,! ,AM]ICAN ,ECONOMY 
,CRISIS & ,POLICY 

,PEOPLE 3 

,AU?OR 3 ,PAUL ,MATTICK 

,TEXT 3 

,S\RCE3 ,ROOT & ,BRAN*1 ,NO4 #c1 #a#i#g#a1 PP4 #a#d-#a#h4 
,TRANSCRIB$3 BY ,?OMAS ,S*MIDT2 

,S9CE CAPITALI/ ECONOMIC POLICY MU/ MAKE NO M5TION ( ! EXPLOITATION 
RELATIONS UND]LY+ ! CAPITALI/ MODE ( PRODUCTION1 ECONOMI/S & 
POLITICIANS MU/ SEEK 0SOLUTIONS0 TO ECONOMIC PROBLEMS 9 T]MS ( 
M>KET PH5OM5A4 ,IT ALL SEEMS QUITE SIMPLE4 ,! P]IODIC %ORTAGE ( PR(IT 
:I* RESULTS FROM ! LAWS ( CAPITALI/ DEVELOPM5T APPE>S ON ! M>KET AS 
A LACK ( DEM&1 :I* H9D]S ! EXPANSION ( PRODUCTION & SO ( NEW 
9VE/M5TS4 ,:5 ?IS /ATE ( AFFAIRS TAKES ON A PROTRACT$ *>ACT]1 ! 
/ATE JUMPS 9 TO 9CREASE DEM& ?R\< PUBLIC SP5D+4 

,?IS 9DE$ REVIVES PRODUCTION1 BUT HAS NO EFFECT ON ! PR(IT SITUATION 
ITSELF4 ,GOODS PRODUC$ 9 ! 0PUBLIC0 SECTOR >E PAID = BY ! 
GOV]NM5T ) FUNDS TAX$ OR BORR[$ FROM ! PRIVATE SECTOR2 SO ?AT :AT 
APPE> AS NEW PR(ITS = ! BUS9ESSES ) GOV]NM5T CONTRACTS >E 
SUBTRACT$ FROM ! PR(ITS ALREADY REALIZ$ ON ! PRIVATE M>KET BY O!R 
BUS9ESSES4.<#a.> ,NEV]!LESS1 ! 
ECONOMI/S MEASURE CAPITALI/ 0PROGRESS0 BY ! 9CREASE ( 
PRODUCTION AS A :OLE1 LUMP+ TOGE!R PR(ITABLE & UNPR(ITABLE PRODUCTION4 
,AL?\< ONLY ! PR(ITABLE P>T ( PRODUCTION MAKES POSSIBLE ! ACCUMULATION 
( ADDITIONAL CAPITAL1 GR[+ TOTAL PRODUCTION SIMULATES ! CONDITIONS ( A 
G5]AL UPSW+4 ,! CONDITIONS EXP]I5C$ S9CE ! SECOND WORLD W> CAN ?US 
BE CELEBRAT$ AS A BOOM1 & TAK5 AS PRO( ?AT CAPITALISM HAS SUCCE$$ 9 
ABOLI%+ ! CRISIS CYCLE ?R\< /ATE 9T]V5TIONS 9 ! ECONOMY4 

,?IS OPTIMISM WAS TO AN EXT5T BORNE \T BY ! FACTS1 ?ANKS TO A RAPID 
RISE 9 ! PRODUCTIVITY ( LABOR RESULT+ FROM ! EXT5D$ APPLICATION ( 
SCI5CE TO TE*NIQUE DUR+ & AFT] ! W>4 ,H[EV]1 UNPR(ITABLE PRODUCTION 
HAS GR[N MORE QUICKLY ?AN PR(ITABLE4 ,! DIV]SION ( PR(ITS TO ! =M] 
HAS L$ TO A FUR!R DECL9E 9 ACCUMULATION1 & ! 0SOLUTION0 TO 
?IS PROBLEM IS N[ 9 TURN S\<T 9 A RE/RICTION ( PUBLIC EXP5DITURES4 ,! 
9CREAS$ PRODUCTION BAS$ ON GOV]NM5TAL DEFICIT F9ANC+ :I* IS1 ON ! 
ONE H&1 HELD TO BE A SOLUTION TO CRISIS1 IS ON ! O!R1 ALSO HELD 
RESPONSIBLE = A CONT9U+ CRISIS SITUATION1 P]CEIV$ 9 ! =M ( GR[+ 
9FLATION4 

,! B\RGEOIS ECONOMI/S CANNOT UND]/& !IR [N ECONOMY4 ,JU/ AS !Y 
SEE 9SUFFICI5T DEM& AS ! CAUSE ( /AGNATION1 !Y SEE 9FLATION AS ! 
RESULT ( AN 9CREAS$ DEM&1 EFFECT$ BY ! /ATE-9DUC$ PRODUCTION1 
MEET+ A SUPPLY :I* O/5SIBLY HAS NOT GR[N4 ,PRICES RISE1 IT IS SAID1 
BECAUSE TOO MU* MONEY SEEKS TOO FEW GOODS4 ,IT FOLL[S ?AT A DECL9E 9 DEM& 
?R\< ! RE/RICTION ( PUBLIC SP5D+ WILL 5D ! 9FLATION1 IF AT ! 
CO/ ( GR[+ UNEMPLOYM5T4 ,IF PUBLIC SP5D+ CANNOT BE R$UC$1 DEM& = 
NEW PRIVATE CAPITAL MU/ BE DIM9I%$ ?R\< HI<] 9T]E/ RATES1 :I* 
ALSO BR+S UNEMPLOYM5T4 ,NO?+ CAN BE DONE AB\T ?IS4 ,= UND] 
TODAY'S CONDITIONS !RE IS ONLY ! *OICE BETWE5 9FLATION & 
UNEMPLOYM5T4 ,TO BE SURE A M>KET EQUILIBRIUM C\LD BE PRODUC$ ?R\< A 
G5]AL R$UCTION ( WAGES & A FUR!R 9CREASE 9 LABOR PRODUCTIVITY4 ,BUT 
?IS SOLUTION IS BLOCK$ BY ! WAGES POLICY ( ! TRADE UNIONS & ! PRICES 
POLICY ( ! MONOPOLIES2 SU* A SOLUTION W\LD REQUIRE BR++ PRICES & 
WAGES UND] GOV]NM5T CONTROL4 

