****** Writing in June 1975, Ernest Mandel, Marxist theoretician and a leading militant of the Fourth International, described the significance of the first generalised recession of the international capitalist economy since the end of the Second World War. still dominated by recession conditions — but with the major capitalist powers 'waiting for the upturn'. As we go into 1976 Red Weekly assesses the prospects for the international economy by publishing an adapted version of a recent lengthy article on the world economy by Ernest Mandel. The complete article is published in the latest issue of Inprecor, the fortnightly information bulletin of the United Secretariat of the Fourth International.
**** At the end of 1975 world capitalism is ***× nearly all the imperialist countries It is clear that the existence of excep tionally high excess capacity • quite simply unused production capacity - in most industries in the major capitalist countries is now the main obstacie to an upturn i capitalst productive investment.
In the United States, investigators for McGraw-Hill expect that expenditure on private investment in 1976 will grow by only 9 per cent compared with 1975, which represents a stagnant volume of investment if the expected rate of inflation for capital goods (machines and raw materials) is taken into account. In West Germany the volume of private investment still stands 6 per cent lower than the quarterly average in 1970. And for Japan, the Structural Industry Council (which conducted an enquiry of 1,866 leading firms) forecasts a 3.8 per cent decline in total private investment for the period April 1975-March Desolate As for Britain, the situation is even more desolate. During the third quarter of 1975 capital spending fell by 6 per cent in manufactur ing industry: this came on top of successive declines of 8 per cent and 7 per cent in the first two quar- an annual decline of around 11 per cent.
Under these conditions the absolutely vital machine tools industry is experiencing a dangerous recession. One of the directors of British Leyland expressed himself with brutal frankness: "Unless the present downward trend of the British machine tool industry is arrested, there could be a very real danger that British machine tools will no longer be available' (The Times, 2 December 1975).
The scope of the excess capacit which causes a decline in investment, often goes beyond anything ever seen in the past. In the Unite States, excess capacity for the who of manufacturing industry reached 35 per cent in the middle of 1975 it was still 28 per cent during Octo Overproduction Time magazine (17 November) affirms that Italian industry as a whole is working at less than 70 per cent of capacity. The 28 Nove ber issue of the Far Eastern Econo ic Review cites the same percentag for Japan. The two major Japanes steel companies, Nippon Steel and Nippon Kokan, have respectively reduced their production to 30-4 per cent and 28 percent beneath maximum capacity. (Newsweek, 17 November).
These vast amounts of unused acity demonstrate that the present crisis is a classic capitalist crisis of overproduction. Overprodiction always means that ther is too much capital to rake in the average rate of profit. There is no shortage of capital, but little invest ment because the capitalist class believe there is little to be gained from investing their money in indu try.
In other words, there is a shortage of profits. In Britain the share of profits in the economy approx imately halved in the period from the early 1950s to the early 1970s and the rate of profit before tax fell by approximately a half There will be no serious unturi