worldwide crisis by ERNEST MANDEL The automobile industry in the capitalist countries is now going through a real crisis of overproduction. It is not simply a recession, but a classical crisis. Both the degree and the duration of the decline in sales and production testify to this. The breadth of the crisis... During the first quarter of 1974, the figures for registration of new automobiles fell by the following percentages in comparison with the first quarter of 1973:
8% in France
18% in Sweden 14 the possibility of a radical rise in workers struggles. For this reason, it prefers to take its chances with a pseudoreformist government that will appease struggles for demands, but will throw all the weight of its policy behind boosting the profits of the large factories in which the major part of national and foreign capital is invested.
The strengthening of the state that López Michelsen has proposed serves to build a base among the petty-bourgeoisie, which has illusions in the arbitrating role that the state can play in conciliating the interests of capital and labor and in utilizing forms of intervention into certain branches of the infrastructure in which small foreign companies are interested.
The López regime is an alternative solution for the bourgeoisie aimed at increasing the cohesion among various sectors of foreign and national capital and at obtaining "popular" support from layers of the middle classes that have been heavily affected by the measures taken by the previous regimes and by the constant increases in the prices of basic necessities. The task of revolutionaries is to elaborate a policy of united front of the far-left organizations and the armed movements that will allow for the development of broad mass mobilizations against the policy of the bourgeoisie. **
22% in Italy 22% in Britain (a 26% decline for the first semester) 22.9% in Switzerland 31% in Japan 31% in West Germany The result was a considerable decline in production despite a rapid accumulation of stocks. Profits dropped even more sharply. And significant reductions in employment are inevitable. In France production of automobiles (excluding trucks) declined by 2.7% during the first quarter of 1974; in the United States it fell 28%, in Britain 26%, and in West Germany 18.3%. If production increased slightly in Italy, it is only
because this country was the only one to experience a decline in automobile production during the first quarter of 1973 as compared with the preceding year. The fall in profits was sensational. Again for the first quarter of 1974, the decreases were: 85% for General Motors, 66% for Ford, 98% for Chrysler, 58% for American Motors, 40% for Nissan, and 83% for Toyota. For the six months ending March 31, 1974, British Leyland suffered a loss (before taxes) of £16.5 million as against a profit of £22.8 million during the corresponding period of the previous year. Fiat also suffered a deficit. As for Citroen, this trust was a hair's breadth from bankruptcy. The level of employment has been seriously affected in the United States. During the first week of April 1974 some 79,000 of the 728,000 members of the United Automobile Workers were definitively laid off, while another 72, 000 were working only part time; that is, the unemployment rate was more than 20 percent. (Two-thirds of those laid off were General Motors workers.) In Europe the layoffs have been less sweeping. But there were several waves of significant partial unemployment: a three-day workweek at Fiat in Italy at the beginning of the year, 62, 000 Volkswagen workers in West Germany put on part-time unemployment in the spring. Above all, a total freeze was placed on hiring and pressure was put on older workers to retire prematurely and on other workers to quit voluntarily. And there were other ways of avoiding outright layoffs but reducing the volume of employment nevertheless. The firms whose profitability has been most gravely affected by the crisis are now preparing a new attack on employment levels. Clearly, the most serious case is that of British Ley-. land. On June 21, 1974, this firm announced an "economizing" program that involves a massive reduction in employment, especially in the Austin-Morris division, which produces cheap automobiles for mass consumption. •..And its causes The bourgeois press and the public relations specialists of the automobile industry have tried to present the current crisis of the industry as a fleeting accident provoked by the "oil crisis." There are many reasons for this attempt. First of all, the employers hope to halt the decline in sales - or at least that section of the sales decline that is attributed to "psychological reasons" -- by auto-suggestion. (In the same way
Nixon hopes to stop the recession by asserting that it doesn't exist.) Also, the importance of the automobile industry in the whole capitalist economy of the imperialist countries (and in a few semicolonial countries like Brazil and Argentina) is such that a prolonged depression in this sector would change the whole outlook for investments and the global growth rate of imperialist industry. Furthermore, a prolonged depression in the automobile industry would demonstrate the mystifying character of one of the basic axioms of contemporary bourgeois ideology, and more especially political economy: that today's "economic science" can not only assure capitalist industry of a "total demand" sufficient to avoid crises of overproduction, but can also assure each important branch of industry a "specific demand" that can guard it against significant declines in production.