,! FACTS1 H[EV]1 CONTRADICT SU* EXPLANATIONS4 ,?AT PRICES >E NOT 
DET]M9$ BY IMPOSSIBLY HI< LABOR CO/S IS %[N BY ! FACT ?AT DESPITE 
9CREAS+ PRODUCTIVITY WORK]S' REAL WAGES HAVE NOT RIS5 S9CE #a#i#f#g4 
,?AT ! PROBLEM IS NOT ONE ( AN EXCESSIVE DEM& IS IMPLICIT 9 ! FACT ?AT 
ALMO/ A F\R? ( ,AM]ICAN PRODUCTIVE CAPACITY LIES UNUS$4 7,IF MORE GOODS 
>5'T PRODUC$ IT'S BECAUSE !Y C\LDN'T BE PR(ITABLY 
SOLD47 ,SUPPLY HAS EXCE$$ ,DEM& & NEV]!LESS PRICES HAVE RIS5 
YE>LY BY >\ND #g4#b.04 ,! DEFLATIONI/ POLICY ( ! LA/ TWO YE>S HAS NOT 
AFFECT$ ?IS SITUATION 9 ! LEA/1 ?\< HOPE SPR+S ET]NAL ?AT IT WILL 
SL[ ! TEMPO ( 9FLATION4 ,9 REALITY SUPPLY & DEM& HAVE NO?+ TO DO 
) ! 9FLATION1 JU/ AS MONOPOLI/IC PRICE & WAGE POLICIES >E NOT CAUSES 
( ! 9FLATION BUT ITS RESULTS4 

,9FLATION & DEFLATION HAVE ALWAYS BE5 =C$ ON CAPITAL AS MEANS BY :I* 
WORK]S' WAGES MAY BE ADJU/$ TO MEET PR(IT REQUIREM5TS4 ,! 
CAPITALI/ IDEAL IS /ABILITY2 ?IS1 H[EV]1 COMES 9TO CONFLICT ) ! 
NECESSITIES ( ACCUMULATION1 SO ?AT CAPITALISM DEVELOPS ?R\< A CRISIS 
CYCLE4 ,UP TO ! SECOND WORLD W> CAPITALI/ CRISES W]E PR9CIPALLY 
*>ACT]IZ$ BY DEFLATION3 PRODUCTION W\LD BE CURTAIL$1 WORK]S FIR$1 WAGES 
CUT1 CAPITAL VALUES DE/ROY$1 & PRICES L[]$4 ,?R\< ?IS PROCESS ( 
DECL9E & RU9 A NEW BALANCE W\LD BE /RUCK BETWE5 ! PR(IT REQUIREM5TS 
( ! SURVIV+ 7& N[ MORE HI<LY CONC5TRAT$7 CAPITAL & ! ACTUAL 
PRODUCTION4 ,! 9CREAS+ 9T5SITY ( !SE CRISES L$ TO ATTEMPTS TO 
NEUTRALIZE !M BY MEANS ( 9FLATION4 ,) 9FLATION1 PRICES CAN BE MADE TO 
RISE FA/] ?AN WAGES4 ,?IS R$UCES LABOR'S %>E ( ! SOCIAL PRODUCT 
& SO AUGM5TS PR(ITS & FUR!RS CAPITAL ACCUMULATION4 

,) ! GR[? ( ! PUBLIC SECTOR 9FLATION ACQUIRES ANO!R ROLE3 AS ! 
MEANS BY :I* ! NON-PR(ITABLE *>ACT] ( GOV]NM5T-9DUC$ PRODUCTION 
F9DS P>TIAL COMP5SATION 9 HI<] PRICES = GOODS PRODUC$ 9 ! PRIVATE 
SECTOR4 ,! UNPRODUCTIVE EXP5DITURES ( ! /ATE >E F9ANC$ 9 P>T ?R\< 
LOANS & 9 P>T ?R\< TAXES4 ,! GOV]NM5T MONEY- & CR$IT-EXPANSION 9 
ITSELF IMPLIES RIS+ COMMODITY PRICES & ! DEPRECIATION ( MONEY4 ,AS ! 
CAPITALI/S SEE IT1 LACK ( PR(IT D]IVES ON ! ONE H& FROM EXI/+ WAGE 
LEVELS & ON ! O!R FROM ! IMPOSITION ( TAXES ON CAPITAL4 ,! BURD5 ( 
UNPR(ITABLE ON PR(ITABLE PRODUCTION1 !N1 APPE>S TO ! 9DIVIDUAL 
CAPITALI/ AS A DECREASE 9 HIS E>N+S1 :I* HE SEEKS TO (FSET BY RAIS+ 
HIS PRICES4 ,:AT IS REALLY HAPP5+ IS ?AT TOTAL PRODUCTION IS GR[+ FA/] 
?AN TOTAL PR(IT2 ?IS %[S UP 9 ! FALL ( ! AV]AGE RATE ( PR(IT4 
,UND] !SE CONDITIONS1 A MONOPOLI/IC PRICE POLICY SECURES ! NE$$ PR(IT 
AT ! EXP5SE ( COMPETITIVE CAPITALS4 7,ITS ABILITY TO DO ?IS MU/ H[EV] 
DISAPPE> 9 ! C\RSE ( TIME AS TOTAL PR(ITS CONT9UE TO %R9K47 ,! 
WORK]S1 F9ALLY1 ONLY TRY TO ADJU/ !IR WAGES TO ! HI<] PRICES4 

