challenge US supremacy. Europe is “broadening”; but can it “deepen”?
The most fundamental feature of the capitalist world economy today is its tendency towards stagnation, a function of the over-production of capital and commodities and the tendency of the rate of profit to fall.
Over the past two decades, a relentless neo-liberal offensive (drastic attacks on the working class and the marginalization of the semi-colonies) and a number of technological revolutions have not been enough to infuse capitalism with a new growth dynamic. Quite the opposite: capitalism in its present stage, globalization, is characterized by a tendency to stagnate.
Table 1: Growth rates of World Gross Domestic Product per head (in %) (1)
While annual world output, measured in Gross Domestic Product (GDP), grew by 4.9 per cent between 1950-1973, on average, it slowed down to 3.0 per cent between 1973-1992 and 2.7 per cent between 1992-2001. (2)
The same development can be observed in the imperialist world. (see table 2)
Table 2: Average annual GDP growth and GDP growth per head 1973-2003 in the imperialist world (in percent) (3)
Euro Zone USA Japan
GDP Growth 1973-1990 2,3 3,0 3,8
GDP Growth 1990-2003 2,1 3,2 1,1
GDP Growth per head 1973-1990 2,0 1,8 3,0
GDP Growth per head 1990-2003 1,7 1,6 0,9
In the past two decades, the accumulation of capital has remained depressed, never regaining the heights of the 1950s and 1960s and dropping very sharply at the turn of the century. In the USA, non-financial corporations suffered a clear decline in the accumulation of capital. During the 1960s and 1970s, the growth of the stock of fixed capital fluctuated between 3 and 4 per cent; since the 1980s, it has declined to around 1.5 per cent and lower still at the end of the century. (See figure 1)
Figure 1. Ratios of net savings and net fixed investment to NDP (%): total US economy (4)
Fixed investment is that of enterprises (private domestic, fixed, non-residential investment), and savings are the excess of domestic income over all other expenses.
Source: NIPA (BEA); Flow of Funds (Federal Reserve).
This is not an exceptional US phenomenon; it can also be observed in imperialist Europe. In a recent paper, the French Marxist economists, Gérard Duménil and Dominique Lévy, showed a similar decline of capital accumulation in France (See Figure 2):
“The size of the fall is already large in the US. In France, it was even more spectacular. Both the profit rate in this measure and the rate of accumulation fell from 8% in 1960 to 1 or 2%, or less, just after 2000. The structural wave of unemployment in France originated from this collapse of investment.” 4 As a result the parasitic (i.e. non-productive, speculative) characteristics of imperialism have grown to extraordinary proportions.” (5)
This contradicts the widespread opinion among left-wing (and bourgeois) academics that European capitalism is fundamentally different from its North American counterpart (the “Rhine”, versus the “Anglo-Saxon”, model). While the latter is said to be speculative, parasitic and debt-ridden, the former is seen as productive and healthy.
Figure 2. Rate of retained profits and accumulation rate (%): France, non-financial corporations (6)
In fact, while there obviously are differences between the US/British economies on the one hand and the French/German economy on the other, the similarities are far more important. For example, in both the US and France, the share of profits distributed as dividends to shareholders has risen to 90-100 per cent i.e. the share of retained profits is getting close to zero! Another element of this growing parasitism is the exploding indebtedness, not only of the state but also of companies and consumers. (7)