But the claim that the automobile crisis results exclusively from the oil crisis does not stand up under a careful examination of the facts. The reality is completely different.
The auto crisis is developing under the impetus of three major factors: the economic recession in most of the imperialist countries; the economic effects of the increase in the price of oil; the end of the long phase of accelerated growth in the market for automobiles in Western Europe and Japan (and in several other countries as well). Thus, the "oil crisis" is but one element among others that are causing the auto crisis. Even if it were to be granted that the oil crisis triggered the auto crisis, it is scarcely enough to relegate the other, more profound, causes to the background. Moreover, the erroneous analysis of many bourgeois observers gives rise to an erroneous outlook. They were anticipating a rapid upturn in automobile sales after the end of the oil shortage (or the fear of a shortage) and after the successive increases in the price of gasoline leveled off. But there has been no upturn since the month of March 1974, when the oil shortage ended and the price of gasoline stabilized, although at a considerably higher level than before. Effects of the oil crisis" What are the real effects of the "oil crisis" on the auto crisis? The effects are exerted primarily on the costs of using a private car and on the category of privately-owned autos. First the oil shortage and then the considerable increase in gasoline prices manifestly discouraged purchases (or use, and therefore replacement) of automobiles for a whole series of buyers that may or may not be termed "marginal, " depending on what meaning is invested in this vague term. The more modest categories of automobile users (semi-skilled workers, low-paid white-collar workers, civil servants, craftsmen, small peasants, and small, nonprosperous merchants) tended to think more than they did in the past about whether they could afford to go someplace by car or whether they had to stoop to mass transit. Both for transportation to and from work and for leisure trips (weekends, parties, and so on), there was a significant increase in the use of railroads, buses, subways, and other means of transit, whereas in past decades the private car was the number one means of transit in such cases. Statistics on 1974 vacations are not yet available. But it is certain that here also utilization of private cars has been on the decline, at least in Western Europe and Japan. Further, the gasoline price increases and the legal reductions in speed limits have undercut most of the attractive power of "middle-sized" or "big" cars as opposed to compacts and "economy" cars, except for reasons of ostentation or desire for luxury. Consequently, with the exception of a few specialized brands, sales of middle-sized and big cars are going through a more than proportional decline, while things are going somewhat better for small cars. On the U.S. market, sales of small cars are declining only modestly, while those of the big gas-eaters hitherto preferred by American customers, have literally collapsed (going from 660, 000 in March
1973 to 350, 000 in March 1974!). Since the beginning of
1974, sales of small cars have for the first time surpassed sales of big cars in absolute figures.
In consequence, there has been a gradual reconversion of the four American auto trusts toward production of small cars.
American Motors, the least important of the four, had in fact carried out this reconversion even before the current crisis broke out. The three other trusts have set in motion an investment program staggered over several years.