,IF PRIVATE CAPITAL DOES NOT SUCCE$ 9 \T/RIPP+ ! EXPANSION ( ! 
UNPR(ITABLE /ATE SECTOR ?R\< A RELATIVELY FA/] PRIVATE CAPITAL 
ACCUMULATION1 !N :AT LIES BEH9D ! CONT9U+ 9FLATION>Y TR5D IS ! 
SL[ DECL9E ( ! PR(IT-ORI5T$ M>KET ECONOMY4 ,9 ! ABS5CE ( AN 
ACCEL]AT$ CAPITAL ACCUMULATION1 A R5EW$ DEFLATION SEEMS REQUIR$ AS ! 
BASIS = A NEW PROSP]ITY4 ,! NOVELTY ( ! PRES5T SITUATION LIES 9 ! 
FACT ?AT DEFLATION & 9FLATION >E BE+ APPLI$ AT ! SAME TIME4 ,HI<] 
PRICES ACCOMPANY DIM9I%+ PRODUCTION1 ! APPE>ANCE ( PROSP]ITY ?AT ( 
CRISIS4 ,?IS D\BLE ATTACK ON ! EXI/+ WAGE & WORK+ CONDITIONS 
EXPRESSES ,AM]ICAN CAPITAL'S NE$ = ACCEL]AT$ ACCUMULATION )9 ITS 
[N BORD]S & 9 ! FRAMEWORK ( ! WORLD ECONOMY4 ,! %>P5$ 
9T]NATIONAL COMPETITION1 9CLUD+ ! IMP]IALI/ POLICY1 REQUIRES AS BASIS 
! GREAT] EXPLOITATION ( WORK]S 9 ?IS C\NTRY4 

,S9CE ! CAPITALI/ /ATE IS NOT TO COMPETE 9 ! M>KET ) ! PRIVATE 
CAPITALI/S IT S]VES1 ITS CONTRIBUTION TO PRODUCTION MU/ TAKE ! =M ( 
PUBLIC SP5D+ :I* IS USEFUL TO CAPITAL4 ,?IS MEANS FIR/ ( ALL PAY+ ! 
EXP5SES ( IMP]IALI/ P[] POLITICS1 :I* WORKS 9 ! BE/ 9T]E/S ( 
PRIVATE CAPITAL4 ,! CO/S 9VOLV$ CAN BE CONSID]$ A K9D ( 0SOCIAL 
9VE/M5T10 :I* MAY OP5 UP NEW PR(IT POSSIBILITIES OR KEEP EXI/+ 
ONES SAFE4 ,IT MU/ BE REMEMB]$ ?AT ,AM]ICA HAS ?R\< TWO WORLD W>S BECOME 
! /RONGE/ IMP]IALI/ P[]4 ,AM]ICAN CAPITAL HAS TO A GREAT EXT5T 
REPLAC$ ,EUROPEAN CAPITAL 9 ,CANADA & ,S\? ,AM]ICA1 MADE L>GE 9VE/M5TS 
9 NE>LY ALL ,EUROPEAN C\NTRIES1 & BR\<T COLONIES =M]LY UND] ,EUROPEAN 
CONTROL UND] ITS [N4 ,! OIL ( ! ,MIDDLE ,EA/ IS N[ = ! MO/ P>T 9 
,AM]ICAN H&S1 & 9 ,S,E ,ASIA ,AM]ICAN CAPITAL IS TRY+ TO W9 SUPREMACY OV] 
?IS >EA ( GREAT PROMISE4 ,)\T IMP]IALI/ COMPETITION ,AM]ICA W\LD NOT 
HAVE BECOME :AT IT IS TODAY4 ,CAPITAL'S NE$ TO EXP& MAKES IMP]IALISM 
AS NECESS>Y AS IT IS DESIR\S1 & ! P[] ALREADY WON DET]M9ES ! DEGREE 
( IMP]IALI/ AGGRESSIV5ESS4 

