Encyclopedia of Anti-Revisionism On-Line

Communist Workers Party

Editorial: Reaganomics Stalls, War Danger Delayed


First Published: Workers Viewpoint, Vol. 6, No. 36, September 30-October 13, 1981.
Transcription, Editing and Markup: Paul Saba
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Never in his Hollywood career did the Gipper backpedal so quickly. Only a little while ago, Ronald Reagan claimed to see a “Soviet terror conspiracy” behind every bedpost in the world. But that was before the promise of a supply-side miracle turned sour. Now the administration is flaunting its participation in arms limitations talks with the Soviet Union beginning Nov. 30. The chest-beating which led to U.S. meddling in El Salvador last spring and the dogfight with Libyan fighter planes more recently has given way before the harsh economic constraints of the ’80s.

Reaganomics argued that slashing government “waste” (read: the social services millions of working and poor folk rely on), would balance the federal budget and corral runaway inflation. Tax cuts, the heart of the supply-side program, and deregulation would give business the incentive to reinvest in productive industry and the economy would boom without inflation, they claimed. A more miserable underestimation of the depths of the economic crisis would be hard to find.

After the first round of massive budget cuts, social spending has been chopped to the bone. Yet the amount saved is dwarfed by the $750 billion in revenues the government will lose through the tax cuts over the next three years. And this is not counting the added financial drain generated by Reagan’s bloated military budget. As a result, the federal debt could easily top the $1 trillion mark, and inevitably trigger a bigger surge in inflation.

At the same time, there is every sign that business will not reinvest its tax savings into production. The nation’s bond market remains in the dumps, and, since its April peak, the Dow Jones industrial average has slid 200 points, the most sustained selloff since the 1974 recession. No capitalist will risk tying up funds in long-term productive industries at a time when, the American people’s purchasing power is dwindling fast. Furthermore, the U.S. Treasury must borrow $60 billion in the next six months to begin covering a looming deficit. This intensifies the pressure keeping interest rates high. High interest rates will continue to drive medium and small businesses under, adding millions more to the ranks of the jobless.

Talking about the problem only seems to aggravate matters. Reagan’s Sept. 24 speech, in which he announced a new round of budget cuts, including dismantling the Department of Energy and Education and trimming the military, and the tightening of tax loopholes, was meant to boost Wall Street’s confidence by appearing strong. It backfired. The financial community saw the speech, in particular the President’s retreat on Social Security cuts, as a sign of weakness. The next day, not only did stock and long-term bond prices hit near-record lows, but demand for three- and six-month Treasury bills bottomed as well. Even the commodities market, traditionally less volatile than either stocks or bonds, was affected.

What’s being revealed today are the real political and economic restrictions hemming in U.S. imperialism. Socialism has put one-third of the world’s markets beyond the reach of the imperialists. The fires of national liberation and independence in the developing countries of Latin America, Africa and Asia, and the inter-imperialist contradictions and the threat of revolution in countries like France, Germany and Britain make U.S. investment in these areas risky. Unless the U.S. position in the world can be stabilized, exports have no safe markets and the economy will continue to stagnate, to reverse the world balance of forces, Reagan must beef up the nation’s military might. Yet the U.S. ability to sustain a massive buildup is severely crippled by the deep economic crisis.

Because of this overall economic situation, Reagan is forced to slow down military spending. And independent of his or any capitalists’ will, Reagan is driven to the only option left – the U.S. must soften its hard-line foreign policy and speed up arms limitation talks.

Detente between the two superpowers, the U.S. and the Soviet Union, delays the danger of a world war and is in the interest of the people of the world. In the past, we believed that since both superpowers were imperialist countries and are thus driven toward launching wars of aggression, detente could only be a smokescreen to disguise preparations for greater contention. We now recognize that the Soviet Union is a socialist country, therefore not a sourced of imperialist war as the U.S. is.

Even clearly anti-Soviet authorities dare not accuse the Soviet Union of plundering the world’s people. The most recent example is an article that appeared in the July 13 issue of Fortune magazine. The author admits that the Soviet Union exports oil, natural gas and raw materials to Eastern Europe in exchange for manufactured goods like East German computers and Hungarian buses. It is well known among communists that in the classic imperialist relationship the colony provides raw materials and markets for the colonizers’ manufactured goods. Furthermore, Soviet oil and raw materials are sold to the Eastern bloc at below-market prices. And this does not include direct-aid grants, low-interest loans and commercial credits which the Soviets also provide.

Nor can the Soviet Union be accused of exploiting less-developed countries like Cuba, despite the fact that revisionist policies foster Cuban economic dependency. Last year, the Soviet Union sold Cuba 11.1 million tons of petroleum and refined products at the equivalent price of $12.80 a barrel, far below the market price of $35 a barrel. To pay for the oil, Cuba sold sugar and nickel to the Soviet Union, a country which already leads world in sugar and nickel production. In addition, the price paid for Cuban sugar and nickel is linked to the price of Soviet oil. A hike in oil prices automatically triggers higher sugar and nickel prices.

With a socialist system, the Soviet leadership is not at the mercy of the spontaneous economic forces which propel capitalist governments inevitably towards wars to redivide the world’s markets and sources of raw materials. Socialism gives mankind the greatest freedom in mastering these economic forces, opening political and economic options undreamed of by any capitalist rule. Thus, the strengths as well as chauvinist and revisionist weaknesses in Soviet foreign policy are mainly a reflection of the abilities of the Soviet leadership and not of contradictions inherent in the socialist system itself.

With this understanding, we can see the correctness of detente between the Soviet Union and the U.S. Pursuing this policy with the U.S. is a correct application of the Leninist principle of peaceful coexistence between different social systems. It not only aids the world’s people by helping to blunt U.S. aggression, but also frees up state funds previously siphoned off for defense to be used to build up the socialist economy. The fact that this principle has been misapplied by revisionists like Krushchev, who chauvinistically pit the interests of the Soviet Union against those of the third world fighting imperialism, should not blind us to the significant contributions made by the U.S.S.R. in building public opinion for detente with the U.S.

Besides delaying world war, the U.S. economic plight has also temporarily reined in government attacks at home. In order to launch a world war, the capitalists must first attack the American people. Yet, Reagan has had to postpone measures to speed up natural gas decontrol, restrict abortion rights, restore the death penalty, his so-called anti-crime program, and other social issues such as the Moral Majority’s Family “Protection” Act so as to keep attention riveted on the economy. At this time, arch-reactionaries like Senator Helms and Denton are political liabilities. Barry Goldwater’s public criticism of the Moral Majority is an attempt to leash these types.

Wall Street’s lack of confidence in Reaganomics has given the American people precious time to organize grassroots resistance. To truly seize the time, we can have no illusions. The threat of world war and stepped-up government repression has been temporarily delayed, not totally destroyed. Detente can delay world war, but contrary to the position of the revisionist Communist Party, USA, it cannot guarantee world peace. Nor can detente be seen as a panacea for the economic crisis as the revisionists believe when they claim detente means jobs.

In the final analysis, it is only the American people who can eliminate the main source of world war, the monopoly capitalist system. The American people as yet have no political consensus, nor do we have the organizations that can help develop this consensus. We have the time – we must use it well.