AUTO Nevertheless, these programs are less ambitious than had been expected. Ford reduced its outlay for this program during the current year from $1, 100 million to $1,000 million. Chrysler, harder hit by the profitability crisis, reduced its program from $350 million to $265 million. Only General Motors, which was the last company to enter the small-car field, will invest more in this field this year than it did last year: $1, 300 million as opposed to $1,200 million. The reticence corresponds both to the fall in profits (and therefore in the companies' own resources for investment) and to the increase in the price of credit and the uncertainty weighing on the future of the automobile industry and therefore on its outlets. So it can be seen just how much the direct effects of the "oil crisis" on the auto industry are in reality combined with conjunctural and structural factors that are determining the evolution of the demand for private cars in the imperialist countries. Effects of the economic recession The automobile industry, like all industrial branches that produce durable consumer goods, is more vulnerable to even moderate conjunctural fluctuations than other branches of industry producing consumer goods. Obviously, the household of a factory worker or a white-collar worker can make quicker and broader reductions in its budget under "automobile" than under "food" or "clothing, " not to mention "rent" and related services like heat, electricity, gas, water, and so on. It can therefore be expected that during each economic recession there will be a decline in automobile sales that will be greater than the general reduction in production, real income., and employment. If the auto slump in countries like the United States, Japan, West Germany, and Britain has extended beyond the "oil crisis, " it is obviously because of the effects of the recession (whether real or anticipated soon). Countries that have not yet been hit by the recession, like Australia and Brazil, are not yet experiencing the auto slump, although the "oil crisis" affects them as much as it does any other countries. The measures taken to restrict credit in order to "slow down" inflation (nobody talks about, "stopping" it any more!) have contributed to reducing automobile sales in that these measures have made credit for consumption more expensive, or have even quantitatively reduced it. The effects of these measures on the demand for automobiles have been especially disastrous in Britain. The absence of a causal link with the "oil crisis" also appears in the fact that there have been analogous decreases in sales of a series of other durable consumer goods and services whose purchase declines more than proportionally in cases of recession. Here are two typical examples: * The decline in the sales of both color and black-and-white television sets in Britain (from 4.1 million sets in 1973 to 2.5 or 3 million sets anticipated for 1974). * The fall in vacation trips abroad by West German citizens, a decline estimated at 30-35% for 1974 as compared with 1973. This will have disastrous effects for the Spanish hotel industry and will most likely have similar effects in Italy and Yugoslavia. The duration of the recession is obviously not predictable. It is thus difficult to formulate predictions about the possibility of a short-term change in the automobile market. What is certain is that the economic situation is worsening in Western Europe, especially in West Germany and France, where 16 the recession is tending to define itself more clearly, as well as in the United States and Japan. For the moment, the conjuncture seems to be stagnant. It will probably be necessary to wait until September or October to see whether the generalized recession will last through the autumn, or even into the winter of 1974-75, or whether a slight upturn in the United States and Japan will counterbalance the recession in Western Europe during the second half of 1974, thus limiting the intensity of the recession. Long-term weakening of expansion Nevertheless, the conjunctural evolution, like the effects of the "oil crisis, " must be placed in a broader framework, namely the long-term development of the automobile industry. In this regard, few experts contest the fact that the rapid expansion of the auto industry during the 1950s and 1960s -one of the main stimulants of the accelerated growth of the economies of the imperialist countries during this period -- is coming to an end. The phenomenon of the saturated market, which has already made its appearance in the United States, is coming more and more to the fore in capitalist Europe and Japan. This is clearly revealed by the decline in the annual growth rates in the automobile sector. Here are the figures for the six countries that originally constituted the Common Market (West Germany, France, Italy, Belgium, the Nether lands, and Luxemburg) :
PERCENTAGE INCREASES IN AUTOMOBILE SALES
(including trucks) 1955 16.6 1956 17.6 1957 16.4 1958 15.4 1959 14.8 1960 15.1 1961 14.6 1962 15.9 1963 16.4 1964 13.9 1965 12.3 1966 10.9 1967 9.0 1968 8.2 1969 8.1 1970 7.2 1971 6.6 1972 5.3 (estimated) 1973 4.2 (estimated) From the standpoint of outlets, the saturation of the markets is explained by the fact that given the present structure of incomes, practically all households that want to buy a car and are able to do so (either on credit or on time) without disastrously eating into the parts of their incomes set aside for articles of basic necessity already own a car. Under such conditions, current production serves an almost exclusively replacement function. It tends less and less to increase the general sales of automobiles. This situation could be turned around if there were a considerable increase in the incomes of the lowest-paid layers of the laboring population or if the prices of autos were very sharply reduced. The second possibility is totally excluded in the near future. Just the opposite, nearly all trusts have