,P,R,O,B,L,E,M,S ,( ,I,M,P,],I,A,L,I,S,M 

,TO BE SURE1 ! IMP]IALI/ POLICY CONTA9S ITS [N CONTRADICTIONS1 :I* 9 
! 5D CAN BE TRAC$ BACK TO ?OSE ( CAPITALI/ PRODUCTION4 ,:ILE IMP]IALISM 
IS A NECESSITY1 IT IS ALSO A DANG] :I* CAN LEAD TO DEEP] ECONOMIC DISORD]4 
,PUBLIC SP5D+ CAN SOMEH[ BE CONTROLL$ )9 A NATIONAL FRAMEWORK2 ?IS IS 
NO LONG] POSSIBLE 9 ! CASE ( W>1 S9CE ! 5EMY HAS A %>E 9 ! 
DECISION-MAK+4 ,9 ! GREAT W>S ( ! PA/ EV]Y?+1 SO TO SPEAK1 WAS AT 
/AKE2 !Y 5D$ AFT] A C\PLE ( YE>S ) ! DE/RUCTION ( ONE SIDE & 
! VICTORY ( ! O!R1 P]MITT+ RE>RANGEM5TS ( 9T]NATIONAL ECONOMIC 
& POLITICAL P[]4 ,9 ! ]A ( ! ATOMIC BOMB1 H[EV]1 ! IMP]IALI/ 
P[]S !MSELVES DRAW BACK 9 FRI<T FROM SU* A W>1 ) ! RESULT ?AT 
!IR ACTUAL W> ACTIVITIES ?REAT5 TO TAKE ON A P]MAN5T *>ACT]1 & 
!RE=E YIELD NO VISIBLE FRUITS4 ,! ,AM]ICAN W> 9 ,9DO*9A HAS L$ TO ! 
DISAPPO9TM5T ( IMP]IALI/ EXPECTATIONS4 ,9/EAD ( CREAT+ POSSIBILITIES 
= FUR!R EXPANSION IT HAS ONLY DEEP5$ ! DIFFICULTIES ( PR(IT 
PRODUCTION & HAS 5L>G$ PUBLIC EXP5DITURES4 

,S9CE ! 9DIVIDUAL CORPORATIONS DO NOT P>TICIPATE EQUALLY 9 ! 
/ATE-CONTROLL$ PRODUCTION1 ONE P>T ( CAPITAL SUBSIDIZES ANO!R P>T4 ,! 
CAPITALS :I* DO NOT PR(IT FROM ! W> TURN1 IF NOT ON IDEOLOGICAL !N ON 
ECONOMIC GR\NDS1 AGA9/ ! APP>5TLY UNSUCCESSFUL W> POLICY4 ,S9CE ! W> 
9VOLVES CONT9U+ 9FLATION1 A P>T ( ! MIDDLE CLASS HAS ALSO LO/ 
9T]E/ 9 IT4 ,! WORK]S HAVE UP TO N[ BE5 ! LEA/ OPPOS$ TO IT1 
P]HAPS S9CE MANY FE> ?AT !IR JOBS DEP5D ON W> & >MAM5TS4 ,OBVI\SLY 
OPPOSITION TO OR ACCEPTANCE ( ! W> >E NOT DET]M9$ ONLY BY ECONOMIC 
MOTIVES1 BUT SU* CONSID]ATIONS >E B\ND TO GIVE ONE ATTITUDE OR ! O!R 
P>TICUL>LY EXPRESSIVE =CE4 ,AT ANY RATE A GR[+ W>-WE>9ESS IS 
DEVELOP+ :I* UND] C]TA9 CIRCUM/ANCES CAN BE DANG]\S = ! 
IMP]IALI/ POLICY4 

,IT W\LD H[EV] BE 9CORRECT TO TRACE ,AM]ICA'S ECONOMIC DIFFICULTIES 
EXCLUSIVELY BACK TO ! W> 9 ,9DO*9A4 ,!Y >E DUE1 AS PO9T$ \T ABOVE1 
TO A T5D5CY TO CRISIS 9H]5T 9 ! CAPITALI/ MODE ( PRODUCTION & 
RELATIVELY 9DEP5D5T ( ?IS W>4 ,! SUCCESS A*IEV$ ?R\< ! ,SECOND 
,WORLD ,W> IS ALREADY A ?+ ( ! PA/4 ,! CAPITAL 9CREAS$ ?R\< ?IS 
SUCCESS N[ REQUIRES A CORRESPOND+LY GREAT] MASS ( PR(IT 9 ORD] TO 
CONT9UE TO EXP& AT ! SAME TEMPO4 ,?US YE/]DAY'S SUCCESS ITSELF 
BECOMES TOMORR['S OB/ACLE4 ,:5 ! MASS ( PR(IT ADEQUATE TO ! 
EXPANSION ( ! EXI/+ CAPITAL CAN NO LONG] BE OBTA9$ EXPANSION 
TRANS=MS ITSELF 9TO /AGNATION4 ,?AT ! GA9S MADE ?R\< ! ,WORLD ,W> 
& ITS AFT]MA? >E NOT SUFFICI5T TO SOLVE ! ACCUMULATION PROBLEM ( 
,AM]ICAN CAPITAL IS VISIBLE 9 ! V]Y FACT ?AT IT HAS BE5 NECESS>Y 
?R\<\T ! :OLE PO/W> P]IOD TO W>D (F UNEMPLOYM5T ?R\< GR[+ 
PUBLIC EXP5DITURES4 

,S9CE ! CAPITALI/ ECONOMY IS NOT C5TRALLY COORD9AT$1 IT IS NATURALLY 
UNABLE TO FRAME POLICIES TO CONTROL ITS DEVELOPM5T3 TO DECIDE AT ONE TIME ON A 
RIS+ & AT ANO!R ON A DECL9+ /ATE ( BUS9ESS4 ,RA!R1 PRODUCTION 
EXP&S :5 PR(ITS GR[1 & CONTRACTS :5 PR(ITS %R9K4 ,:5 WE SPEAK ( 
ECONOMIC POLICY WE REF] ONLY TO MEASURES TAK5 BY ! /ATE TO 9FLU5CE ! 
ECONOMY 9 ONE DIRECTION OR ANO!R1 )9 ! LIMITS IMPOS$ BY ! CYCLICAL 
NATURE ( CAPITALI/ DEVELOPM5T4 ,! /ATE CAN USE ! TAX SY/EM1 /ATE 
CR$IT1 & CONTROL ( ! MONEY SUPPLY TO AFFECT BUS9ESS CONDITIONS4 ,?R\< 
! SC>CITY ( MONEY & ! RISE 9 ! 9T]E/ RATE ?AT GOES ) IT 
PRODUCTION & 9VE/M5TS >E SL[$ D[N4 ,! SAME 5D IS ACCOMPLI%$ 
?R\< ! RAIS+ ( DIRECT OR 9DIRECT TAXES ON CAPITAL4 ,) ! LIMITATION 
( PRODUCTION 9 G5]AL1 ! PR(ITABILITY ( WEAK] CAPITAL IS ESPECIALLY 
L[]$1 & ! RESULT+ RE/RICTIONS 9 BUS9ESS ACTIVITY & BANKRUPTCIES 
PRODUCE UNEMPLOYM5T :I* IS NO LONG] ABSORB$ BY ADDITIONAL PUBLIC 
EXP5DITURE4 ,! F9AL AIM ( ! :OLE PROCESS IS ALSO ! PRIM>Y GOAL ( ALL 
CAPITALI/ PRODUCTION1 NAMELY ! 9CREASE ( PR(ITS1 9 ORD] TO A*IEVE A 
NEW PROSP]ITY ON ! BASIS ( A *ANG$ CAPITAL /RUCTURE4 

