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Notes from the editors.

It's been quite a while since we last commented on the state of the economy in this space or elsewhere in the magazine. The reason is simply that nothing remarkable or that readers of MR could not have reasonably expected has been happening. The main thing to keep in mind is that the state of the economy at any time is determined by two sets of forces, the long-term or secular on the one hand and on the other the short-run or cyclical. A secular downturn began in the mid-1970s, just about two decades ago, and is still continuing, with no sign of a turnaround anywhere in sight. Its hallmark is depressed private business investment, the indispensable engine of capitalist economic growth. The cyclical component is more variegated: it includes private business investment (which always varies around its long-term trend) as well as private consumption and government spending on goods and services, the latter two variables being relatively the most sensitive to financial and fiscal considerations. Since the beginning of the secular downturn in the 1970s, the economy has experienced a cyclical expansion in the remainder of the decade, a recession in the early 1980s, recovery into the later 1980s, recession again at the turn of the decade, and most recently a relatively weak and unsteady recovery. As it happens, the last quarter of 1993 has been the strongest of the recovery so far, a fact that has given rise to a lot of politically motivated wishful thinking about the beginning of a new period in which everything is going to be swell again just like in the good old days of the big postwar capitalist boom.

The trouble with this thinking is that it treats what is essentially a passing cyclical phenomenon as though it were the beginning of a real turnaround in the underlying secular force at work, i.e., private business investment. But there is no evidence that this is so and no reason to believe that it soon will be. Excess capacity is widespread throughout the economy. The most dynamic industries--science- and technology-based--are not big users of capital. Hyperactivity in the (money) capital markets has to do with paper assets rather than real capital investment. It is hard to imagine an overall economic situation less likely to give rise to a new secular boom of the kind that powered capitalist growth in the past.

What about the cyclical upturn that, by official calculation, is now in its third year and, as already noted, reached a relative high point in the last quarter of 1993? Is there anything to suggest its future will be longer and stronger than in other recent cycles? Not really. The two major components of the latest spurt--housing and motor vehicles--have been affected by accumulating replacement needs together with a long period of declining interest rates, all typically cyclical phenomena. The stimulus from these sources may continue for a while, but there are counteracting forces coming into play that act in the opposite direction: higher taxes, a somewhat reduced deficit (mostly because of lower interest rates, hence lower payments on the public debt), and now indications that the Fed, in what is advertised as a pre-emptive strike against nonexistent inflation, is moving to raise interests rates. This, incidentally, is an interesting symptom of an important change taking place in the U.S. power structure: a continuing increase in the relative power of financial/rentier capital. All in all, there doesn't seem to be any good reason to expect this cyclical upturn to be much different from those of the recent past. Underneath, stagnation is the order of the day and seems likely to remain so for the visible future.

In the December 1993 issue of MR we reprinted the 1953 Preface to W.E.B. DuBois's Souls of Black Folk, stating that it was "absent from the subsequent editions we were able to consult." It has been brought to our attention that it did in fact appear in the 1973 Kraus-Thomson edition, edited by Herbert Aptheker.

Since it is not for us to create a plan for the future that will hold for all time, all the more surely what we contemporaries have to do is the uncompromising critical evaluation of all that exists, uncompromising in the sense that our criticism fears neither its own results nor the conflict with the powers that be.--Karl Marx
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Publication:Monthly Review
Article Type:Editorial
Geographic Code:1USA
Date:Mar 1, 1994
Previous Article:Image and Reality.
Next Article:The future in the present.

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