responded to the decline in sales and profits by increasing the unit sales price of their cars. Only a real technological revolution in the industry, reducing the cost of production on the order of 30 or 50 percent, could lead one or another trust to institute such a price decrease in order to radically increase its share of the market. As for the real incomes of households, inflation and recession tend to reduce them or hold them stagnant, not to increase them. After the economic upturn that will follow the current recession, inflation will continue to be exacerbated. The increase in the real income of workers households will therefore be quite modest, if it occurs at all, which is not at all certain. Under these conditions, a new rapid expansion in automobile sales is very improbable in capitalist Europe and Japan. Nor is it likely to occur in the United States, where in the past decade high auto sales have bolstered the tendency to want to acquire a second car. It is only countries like Australia and Canada that could experience a more rapid expansion for another few years, until motorization attains a saturation point comparable to that reached in the United States or Western Europe. As for semicolonial countries like Mexico and Brazil, which have in their turn been drawn inio the wave of motorization, the income structure is such that purchase of a private automobile is in practice limited to the middle classes and a very tiny layer of the labor aristocracy. The saturation point is thus reached much sooner in these countries than in the imThe bureaucratized workers states have in their turn launched a program of accelerated motorization. But these countries scarcely form a significant additional market for the automobile industry in the imperialist countries. In practice, their governments prevent imports of private cars, except in minimal proportions. If they construct or extend their own automobile industry in collaboration with the capitalist trusts, it is above all the sector that produces machines for automobile construction and not the auto industry itself that will win new outlets. To the saturation of the market for reasons relating to buying power must be added phenomena of market saturation for physical reasons. In the past twenty years neither construction of roads nor expansion of traffic and parking facilities in the cities of the imperialist countries has kept pace with automobile sales and production of private cars and trucks. The result has been growing traffic difficulties and a rapid decline in the "utility" of the private car. To drive around in a private car during the rush hours in cities like New York, London, Paris, and Tokyo has become almost impossible. Routes leading out of the great cities are becoming more and more congested during weekend hours when the weather is good and even during the annual vacation stampede. From this standpoint a modification in transportation demand is going on that is tending to boost the demand for railroads and mass transit at the expense of private automobiles, independent of the conjunctural effects of the "oil crisis" or the current reInternational competition The crisis in the automobile industry has accentuated international competition. As sales in the internal markets of most of the big imperialist countries have diminished, the "national" trusts of each of these countries have sought to increase their exports to take up the slack. It is too soon to draw a full balance sheet of this intensified competition, but up to now the following tendencies seem to be taking shape: * On the internal U.S. market, imports of European and Japanese autos have declined almost in the same proportion as total sales of autos. Foreign competitors have thus not succeeded in increasing their share of the North American market, particularly because of the massive production of American small cars and the revaluation of the Deutschemark. The Ford Pinto has become a better bargain than the Volkswagen in the United States. * In a general way, the West German auto industry, which is the biggest exporter in the world industry, seems to be hardest hit (especially in terms of the increases in the price of its exports). Exports of West German autos for the period January to April 1974 were 7.6 percent lower than for the corresponding period in 1973. Nevertheless, the share of exports in current production has increased from 58.2% to 65.3%, since sales, on the internal market have fallen more sharply than exports. * Japan is just on the heels of West Germany as an auto-exporting country. This year it may overtake West Germany. In 1973 West Germany exported 2.35 million cars and trucks, as against 2.1 million for Japan, 1.6 million for France, 1.15 million for Canada, 750,000 for Britain, and 705,000 for Italy. In 1974 German exports are declining, while Japanese exports rose 20% during the first quarter. * The French and Italian industry realized modest export gains at the beginning of 1974, due mainly to the effects of the devaluation of their currencies relative to those of a series of other European capitalist countries and the U.S. dollar. But it is not certain that the French and Italian firms will be able to preserve these gains if the recession deepens in most of the countries where it has begun already. Reduced production and profits combined with intensified competition is threatening the very existence of the least profitable firms. Up to now, it is mainly BMW, Citroën, Chrysler (including its French subsidiary, Simca), and British Leyland that seem threatened. Chrysler, which had a close brush with bankruptcy during the previous recession in the United States, is nearly running at a loss and is finding i.creasing difficulties in obtaining credit. Citroën was saved from disaster only through its merger with Peugeot. The fate of BMW and of Toyota, the financially weakest Japanese auto trust, will most likely be decided by mergers on a national scale.
But the situation of British Leyland is the most dramatic, reflecting in a striking manner the general decline of British imperialism in the international capitalist economy. British
Leyland is itself a product of a merger of all the British automobile firms that were still in business. If it has to merge to save itself now, the merger will have to be with a foreign company. In that case it would in fact be absorbed by one of its foreign competitors. Since British imperialism cannot tolerate such a possibility, it is more likely that the state will come to the aid of British Leyland by granting it massive subsidies, by taking over a minority share of the stock, or by partially nationalizing it while leaving a minority of the stock in private hands.