,! DEFLATION>Y C\RSE 9TRODUC$ BY ! ,NIXON ADM9I/RATION WAS 9 ?IS 
REG>D SUCCESSFUL4 ,ACCORD+ TO ,>?UR ,F4 ,BURNS1 HEAD ( ! ,F$]AL ,RES]VE 
,SY/EM1 

,R$UCTIONS 9 EMPLOYM5T HAVE OCCURR$ AMONG ALL CLASSES ( 
WORK]S - BLUE COLL>1 :ITE COLL>1 & PR(ESSIONAL WORK]S ALIKE4 
,9DE$1 EMPLOYM5T ( SO-CALL$ NON-PRODUCTION WORK]S 9 MANUFACTUR+ HAS 
%[N A DECL9E S9CE ,M>* ?AT IS UNP>ALLEL$ 9 ! PO/W> P]IOD4 

,BECAUSE ( !SE VIGOR\S EF=TS TO CUT CO/S1 ! GR[? 
( PRODUCTIVITY HAS RESUM$1 AFT] TWO YE>S ( /AGNATION4 ,9 ! SECOND 
QU>T] ( ?IS YE>1 \TPUT P] MAN-H\R 9 ! PRIVATE NONF>M ECONOMY ROSE 
AT A #d P] C5T ANNUAL RATE1 & ! RATE ADVANC$ TO #e P] C5T 9 ! ?IRD 
QU>T]4 ,!SE PRODUCTIVITY GA9S HAVE S]V$ AS A %>P BRAKE ON ! RISE 9 
UNIT LABOR CO/S1 DESPITE RAPID 9CREASES 9 WAGE RATES4 .<,NEW ,YORK 
,TIMES1 ,DEC4 #h1 #a#i#g.> 

,AL?\< IT HAS ESCAP$ ?IS EXP]T ?AT REAL WAGES ALREADY CEAS$ TO RISE 
S9CE #a#i#f#g1 IT CANNOT BE D\BT$ ?AT UNEMPLOYM5T1 :I* ACCORD+ TO (FICIAL 
DATA AFFECT$ #f.0 ( ALL WAGE WORK]S AT ! 5D ( #a#i#g1 MADE POSSIBLE GREAT] 
EXPLOITATION & L[]$ PRODUCTION CO/S4 ,BUT ?IS CO/-CUTT+ HAS HAD LITTLE 
EFFECT ON ! CONT9U+ RISE 9 PRICES4 

,NIXON'S POLICY WAS ?US A 0DISAPPO9TM5T0 :ILE IT 9DE$ 
SL[$ ! PACE ( ! ECONOMY1 IT DID NOT 5D 9FLATION4 ,9FLATION )\T 
UNEMPLOYM5T1 IT IS N[ SAID1 HAS ONLY GIV5 WAY TO 9FLATION ) 
UNEMPLOYM5T4 ,BUT CAPITAL MU/ MAKE PR(ITS 9 ALL SITUATIONS1 & ?AT ( 
9FLATION ) UNEMPLOYM5T SUITS IT WELL4 ,SOLOMON ,FABRICANT1 ANO!R EXP]T1 
DREW !SE CONCLUSIONS3 

,9 FACT1 TO HAVE MA9TA9$ AN 9FLATION>Y POLICY 9 #aifi 
W\LD1 ,I BELIEVE1 HAVE PO/PON$ ! RECESSION ONLY AT ! CO/ ( A F> WORSE 
RECESSION LAT]1 :5 ! RATE ( 9FLATION HAD ACCEL]AT$ TO AN ALTOGE!R 
9TOL]ABLE LEVEL4 .<,NEW ,YORK ,TIMES1 ,NOV4 #h1 #a#i#g.> 

