materials prices between 1972 and 1974 was stronger than it had been during the Korean War, it is nevertheless useful to the boom and decline of raw materials by A. UDRY place the 1972-74 price explosion within its longterm context. After rising rapidly between the first quarter of 1950 and the first quarter of 1951, the prices of primary products(1) declined continuously until 1962. At that time, according to the United Nations index, they were about 5% lower than they had been during the first quarter of 1950 (that is, the pre-Korean War leve ls). After a slight rise between the end of 1962 and the beginning (first quarter) of 1964, they entered a new decline, which brought them to a level beneath that of the first quarter of 1950. After the fourth quarter of 1968, the overall index of primary products prices rose 5% in 1969 (between the fourth quarter of 1968 and the fourth quarter of 1969), 3% in 1970 (idem.), 7% in 1971 (idem.), 17% in 1972 (idem.), and 61% in 1973 (idem.). Obviously, the changes in the overall primary products index conceals important gaps among the various products. From the last quarter of 1968 to the last quarter of 1971 mineral and forest products (coal, nonferrous metals, wood, wood pulp) and oil drove the index up, as did certain agricultural products (sugar, oil-seed products). On the other 51
RAW MATERIALS hand, corn, rice, wool, and rubber exerted downward pressure. From the last quarter of 1971 to the last quarter of 1972 agricultural products like wool, wheat, oil-seed products, corn, cocoa, and rubber led the way in price rises. On the other hand, the dollar prices of minerals in 1972 did not increase (with the exception of oil), and the prices of nonferrous metals declined. In 1973 (last quarter of 1973 compared with the last quarter of 1972), on the other hand, the price increases were more uniform. Agricultural products were up 56%, that is, slightly less than the average increase for all basic products (61%). The agricultural raw materials index rose concurrently with the overa ll index. The index for minerals and nonferrous metals (including oil) rose 72%. It must be stressed that the mathematical scope of these increases is partly the result of an illusion created by the UN's utilization of the dollar in calculating the price indices. Thus, expressed in deutschemark, the 43.1% increase of the 1973 average over the 1972 average would be only 19.1%; the 1971-72 average increase of 13% would be only 3.2%. Hence, when the index shows increases in 1973 of 8% for ferrous metals or 4% for tea, these percentages are in fact inferior to the effective devaluation of the dollar. To better understand the real significance and position of the increases during the most recent period (1968-73), these increases can be "corrected" by using the UN index for the prices of the manufactured products exported by the industrialized coun tries. For the period from the beginning of 1950 to the fourth quarter of 1973, the results are as follows:
TABLE L Price Increases of Primary Products From 1950 to the Last Quarter of 1973 As Expressed in Dollars
(in percent) Divided by the UN index for the prices of exported manufactured products Primary products 100 - 2.4 Food products 120 7.3 Agricultural raw materials 68.9 -17.6 Minerals 122.2 8.4 Fuel (oil) 173.4 33.4 Source: Skandinavska Euskilda Bankens, Kvartalskrift, No. 4, 1974 52
Thus, when the prices of primary products are compared to those of manufactured products, it can be easily understood that the peaks reached in monetary terms are not all that high, even though the two booms of 1950-51 and 1972-73 are included in this period. The 1972-74 boom Compared with the boom of 1950-51, the most recent boom in primary products was marked by three particular features: 1. The price increases in current dollars were considerably stronger during the most recent upswing (1972-73) than during the Korean War boom. The UN price index for all primary products rose 150% between 1971 (base of 100) and the first quarter of 1974 (the highest point). During the 1950-51 upswing the increase was less great, the index rising 50% between 1949 (base of 100) and the first quarter of 1951 (the highest point). The same difference emerges if the prices in current dollars are "corrected" by the UN price index for exported manufactured products: 80% between 1971 and the first quarter of 1974; 43% between 1949 and the first quarter of 1951. 2. During the most recent upswing the price escalation lasted for more than two years, from 1972 to April-May 1974, and this was the case even though stagnation of industrial production appeared in a number of imperialist countries beginning with the end of 1973. At the beginning of the 1950s, on the other hand, the explosion of prices lasted only nine months, and less than two years after the beginning of the boom they stood at a level 20% higher than that of 1949. This prolongation of the increase in primary products prices during the recent period expresses one of the specific features of the first phase of the generalized recession of the imperialist economy (approximately up to July 1974), during which the decline of industrial production was combined with shortages and bottlenecks in some sectors. 3. During the recent boom the price explosion afFected all sectors of primary products, whereas during the years 1950-52 the rise of prices occurred in the realm of agricultural products and metals (except iron), but affected energy products and foodstuffs only slightly. A brief examination of the price increases in the various sectors since the beginning of 1972 indicates the growth rate of each of the categories up to the period of the turnabout of May 1974. We utilize the figures of The Economist, whose overall index breaks down as follows: 55.6% food products and 44.4% raw materials:(2) (See tables 2 and 3.)