The duration and amplitude of the recession will determine whether other automobile trusts will also be unable to keep their heads above water and whether additional concentration, including international concentration, will take place.
17
AUTO
Diego Kivera's Portrait of Detroit Technology and private property The fact that the famous Club of Rome, which popularized the Meadows Report on the "limits of growth, " was in large part a product of the automobile trusts (especially Fiat and Volkswagen), takes on a symbolic significance in these circumstances. Clearly, it is not fortuitous that some capitalists discovered the ecological misdeeds of the growth of "their" sector just at the time that this growth was coming to an end. No one would deny that the misdeeds are real. Poisoning of the air in the big cities by automobile emissions, the large number of road accidents, and the enormous waste that results from traffic jams in the cities are but a part of the negative balance that humanity has had to pay for the so-called automobile civilization. Nevertheless, it is necessary to guard against the easy and mechanical reaction of condemning the automobile as such and of predicting its early disappearance. Such a reaction would be equally as insensitive as that of the arrogant optimism of spokesmen for the auto industry like the head of General Motors, who predicted a new "unprecedented automobile boom" for the second half of the 1970s. The two reactions are similar in that they merely extrapolate the present tendencies of development and ignore possible -or let us say inevitable -- sharp and qualitative changes. As a means of daily transportation, the individual automobile is manifestly irrational. The persistence of this irrationality is in the first place a result of private property. It is clear that the same number of persons could be transported every day by half, a third, or a fourth as many individual autos, if not by a tenth or a twentieth as many buses or minibuses, if a rational system of road transport were organized. The gains in time, costs, physical and mental health, and pollution 18 rates could be considerable. Furthermore, it is by no means demonstrated that the users of such a system would in any way suffer reductions in comfort or convenience. It is perfectly possible to conceive of a very flexible system of buses, minibuses, and taxis transporting the same number of people under maximum conditions of comfort who today use private cars for their daily transport. Urbanists and experts on transport planning are nearly unanimous in recommending this solution. If it is not applied on a grand scale -- let alone universally -- in the richest countries, it is not because it would cost too much or because consumers would reject it. It is because under the capitalist system powerful interests within the bourgeoisie are opposed to such a conversion. Moreover, the whole logic of bourgeois society always favors new solutions based on private property and on the sale of commodities rather than on those axised on the satisfaction of needs and public services, even if the latter are more rational and less costly from the standpoint of society as a whole and of the great majority of individuals. As a means of transportation driven by the internal combustion engine, the automobile is certainly not the most successful technological solution for short- and middle-range transit. Nor was it the only possible solution. If the automobile became generalized over more than half a century, it was not because of any "technological constraints, " but because of the choices made by capitalist groups at given moments on the basis of their particular interests, their respective weight, and the degree of control they had over the market and over scientific knowledge (which is to say sometimes because of their ignorance). Other forms of autos are conceivable driven by other forms of energy, above all electrical cars, which would radically reduce the damage the internal combustion engine does to the environment. A positive result of the "oil crisis" has been powerful stimulation of research into, experimentation with, and probably production of electrical cars. It is only a matter of time until mass production of such a car begins on a vast scale and it becomes competitive with the automobile powered by the internal combustion engine, even under the capitalist system.
Capitalism is condemned to death. Production for profit has no future. As for the automobile, its role is far from ended, even if it will never again regain the deified position that big capital tries to give it in past decades. It will maintain a choice position in the transportation system under socialism, in view of its greater flexibility as compared to rail transport. It will conserve that role thanks to a social, technological, and cultural revolution that will make its use rational, freeing it from the chains of private property and profit.
HOW THE RAIL STRIKE
INDIA WAS BROKEN The Indian national rail strike, which began on May 8, was officially called off by the Action Committee of the National Co-ordinating Committee for Railwaymen's Struggle (NCCRS) on May 28. The railway workers suffered a severe defeat in a long and bitter struggle that was