,! 9T]RUPTION ( ! 9FLATION>Y TR5D APPE>S TO BE NOT ONLY A 
NATIONAL2 BUT ALSO AN 9T]NATIONAL NECESSITY1 S9CE ! ,AM]ICAN SITUATION IS 
CLOSELY B\ND TO ?AT ( ! WORLD ECONOMY4 ,! DOLL> IS A RES]VE CURR5CY4 
,ON ITS /ABILITY HANGS ?AT ( ! 9T]NATIONAL CURR5CY SY/EM1 & SO ?AT 
( ! WORLD M>KET4 ,9T]NATIONAL AGREEM5TS SET ! RELATIONS ( O!R 
CURR5CIES TO ! DOLL>1 :I* ITSELF IS - AT LEA/ !ORETICALLY 
- BAS$ ON A FIX$ GOLD PRICE4 ,DUR+ ! LA/ T5 YE>S1 ! BUY+ 
P[] ( ! DOLL> HAS FALL5 BY MORE ?AN ONE F\R?4 ,) ?IS ! DOLL> 
RES]VES ( O!R C\NTRIES HAVE ALSO DEPRECIAT$1 & ! PREF]5CE = 
EX*ANG+ DOLL>S = GOLD HAS RIS54 ,! CON/ANTLY 9CREAS+ LOSS ( ITS 
GOLD BACK+ MAKES ! DOLL> CONT9UALLY MORE PROBLEMATIC AS WORLD MONEY & 
RES]VE CURR5CY1 & ) IT ! WORLD'S MONEY SY/EM4 ,?US1 :ILE ! 
DEPRECIATION ( ! DOLL> MAKES 

= HI<] PR(ITABILITY 9 SO F> AS PRICES RISE FA/] ?AN WAGES1 IT 
T5DS TO UND]M9E ! EXI/+ 9T]NATIONAL MONEY SY/EM1 :I* RE/S ON ! 
P>ITY ( ! DOLL> ) O!R CURR5CIES4 ,A GREAT] EFFICI5CY 9 
9T]NATIONAL COMPETITION HAS UP TO N[ GRANT$ ,AM]ICAN CAPITAL A POSITIVE 
BALANCE ( TRADE1 :I* H[EV] HAS BE5 ACCOMPANI$ BY A NEGATIVE BALANCE ( 
PAYM5TS BECAUSE ( GREAT CAPITAL EXPORTS & ! W> 9 ,9DO*9A4 ,! DOLL>S 
SP5T BY ! GOV]NM5T F\ND !IR WAY ABROAD1 S9CE PR(ITS PROMIS$ TO BE 
GREAT] !RE ?AN 9 ,AM]ICA1 & AN 9CREAS+ P>T ( ! WORLD ECONOMY WAS 
BR\<T UND] ! CONTROL ( ,AM]ICAN EXPLOITATION4 ,! ACCEL]ATION ( 
9T]NATIONAL ECONOMIC ACTIVITY WAS ?US 9 P>T TI$ TO ,AM]ICA'S 
9FLATION>Y POLICY & = A LONG TIME MET ) NO S]I\S OPPOSITION4 ,BUT 
) ! 9CREAS+ COMPETITIVE CAPABILITY ( ,EUROPEAN & ,JAPANESE CAPITAL1 
!SE C\NTRIES TURN$ AGA9/ ! ,AM]ICAN CAPITAL EXPORT ADVANC$ BY 
9FLATION>Y MEANS4 ,IT IS NOT TO BE EXPECT$ ?AT !SE C\NTRIES WILL =EV] 
SUBMIT !IR [N CAPITALI/ 9T]E/S TO ! 9FLATION>Y NECESSITIES ( 
,AM]ICA1 JU/ 9 ORD] TO PRES]VE ! DOLL> /&>D4 

,AT ALL EV5TS1 ! ACCEL]AT+ 9FLATION1 NATIONAL & 9T]NATIONAL1 
APPE>S TO SLIP FROM ! CONTROL ( ! ,AM]ICAN REGIME & TO H>M CAPITAL 
MORE ?AN PR(IT IT4 ,9 ADDITION TO DE- & REEVALUATIONS ( O!R CURR5CIES1 
IT HAS =C$ AN 9T]NATIONAL 9FLATION4 ,?IS HAS UND]M9$ ! 9T]NATIONAL 
AGREEM5TS REA*$ ANYWAY ONLY ) DIFFICULTY1 & PO9TS TO A G5]AL 
F9ANCIAL CRISES4.<#b.> ,9 ADDITION ! 
RAPIDLY CLIMB+ DOLL> PRICES DECREASE ! 9T]NATIONAL COMPETITIVE ABILITY 
( ,AM]ICAN CAPITAL & ITS COMMODITY EXPORTS HAVE FALL5 9 RELATION%IP TO 
IMPORTS4 ,BETWE5 #aifb & #aifh ,AM]ICAN EXPORTS GREW FROM @s#b#a4#d BILLION TO 
@s#c#d4#b BILLION4 ,9 ! SAME P]IOD H[EV]1 IMPORTS CLIMB$ FROM #a#f4#d TO #c#b4#d 
BILLION DOLL>S1 SO ?AT ! POSITIVE BALANCE ( TRADE WAS RAPIDLY 
DISAPPE>+4 ,?AT IT /ILL EXI/S TO A SMALL DEGREE IS DUE NOT TO ! 
COMMODITY EX*ANGE BETWE5 ,EUROPE & ,AM]ICA BUT TO ?AT BETWE5 ,AM]ICA & 
! UND]DEVELOP$ C\NTRIES4 ,) ! DISAPPE>ANCE ( ! TRADE SURPLUS1 ! 
PRESSURE IS ON ! PAYM5TS BALANCE ?R\< GREAT] CAPITAL EXPORTS & ! 
CO/S ( IMP]IALISM CONT9U$ TO GR[1 & ?US CONTRIBUT$ TO ! DECISION TO 
HALT ! 9FLATION>Y TR5D4 