TABLE 1L
Evolution of Prices of Primary Products
(dollar index, 1970-100)
January 72
101.3
All items
107.7
Food
Industrial raw materials
94.1
116.1
Fibers
82.8
Metals
TABLE !!!
Variation in % Compared with Corresponding Period
Jan 73
Jan 74
Jan 72
Jan 72
All items
45.3
125.9
54
131.4
Food
Industrial raw
29.4
129.1 materials
64.5
184.3
Fibers
85.6
Metals
3.5
It should be stressed that the food sector expanded until November 1974 (index 329.2), while fibers began to decline in January 1974; metals joined the downward slide beginning in June 1974.
The short-term causes
The escalation of raw materials prices is explained by various factors that have nothing to do with "the limits of growth" or any "natural scarcity. "(3)
1. The growth of manufacturing production in the imperialist countries taken as a whole in 1972-73 obviously triggered an explosion of demand for raw materials and revealed the existing disproportions among various sectors of production.
In 1973 the growth of manufacturing production reached a level rarely seen in a single year - and this in the totality of the advanced capitalist coun tries. Now, production in manufacturing is the best indicator of demand for raw materials. (See table 4.)
Production in the metal and machine industries, whose average increases were 12.5% and 13.1% respectively for the three regions mentioned in the
January 73 January '74 May 74 147.2 228.9 254.5 165.9 239.7 271.4 123.8 215.6 233.4 190.0 330.1 265.4 85.6 153.7 225.8 Jan 74 May 74 May 74 May 74 Jan 73 Jan 72 Jan 73 Jan 74 55.5 151.2 72.2 11.1 43.2 151.9 63.5 13.2 74.2 145.6 87.7 8.2 73.7 128.4 39.6 -24.4 80.3 172.7 163.9 46.8 table, had strong effects on demand for minerals and nonferrous metals. The same goes for the effects of textile and clothing production on the demand for fiber and wool. The synchronization of the increase of demand thus created market tensions, especially since there is some short-term ine lasticity of supply (for most of these products). It takes about seven years for a normal mine to reach full production.
