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International Socialism, July/August 1970



The Two Crises of Richard Nixon

1. The Wall Street Seizure


From International Socialism, No.44, July/August 1970, pp.1-2.
Transcribed & marked up by Einde O’Callaghan for ETOL.


If what happened on Wall Street last month was the first tremor of a catacysmic slump we should now be agitating for direct mass action in defence of jobs. We would not need much in the way of analysis – events would substitute for that – and almost as little in the way of organisation, since whatever was needed would have to be created quickly and on the widest scale.

If, at the other extreme, what happened was a minor correction in Western capitalism’s strong upward sweep we should now be closing in on ourselves, combing the system for hair-line cracks and hoping they prove damaging in the long run. In this case too we would need little in the way of analysis – we could safely denounce the inner contradictions of capitalism without having to be specific – and hardly anything in the way of organisation, just enough to run a journal.

But if what happened was neither of these, neither a sign of imminent collapse nor an aberration, but an indication that the system was seizing up in a complex of structural rigidities, each one of which might be made to unbend but only at the cost of greater inflexibility in the complex as a whole, then we would need every ounce of analytical and organisational power that we could muster. For we would need to know precisely where the system could still give or expand, and to concentrate the largest possible force in hemming it in.

That it was such an indication is suggested by two considerations, one general and one particular. In general, the scale and concentration of economic activity are now too large for the stock exchange to be able to fulfil its central functions effectively. It used to be of key importance in combining savings into large investment accumulations and in breaking down large streams of profit into smaller streams of personal rentier income. Now industry is financed almost entirely through taxation or through retained profits, while middle-class incomes are overwhelmingly ‘earned’ or made to seem so rather than received as dividends. As a result, stock markets have been relegated to a fairly subordinate position so that what happens on the floor, although not altogether unrelated to what is happening outside, has become a very obscure guide.

It is also a very uncertain trigger to economic events. In an earlier age, when stock markets were more closely woven into the fabric of the economy their collapses were linked to financial failure and business bankruptcy as cause and effect. That was how the system purged itself of its structural imbalances and cleared the ground for further growth. But this time, even though the gigantic IOS was in difficulties and its difficulties rebounded on the markets, IOS did not fail. It was not allowed to. It was too big.

This combination of collapse and stability is a dreadful portent for Western capitalism, more dreadful by far than the periodic slump which rings the minds of both soggy and sclerotic socialists. For it means that there is no automatic mechanism left to reset its structural imbalances. Whatever needs to be done must be done consciously, as policy – and that is impossibly difficult. Take Nixon’s range of choices. There is none any more in Vietnam. He has to pull out and is sufficiently desperate to do so to make even the Cambodian gamble seem worthwhile. For unless he does pull out he might not be able to meet the grisly deadlines set by the new ABM-MIRV stage of the superpower arms race. And meet them he must, for the new military techniques with their highly accurate long-range missiles and abundance of nuclear warheads is slowly shifting the balance of military thinking from a second-strike to a first-strike strategy. And to be second at the start of a first-strike world is to be nowhere. So harsh are the compulsions generated by this latest twist in arms competition, Nixon must look back on the days of deterrence as a palmy period of almost infinite free choice, a choice at least as wide as between the deterrent force of 1960 – 35 nuclear-tipped ICBMs – and the deterrent force of 1970 – 2,300.

His economic choices are narrowing too. Three decades of fast economic growth have made the mighty corporations so much mightier and simultaneously put so much pressure on the market for skilled labour that inflation has become endemic to the system: big firms find it relatively easy to give in to wage drives because they can pass their cost on to the consumer and because it makes life more difficult for their smaller competitors, while workers find it possible to exploit the shortage of skills to prise out wage rises in some areas and grades and then to generalise them through battling in defence of traditional wage differentials. The upshot is that the system has lost a great deal of the adaptability that fluctuating prices once gave it.

This would not be so bad in itself. But the three decades of growth have also opened up the Western economies to each other to such an extent that minute differences in rates of inflation can be crucial in international competition – leading to damaging balance of payments and currency problems, while huge differences like those that have opened up over the last five years or so between us export prices and those of her main competitors can be catastrophic. So prices have to be held for good structural reasons, but they cannot be held for equally good structural reasons. And the impending huge lunge in arms expenditure will simply make the dilemma worse.

It is not only an economic dilemma. If price increases are choked off, or even if an unsuccessful attempt is made as during Nixon’s last 18 months, employment is hit and the feeling of security throughout society takes a beating. In the us where the impact of deflation is quickly amplified beyond endurance in the black urban ghettos and where black workers are increasingly effective in leading industrial struggles, the consequences for the powers that be can be alarming, particularly in an election year such as this is. Yet to free prices from constraints is to invite a white middle-class backlash that is no less alarming, without moreover winning peace in industry.

Nixon’s world is an unyielding place. Whether he turns to the battlefield or to the economy or to the social front, whether he looks to the campuses or to his allies abroad, everywhere he finds himself embedded in cold, immobile structures, each of which he may shift but only with immense and growing difficulty. His world is icing over. It must be a frightening prospect.

But it is frightening for us as well. As the system congeals into great interlocking structural imbalances, becomes more violent and erratic in trying to shake free and arms itself with more frightful weapons and an even more frightening military strategy, what we think and what we do as socialists become critical. We cannot take comfort in thinking, like the soggies, that there will always be time for a total confrontation and therefore it can be postponed. Nor can we take comfort with the sclerotics in thinking that the system will shake itself to bits in the next, ever-impending slump. There is little time – this decade of rearmament is crucial – and when and if the system does shake itself to bits we don’t live to inherit the pieces.

For the first time ever revolutionaries are racing against total human catastrophe. For the first time too we can win only if we break their power before their system breaks. And that implies, as never before, an organised presence throughout society, sensitive to what is happening in the here and now and democratic enough to be able to respond without precedents.

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