,?IS DECISION CAME ! MORE EASILY AS ! W> SITUATIONS 9 ,9DO*9A & 9 
! ,MIDDLE ,EA/ HAD SEEM+LY LO/ MU* ( !IR M5ACE1 ALL[+ ,AM]ICA TO 
/ABILIZE ! CO/S 9VOLV$4 ,! TEMPOR>Y LIMITATION ( CAPITAL EXPORTS POSES 
NO GREAT PROBLEMS = ! CAPITAL ALREADY 9VE/$1 S9CE ! LATT] CAN N[ 
MAKE USE ( A NEWLY DEVELOP$ ,EUROPEAN CAPITAL M>KET TO F9D FUNDS = FUR!R 
GR[?4 ,AN >TIFICIAL RES]VE =C$ ON ! ,9T]NATIONAL ,MONET>Y ,FUND1 ! 
SO-CALL$ ,PAP] ,GOLD1 S]VES AS BACKUP TO ! ,AM]ICAN GOLD RES]VES1 & 
RESUM$ ,EUROPEAN CAPITAL EXPORTS TO ,AM]ICA AID ! PAYM5TS BALANCE4 ,9 ! 
BREA?+ SPACE PRODUC$ BY ?IS CONJUNCTION ( FACTORS IT APPE>$ QUITE 
POSSIBLE TO BRAKE ! 9FLATION4 ,! SOCIAL CONSEQU5CES - SU* AS 
UNEMPLOYM5T - WILL BE PUT UP ) AS A NECESS>Y PRICE TO PAY 9 ORD] 
TO PU% =W>D FROM ! 9FLATION>Y TO A MORE /ABLE =M ( CAPITAL 
PRODUCTION4 

,P,R,O,D,U,C,T,I,O,N ,G,E,S ,D,[,N 

,?IS APPE>S TO BE AN ILLUSION4 ,9DE$1 TOTAL PRODUCTION FELL 9 #aig = 
! FIR/ TIME S9CE #aieh - BUT )\T *ANGE 9 ! PRICE LEVEL4 ,BY ! 
5D ( ! YE> !RE W]E #e MILLION UNEMPLOY$ & NE>LY #ae MILLION ON 
WELF>E4 ,EV]Y WEEK >\ND #c FIRMS & MORE ?AN #c1 9DEP5D5T 
BUS9ESSM5 DECL>E BANKRUPTCY4 ,! 9CREAS+ PRODUCTIVITY ( LABOR HAS 
C]TA9LY IMPROV$ PR(ITABILITY1 BUT NOT BY 5\< TO MAKE NEW 9VE/M5TS 
ATTRACTIVE4 ,ORD]S 9 ! MA*9E TOOL 9DU/RY >E L[] TODAY ?AN !Y HAVE 
BE5 = TWELVE YE>S4 ,! 0CALCULAT$0 R$UCTION ( ECONOMIC 
ACTIVITY HAS TURN$ 9TO A G5]AL DECL9E1 ! SOCIAL CONSEQU5CES ( :I* 
CANNOT BE =ESE54 ,! ,NIXON ADM9I/RATION'S FIR/ RESPONSE WAS AN 
ATTEMPT TO PU% ! ECONOMY UP AGA9 BY MEANS ( A GREAT] R$UCTION ( TAXES 
ON CAPITAL1 & A L[]+ ( ! 9T]E/ RATE2 BUT IT WAS QUICKLY COMPELL$ 
TO RETURN TO ! 9FLATION>Y TACTICS ( ! PA/4 ,= #aiga A DEFICIT ( 
BETWE5 #ae & #b BILLION DOLL>S & A CORRESPOND+ EXPANSION ( ! MONEY 
SUPPLY IS =ESE5 9 ORD] TO RETURN TO FULL EMPLOYM5T4 

,TO BE SURE1 0FULL EMPLOYM5T0 IS DEF9$ AS ALL[+ UP TO #d.0 
UNEMPLOYM5T4 ,BUT 9 ORD] TO DO JU/ICE EV5 TO ?IS DEF9ITION1 ACCORD+ TO 
ECONOMIC EXP]TS1 YE>LY PRODUCTION MU/ CLIMB BY #f.0 9 REAL VALUES4 ,BUT 9 
VIEW ( ! DECL9E 9 PRODUCTION AT ! YE>'S 5D1 EV5 ?IS #f.0 GR[? 
RATE - ITSELF UNREALI/IC - W\LD NOT SUFFICE TO PRODUCE FULL 
EMPLOYM5T1 & ?IS ! LESS SO AS1 9 SO F> AS PLANN$ NEW 9VE/M5TS >E 
KN[N1 ALL 9DU/RIES >E /RIV+ TO L[] !IR 9VE/M5TS = #aiga BY 
BETWE5 #e.0 & #i.04 ,! UNEMPLOY$ WILL NOT F9D JOBS 9 ! PRIVATE SECTOR ( 
! ECONOMY1 SO ?AT ! FULL EMPLOYM5T PROGRAM CAN BE REALIZ$ ONLY ?R\< A 
NEW WAVE ( 9FLATION 7I4E41 GOV]NM5T-9DUC$ PRODUCTION74 