2. To this must be added the fact that the stocks of many raw materials held by users had been relatively low when prices began rising (a result of the price tendency of the previous period). This was especially true because after the slowdown and regression of manufacturing production in 1970-71, appropriation of existing stocks was needed to respond to the first phase of the 1972 upturn. This is one of the elements that lend a specific character to the recent price increases in comparison with the Korean
War increases. In fact, the level of stocks of strategic products was rather high at the time of the
Korean War, both because of the stockpiling that had been done in anticipation of an armed conflict and because of the reserves that had been piled up during the second world war. The constitution of strategic stocks combined with the industrial boom
53
RAW MATERIALS
TABLE IV Evolution of Production in Manufacturing (variation in % compared with preceding year) Year All Basic items U.S. & Canada 1959-69* 5.7 4.5 70 -4.8 -5.7 71 0.0 - 5.0 72 9.0 11.6 73 9.2 11.3 • West Europe 1959-69 6.2 5.1 (EEC & EFTA) 70 5.3 2.0 71 2.0 - 4.0 72 5.9 5.2 73 8.3 9.9 Japan 1959-69 15.3 16.6 70 13.6 12.3 71 3.0 - 2.0 72 6.8 10.2 73 18.2 22.2 *average annual growth rate (composed) for 1959-69 Source: OECD - Industrial production (industrial production for the United States and West Europe increased 8.1% in 1950 and 9.3% in 1951) to generate a rise in the prices of basic products. But later, the decline in industrial production was compounded by the effects of the unstocking and exerted strong downward pressure on the prices of raw materials. 3. Finally, speculation, although it was not at all the real cause of the price increases, did stimulate continuation of the escalation. In face of the depreciation of paper money in this era of inflation, holders of capital "take refuge" in the purchase of so-called real goods, especially when stock exchange values are showing signs of weakness. In 1973, for instance, the total volume of transactions for eight major primary products (cocoa, coffee, sugar, rubber, copper, lead, tin, and zinc) on London and New York commodity futures markets was about two-thirds higher than the average of the three preceding years. For most products, the volume of sales was several fimes higher than the volume of world imports. Behind the agents of the London Metal Exchange stand the major integrated groups (controlling the energy sources, transport, and extraction all the way through to marketing), which, by virtue of their fruitful speculations, recover the royalties 54
Industrial
Chemical
Textiles,
Clothing
Mefal lurgy
Machine products products
6.6
8.1
3.0
- 8.3
0.0
-4.8
- 2.0
6.0
1.0
8.2
6.9
9.4
13.2
8.6
6.5
6.2
10.1
3.4
7.5
7.5
0.0
2.0
5.0
4.0
3.9
7.6
3,8
9.4
13.3
0.9
19.9
15.2
7.0
17.6
19.0
4.2
3.0
7.0
1.0
8.7
5.6
0.0
23.2
15.9
9.9 sent to the producing countries. A good example of this sort of manipulation is provided by the transfer of copper that was carried out during autumn
1973 between the United States and Europe. Since the price of copper in the United States had been frozen by government decision, the price was 70% higher in London. Hence, import prices were free, so the European and Japanese sold on the U.S. market; the Americans exported to the European markets.
In its January 4, 1975, issue Entreprise, the weekly magazine of the French employers, wrote: "European and American ships are crossing paths in the middle of the Atlantic, each side supplying the other with the same products." In 1950-51, when inflation was more limited and the demand for productive investment was stronger, speculative operations did not attain such dimensions.
A more profound imbalance
But all these are short-term factors. They do not allow us to grasp the real causes of the emergence of sectoral shortages (with the consequent upward pressure on prices) after a long period of growth in capitalist manufacturing production, shortages that continued to be felt for a whole chain of products during the first phase of the recession.
In reality, we are dealing here with the classical effects of uneven disproportioned development among the various sectors of production, a feature of all growth under the capitalist system. 1. The deterioration of the terms of trade between primary produch and manufactured products could not but lead to a relative fall in the rate of profit in the various primary sectors. Although in the most recent period there was a turnabout in the terms of trode in favor of primary products, and then, after May 1974, a new shift to their detriment, the deterioration of the terms of trade was constant during the 1950s and 1960s. (See table 5.)
TABLE V
TERMS OF TRADE: between manufactured products in developed countries (dev. mfg.) and primary products in underdeveloped countries (und. pps.) Unit values Und. pps. Terms dev. mig of trade 1953 275 163 170 1962-63 275 148 185 1967-68 285 153 187 1973* 380 260 146 *Estimate, without oil Source: see foatnote 4 The deterioration of the terms of trade for the coun tries producing row materials — and the semicolonial countries remain essentially exporters of raw materials - triggered slowdowns in investment, in productivity increases, and in the relative increase of productive copocity in the raw materials sector compared with the manufacturing sector. In addition, the monopolies sometimes developed policies of restriction in order to maintain prices. Likewise, there wos a transfer of capital from the primary sector to monufacturing industry within the structure of imperialist investment in the semicolonial countries. The transfers, like the frequent cancellation of investment projects aimed at modernization, were heavily stimulated by the "dangers" of nationalization facing the monopolies of the extractive industries. In fact, the preponderant position of these industries in the economies of the semicolonial countries - reflected in the fact that this secfor essentially defines exports and in the role played by the imperialist monopolies, which transfer their high profits and thus permanently encumber the balance of payments strongly incites any government that is at all favorable to increasing economic growth to nationalize the monopolies producing primary products. This twofold process can be observed in the series of figures below. (See table 6.)
TABLE VI
A. Direct U.S. investment in Latin America
(by sector, in %) 1950 1957 1963 1967
Manufacturing industries 19 20 29 32
Oil 32 37 32 29
Mines 17 16 12 12
B. U.S. investment, by sector, in developed and underdeveloped countries (in %) 1949 1959 1968 Annual Average investment income for 1967/1968 Manufacturing industries 33 32 41 26 Oil 29 33 29 46 Mines 10 10 8 13 Source: See footnote 4 The stability and even slight decline of investment in the mining sector is significant. This tendency, along with its inherent effects, is confirmed by a French employers' monthly magazine, which writes: "Inflation has led the mining industries toward diversification in the direction of consumer industries in which profitability is greater and turnover time is lower, and this has increased the demand for raw materials even further. "In the end, it is perhaps here, in the disruption of the structures of supply rather than in a hypothetical exhaustion of reserves, that the real threat to the economy lies. " (Usine Nouvelle, October 1974) As for oil, during the past two decades investment was especially developed - still only relatively -in the Near and Middle East. The world oil cartel used the price of Gulf of Mexico oil as a base in setting the world cartel price, although the costs of extraction in the Middle East amounted to only one-ninth of the costs in the United States. Obviously, this was reflected in the return on capital invested in the petroleum industry, which amounted
55
RAW MATERIALS to 3.8% in the industrialized countries and 22.7% in the "developing countries" during the period 1950-51. That is why the oil majors placed many restrictions on refining capacity in the United States itself, with the consequent effects of shortage when the "oil crisis" broke out. One of the results of the totality of this process can be seen in the increase of the index of production for manufacturing industries, which rose 132% between 1960 and 1973, as compared with an increase of 92% for the index for the extractive industries. 2. But the flow of investment under the impetus of fluctuations in the rate of profit particularly provoked an imbalance in long-term investment in productive capacity in the transformation of metals industry and in the industries transforming rubber, chemical products, and wood. Now, the industries transforming primary products account for 40% of the total volume of these materials consumed in the industrialized countries. The decline of investment was particularly sharp after 1969. This is not unrelated to the recession that occurred in 1970-71 in basic metallurgy and in the machine industry in a number of capitalist countries. (See table 4.) The graph below indicates the gap between the investment cycle in the industries transforming primary products in the United States and the investment cycle in the manufacture of finished products. 300 200 100