,9FLATION1 W>1 & UNEMPLOYM5T LEAD TO A G5]AL DISSATISFACTION :I* 
MAKES ITSELF FELT NOT ONLY POLITICALLY BUT ALSO 9 ! DEMORALIZATION ( ! 
>MY4 ,! RETURN ( P>T ( ! TROOPS FROM ,9DO*9A IS TRACEABLE NOT ONLY TO 
! DESIRE TO /ABILIZE MILIT>Y EXP5DITURES BUT ALSO TO ! GR[+ 
UNRELIABILITY ( ! SOLDI]S /ATION$ 9 ,VIETNAM4 ,( C\RSE IT IS MADE 
POSSIBLE ONLY BY ! APP>5T 9ABILITY ( ,NOR? ,VIETNAM & ! ,N,L,F TO C>RY 
ON ! W> ON AN EXP&+ SCALE4' ,! RETURN ( ! TROOPS1 & ! 
IMPLI$ PROMISE ( A FULL )DRAWAL FROM ,VIETNAM1 AWAK5$ NEW ILLUSIONS & 
BR\<T ! ,AM]ICAN ANTIW> MOVEM5T1 AT ! 5D ( #a#i#g1 TO A NE>LY FULL 
HALT4 ,9 ADDITION1 ! /UD5T MOVEM5T1 :I* FOCUS$ ITS OPPOSITION NE>LY 
EXCLUSIVELY ON ,AM]ICAN IMP]IALISM1 )\T MU* CONC]N ) ! CAPITALI/ 
SY/EM ITSELF1 BECAME A VICTIM ( ITS [N PROGRAMMATIC LIMITATIONS & ITS 
PRES5T 9ABILITY TO HAVE ANY REAL 9FLU5CE OV] ! PACE ( EV5TS4 ,?R\< 
! 9T]V5TIONS 9TO ,CAMBODIA & ,LAOS IT RECEIV$ A NEW IMPETUS1 :I* 
H[EV] LAGG$ BEH9D ! ACTIVITY DEVELOP$ E>LI]4 

,! ECONOMIC & POLITICAL DIFFICULTIES ( ,AM]ICAN CAPITAL %\LD NOT BE 
OV]E/IMAT$4 ,9 G5]AL1 ! DISCONT5T$ >E OPPOS$ NOT TO ! CAPITALI/ 
SY/EM BUT ONLY TO ! POLICY ( ! PRES5T ADM9I/RATION4 ,LIKEWISE1 ! 
,NIXON ADM9I/RATION IS CONC]N$ NOT SO MU* AB\T 

! BREAKD[N ( CAPITALISM AS AB\T ITS [N CONT9U$ EXI/5CE1 & 
CON/RUCTS ITS POLICY1 9S(> AS ?IS IS OBJECTIVELY POSSIBLE1 ) AN EYE TO 
! COM+ ELECTION4 ,TO BE SURE1 ?IS VIEWPO9T IS POSSIBLE ONLY ) RESPECT 
TO DOME/IC ISSUES1 BUT H]E IT IS QUITE FEASIBLE TO 9CREASE TOTAL PRODUCTION 
& L[] UNEMPLOYM5T1 IF AT ! CO/ ( GREAT] GOV]NM5TAL 9DEBT$NESS4 
,! RESULT+ IMPAIRM5T ( CAPITALI/ ACCUMULATION CAN NOT YET UPSET ! 
SY/EM ITSELF1 S9CE ! SPH]E ( /ATE-9DUC$ WA/E PRODUCTION 9 ! 
TOTALITY ( PRODUCTION IS /ILL RELATIVELY SMALL4 

,CONTROL OV] =EIGN POLICY DOES NOT1 H[EV]1 RE/ 9 ,AM]ICA'S H&S 
ALONE4 ,)\T D\BT ! ,NIXON REGIME W\LD WELCOME AN 5D TO ! W> ON 
,AM]ICA'S T]MS1 P>TICUL>LY AS A SITUATION CRITICAL = ,AM]ICAN 
CAPITAL IS BEG9N+ TO DEVELOP 9 ,S\? ,AM]ICA1 & AS ! SITUATION 9 ! 
,MIDDLE ,EA/ HAS NOT LO/ ITS EXPLOSIV5ESS4 ,! 9VASIONS 9TO ,CAMBODIA & 
,LAOS %[ ?AT = ,AM]ICA ! W> 9 ,9DO*9A CAN 5D ONLY ) ! DEFEAT ( 
! ,N,L,F & ,NOR? ,VIETNAM1 I4E41 ) ! 5D ( ! ATTEMPT TO UNITE ,S\? & 
,NOR? ,VIETNAM4 ,IT DEP5DS ON ! BEHAVIOR ( ,RUSSIA & ,*9A1 :E!R ,U,S 
MILIT>Y DOM9ANCE ( ,S4,E4 ,ASIA WILL BE FOLL[$ BY ! CONSOLIDATION ( 
,AM]ICAN P[] 9 ?AT >EA4 ,AS ?+S /&1 ! R5EW$ 9FLATION>Y TR5D 
CO9CIDES ) %>P5$ IMP]IALI/ AGGRESSIV5ESS4 ,BO? PH5OM5A CAN ONLY 
DRIVE ! 9T]NAL SOCIAL CONTRADICTIONS TO EXTREMES1 SO ?AT ,AM]ICAN 
CAPITALISM IS B\ND TO CONT9UE 9 ITS LONG /&+ CONDITION ( SOCIAL 
CRISIS4 

,FOOTNOTES 

#a4 ,?IS IS OBVI\SLY ! BRIEFE/ =M POSSIBLE ( A FAIRLY CONTROV]SIAL >GUM5T4 ,= A DETAIL$ EXPOSITION ( ! LATT]1 SEE ,PAUL ,MATTICK'S ,M>X & ,KEYNES1 ,BO/ON 7,PORT] ,S>G5T73 #a#i#f#i4 - ,! ,$ITORS 

#b4 ,?IS WAS WRITT5 BE=E ! DOLL> CRISIS ( ,MAY1 #a#i#g#a4 - ,! ,$ITORS 

,FROM 3 ,M>XI/S4ORG4 

,*RONOLOGY 3 
,M>* #c1 #bba 3 ,! ,AM]ICAN ,ECONOMY -- ,ADD$4 
,JANU>Y #h1 #bbb 3 ,! ,AM]ICAN ,ECONOMY -- ,UPDAT$4 

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