1958 60 62 64 66 68 70 72 Expenditures in 1968 constant prices on total equipment and new materials in the transformation of materials industry (A) and in other branches of the manufacturing sector (B). Index, 1958=100. This disproportion between investment and the deve lopment of productive capacity gave rise to a 56 good number of sectoral shortages in face of the explosion of demand linked to the boom in manufacturing industries in 1972-73. But in its turn, the price increases in the raw maferials sector unleashed a wave of investment -especially in the energy sector — that had to be made profitable, and this was compounded by the rise in production costs (the increase in the price of fuel, etc.). This shows that in spite of the decline of prices because of the extension of the recession, it is unlikely that most prices will quickly fall back to their 1968-69 levels, at least if the recession does not deepen beyond 1975. Paradoxically, this is combined with potential shortages in some sectors in which the investment projects canceled in 1971-72 have not been replaced. Hence, a new upturn of the imperialist economy, even a moderate one, could raise various products out of the current morass (which is in any case not as deep as that of the 1960s) and, under the impact of a new rise in prices, could stimulate investment that had been postponed in 1973-74. It thus seems that we are in for a rather long process of readjustment, which obviously does not mean that the peaks of 1973 will be reached again, but rather that the troughs of the 1960s are not likely to be seen again soon. A sudden shock Beginning with the second half of 1974, the effects of the recession made themselves felt on the prices of basic products. In wave after wave, the recession overtook all the branches of the manufacturing industry. The demand for raw materials dropped rapidly. Stocks began to accumulate on the market again, especially in the products most sensitive to the industrial conjuncture: zinc, tin, lead, copper, rubber, cotton, etc. The rise in the costs of credit engendered a wave of destocking. Speculators innundated the market, for they had oversupplied themselves in 1973-74, the Japanese companies on the copper market being an example. The price declines struck with particular unexpectedness, for many people had hoped that there would be enough industrial growth in 1975 to enable price levels to be maintained. The index provided by the British weekly The Economist (May 12, 1975) indicates the following depreciation during a one year period:
All items -18.0
Food -11.0
Industrial raw materials -33.2 fibers -18.7 metals -40.1 A few price quotations can give an idea of the price declines for major primary products, (See table 7.) Stocks swelled in face of the emergence of produc-
here are the classical effects of uneven developmen among the various of production, a feature of all growth under there capitalist syste
TABLE VII Price Declines for Major Primary Products Highest price in 1974 Sugar in New York (U.S. cents per pound) 61 Cotton in Liverpool (") 91.5 Wool in London (pence per kilo) 294 Copper in London (E per ton) 1,000 Zinc in London (E per ton) 775 Index of the Kredietbank (Belgium) - raw materials 410.0 - agricultural products 332.8 - mineral products 523.8
Price on May 5, 1975
18
54.05
187
567
309
282.9 : -30%
214.5: -35.5%
338.9: -35.2%
57
RAW MATERIALS five overcapacity in all important sectors; producers of material after material held discussions on price reductions so as not to exacerbate the declines. The consequences of these price declines are very severe for the semicolonial countries, which hold relative hegemony only over production of basic products and whose exports rest almost exclusively on the sale of these products. The advontages that the semicolonial countries drew from the rise in the prices of raw materials during the period of upswing were on the whole not as great as the Western press tried to make out, with the exception of oil. First of all, it must be noted that many semicolonial countries are net importers of many raw materials whose prices soared in 197273. Second, close to the majority of these countries are net importers of food products. An examination of the imports of India, which does not export the leading products (apart from sisal, tea, etc.), makes explicit the effects of the price increases on this category of country:
Indian Imports (in millions of rupees) 1972/73 1973/74 1. Investment goods
Total 5,636 9,535 2. Primary products
Total 8,307 19,696 of which: Oil and oil products 2,040 5,602 Wheat 808 7,431 Fertilizers 962 1, 622 In addition, a good part of the profits obtained through the price increases of primary products were simply appropriated by the imperialist monopolies that control the production and distribution of many of these products. Finally, the share of the imperialist countries in production, transformation, and marketing in the mining and metals sector is extremely large: The colonial and semicolonial countries control only one-third of the marketing of minerals and metals taken fogether (Le Monde, April 29, 1975): 40.7% for minerals (compared with 54.4% for the imperialist countries); 30.6% for metals (compared with 65.0% for the imperialist countries). This moved one group of experts to say: "For about 90% of the inhabitants of the third world, an increase in the price of mineral raw materials entails no advantage, but on the contrary amounts to a suplementary burden, especially for the poorest of 58 them. " (Annales des mines, January 1975, quoted in Le Monde, April 25, 1975.) Nevertheless, a number of semicolonial countries did experience a growth in their currency resources and participation in world trade, and this enabled the "developing regions" to conserve their approximately 18% participation in world trade for three years in a row (18.4% in 1971, 17.5% in 1972, 17.9% in 1973). It is true that in 1974 their share rose to about 25%, but this was due in large part to oil exports. During the past eleven months the currency resources of the underdeveloped countries have diminished drastically because of the conjunction of the decline in the prices and volume of exports, which was in turn caused by the extension of the recession. Moreover, a turnabout in the terms of trade is now going on, and the underdeveloped countries that are buying machinery to modernize their production of basic products will thus automatically effect a transfer of value in favor of the imperialist countries. The projects of agricultural and mining development, which involve substantial increases in purchases of capital goods, will weigh down the import bill even further or else will be canceled. The hardest hit countries are those that depend on exporting one or two products whose price is falling. Two years ago the capitalist press was speaking of Zambia (copper) and Malaysia (rubber) as candidates for membership in the "nouveaux riches raw materials" club. But today these countries are trying to avoid suffocation. The Economist remarked in its December 28, 1974, issue: "A recession among manufacturing nations in 1975 will rebound doubly hard on the developing world: not only will their export earnings drop sharply next year (slowing their development and ability to import vital industrial goods), but their oil bill is saddling them with deficits relatively much larger than those of the rich nations." Finally, the fall in prices will bring to the surface all the differences in profitability among the extractive industries themselves. This has already happened with copper. The mines of central Africa, whose extraction and refining systems are old, operate at a cost of production that is about £75 per ton higher than that of the mines of Australia or South Africa. Will Zambia continue to produce at a loss in order to assure itself of currency? In the context of the reorganization of production and distribution generated by the raw materials boom, the imperialist monopolies have taken the offensive and will try to make gains during the re-
cession itself. For instance, "The mining companies of the West are already getting out of the developing world. America's largest company, Anaconda, has been putting its new investment almost entirely in the United States, where it can still produce copper profitably - and keep the profit. The mines that Rio Tinto Zinc now operates in South Africa, Australia, and Papua New Guinea (which would keep out of any producer cartel) were prospected mainly because the company feared nationa lisation elsewhere; and these mines are now operating more profitably than most in the traditional copper exporting countries." (The Economist, May 11, 1974) Producing at costs lower than the mines of Chile, Zaire, Zambia, or Peru, a group like Rio Tinto Zinc is now in position to break any attempt to create a single supply source by strengthening the copper cartel and to repurchase Japanese stocks that still "threaten" the market, so as to slow down falling copper prices on the London market and maintain prices at a level that is profitable for the company but dangerous for the members of the cartel. But here we are dealing with one of the characteristic features of this raw materials boom and its overturn: the attempt by producers of various basic products to develop a strategy similar to that of the O PEC (Organization of Petroleum Exporting CounCartel and recession Spurred on by the success of the oil states and the example of OPEC, many raw materials producers want either to strengthen the links in already existing producers' syndicates or to create such combines if none exist. This is the case for copper (ICCEC -Intergovernmental Committee of Copper Exporting Countries), tin, bauxite, etc. The point of departure of this strategy obviously rests on the physical dependence of the imperialist countries on the colonial and semicolonial countries. Although this physical dependence is growing, it must immediately be stressed that there is a diversity of dependence between the United States and Canada taken as a bloc on the one hand and the Common Market countries on the other hand. The U.S. -Canadian bloc commands a significant degree of independence (in terms of the relationship between production and consumption) in energy, copper, zinc, lead, iron, cotton, wool, and phosphates. On the other hand, things are different for Europe, which is more dependent in energy, copper, zinc, lead, iron, cotton, phosphates, and wool. In the United States it is especially products like bauxite, tin, manganese, chrome, and antimony that are almost totally lacking.
In addition to this dissimilitude, European and American imperialism have different ranges of investment in the "third world." American imperialism has tended to put the emphasis on investment in the extractive industries, while the European imperialist powers, especially West Germany, have directed their investment toward the transformation industries. These differences explain why, for example, Kissinger proposes a floor price for oil, because the energy reserves available for exploitation in the United States and Canada, like the planned investment in nuclear energy, could become profitable only on condition that oil prices do not fall too low! The same differences also furnish some of the elements explaining the varying attitudes that have been adopted by the competing imperialist powers in the framework of the discussions with the countries producing raw materials. Nevertheless, can these attempts to transpose the post-1971 OPEC strategy to other products succeed? Such success would appear extremely difficult, for several reasons: 1. The oil industry is strongly capitalized, but any decrease in production for other products would have very important repercussions on employment, as is the case with copper, for example. The heavily populated oil countries have already run into this difficulty themselves. The case of coffee provides an extreme example: "The world coffee trade is worth less than 10% of Arab oil exports, but nearly 20 million people in 40 different developing coun tries, more than the entire population of the Arab oil-producing states, earn their living from the coffee bean." (The Economist, May 11, 1975.) 2. The producing countries, which have pressing currency needs, will find it difficult to afford the Tuxury of introducing production restrictions of any scope, especially since in certain countries the products concerned represent nearly the totality of exports. (Copper accounts for 98% of Zambia's exports; cocoa accounts for 70% of Ghana's exports.) 3. The possibility of substituting products, while not gigantic, exists nevertheless. This is the case with aluminum, rubber, cotton, and magnesium. For example, although concentration of bauxite production would be one of the conditions favorable to the establishment of a sales cartel, the discovery of a substitute product raises a threat against any price increase that is too strong: "As always, the uncertainty is more technical than economic. For the moment, the 'H+ process' (based on the utilization of clay and shale), which has been set up by Péchiney, is 'slightly more costly' than the Bayer process discovered twenty years ago. But the cost of this technique constitutes a ceiling beyond which
59
the market econon!
is radically challenged
RAW MATERIALS the general trend will contine until the bauxite-producing countries will not be able to go without facing the substitution of clay and shale for bauxite, while at the same time, the classical mineral coming from the Caribbean or Australia will suffer the inevitable increases in transport costs." (Entreprise, June 20-26, 1975) 4. The financing of stocks is also a delicate problem. Malaysia, which produces 50% of natural crude rubber, had to advance the sum of $200 million to begin to build up a regulatory sfock. Malaysia, along with Indonesia - which can finance its stock 60 more easily because of its oil income - would have to spend $100 million to establish a stock of 300,000 tons. And that stock would not exceed 10% of the annual production of rubber in Southeast Asia. But overproduction had already hit 10% at the beginning of 1975. In the case of copper, according to the experts of the ICCEC, a regulatory stock would have to represent about 20% of annual world consumption if it was to be capable of influencing price scales in a lasting manner. Based on the annual averages for 1971, 1972, and 1973, $3,000 million would have been needed to set up such a stock at the end of 1973!
5. The diversity of producers and the organized dispersion of production effected by the imperialist monopolies also renders it arduous to transpose the OPEC strategy. This is the case, for example, for the producers of bauxite, among which Australia occupies first place (producing 14.2 million tons in 1973; Jamaica was second, with 12.8 million tons). This diversity comes to light even more strikingly during a period of recession, especially for the products that are consumed almost exclusively by the industrialized countries. It is very difficult to maintain a sales cartel under conditions of slump. All these obstacles tend to indicate that even in the most favorable sectors (bauxite, fin, copper, antimony), the formation of sales cartels as effecfive as OPEC will certainly not take place. On the other hand, the imperialist countries will seek to sef up a system of regulatory stocks within strict limits in order to guarantee a given quantity of products at a certain price. These stocks should enable them to avoid a new explosion of raw materials prices in the event of an upturn and at the same time to foresee raw materials costs in advance, which is not without interest in determining investment. The imperialist powers will try to force the issue so as to seck to obtain advantages during the present period of recession, for as The Economist has asserted, "Industrialised countries will have greater bargaining power in negotiations that start during the slump. The time for them to act may be mid-summer, when UNCTAD lays the details of its commodity stockpile programme on the table." (March 15, 1975.) With the exlension of the recession and the new furnabout in the terms of trade, the growing physical dependence of the imperialist countries on the raw materials of the third world will once again be combined with declines in the cost of financing this dependence. To be sure, relations will not be identical to those of the 1950s or 1960s, but the general tendency will persist. At least until the market economy that embodies the contradiction between use value (physical dependence) and exchange value
(unequal exchange) is radically challenged.
May 29, 1975
Footnotes:
1. According to the classifications of world trade, the term primary products includes: food products
(Food and animal products, drink and tobacco, animal and vegetable oils and fais); raw materials
(leather, crude rubber, wood, paper pulp, textile fibers, crude minerals, metal ore, raw materials of animal or vegetable origin); fuels (minerals and lubricants).
2. The Economist's index is composed and broken down as follows:
Food: total 55.6%
Internal breakdown: beef 12.2, lamb 2.8, wheat 9.8, maize 11.1, coffee 20.0, cocoa 6.3, tea 2.9, sugar 10.3, oilseed cake 6.5, oilseeds
11.8, vegetable oils 6.3.
Industrial raw materials: total 44.4%
Breakdown: Fibers - cotton 12.8, wool 13.8, jute 1.2, sisal 0.6, jute goods 2.7.
Metals - copper 39.2, lead 4.3, zinc 5.5, tin 5.6.
Others - hides 3.0, rubber 7.3, oilseeds 2.6, vegetable oils 1.4.
3. See the article "The Profits of Famine, " INPRE-
COR, No. 16/17, January 16, 1975. We have left aside the question of oil, which has been dealt with in other articles.
4. Michael Baratt-Brown, The Economics of Imperialism, Penguin, 1974.
5. Klaus Busch, Die Multinationale Konzerne: Zur
Analyse der Weltmarktbewegung des Kapitals, Suhrkampf, 1974.
61
STOP THE TRIAL
CARMENDIA!
The following appeal was issued May 23 by the comrades of the United Political Bureau of the
Liga Comunista Revolucionaria/Euzkadi ta Askatasuna-VI (LCR/ETA-VI - Revolutionary Communist League/Basque Nation and Freedom-VI), sympathizing organization of the Fourth Inter-
The Francoist dictatorship has decided to pass a death sentence against J. Antonio Garmendia, a revolutionary nationalist militant of the ETA-V, without giving any advance notice, in order to avert a national and international mobilization that could prevent the dictatorship from per-
THE TRIAL MAY TAKE PLACE DURING THE EARLY DAYS OF JUNE!
Once again, it is a farce trial, which will take place within the framework of the enormous farce that all Francoist legality represents. The only "evidence" is a military judge's "moral conviction" that the Basque militant is guilty. Apart from that, there is only Garmendia's signature on a piece of paper on which the police were able to write whatever they wanted; the signature was affixed while Garmendia lay in a coma, a result of the head injuries he suffered
There is no doubt that the dictatorship hopes that the thousands of arrests in Euzkadi after the declaration of the state of exception there will constitute a sufficient guarantee that a mass mobilization will be averted, both in the Basque country and throughout the rest of the Spanish
But the dictatorship is wrong: THE WORKING CLASS AND THE OPPRESSED PEOPLE ARE NOT
PREPARED TO LET THE DICTATORSHIP, IN ITS DEATH AGONY, CREATE NEW VICTIMS!
THERE WILL BE NO NEW EXECUTION! THERE WILL BE NO NEW SALVADOR PUIG ANTICH!
In spite of the state of exception and the terror imposed by the fascist-police gangs, Euzkadi will once again stand at the head of this battle, and the proletariat and oppressed people nation in