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-BIL SIO lader in chains idens litain, some ¿ population agately hit. ris worst in cities; and rially severe i blacks and ame of the my, has lost ta industrial i last three ployment is han the natand one in IS receives mblic assistYork one in out of work, is the figure 4 women are Ly badly hit /problems. obs held by 'aching and ince, are first ¿ line. Many nilies have heir living r the last 15 g real wages omen taking : and other s. A lot of i now being suffered amic disadmerica since slavery. It is iy better. As ump and remaking it inwide black it in the US is around 15 per cent, compared with about 7 per cent for whites.

But among blacks and whites, it is young people whose situation nearly everywhere is far worse than that of older workers. About one fifth of American post-school teenagers are without jobs; and the figure for black teenagers is over one half. There are many cities in which for young blacks (for women even more than men) & regular job has become an impossible dream.

The New York Times recently ran a series of articles attempting to probe into the reasons why there had not been a social rebellion Rates of Percent Book rofit Conce 12- Adju ed for Infla 1956 58 in America's big northern cities last summer. The author ended up quite perplexed about the reasons why it had not happened - all the conditions for it seemed more than fulfilled.

The fall in profits Unemployment, inflation and urban decay are among the many symptoms of economic crisis which anyone can see. What is more difficult to see is something which lies beRetur on Capital neath them all - a longterm, persistent and significant fall in the profitability of just about every major industry.

The recent fall in the rate of profit in the United States has not been as precipitous as it has been in Britain or in Italy; but nearly every economic study of the question supports the conclusions that there has been a major fall in profits. The best study of the US rate of profit shows the average rate of profit was a quarter lower in the 1970s than it had been in the 1960s.

The decline has been uneven and erratic, and has gone in cycles. But while there have been ups as well as downs, the worrying thing for American capitalists is that the low point in each cycle has been distinctly worse than its predecessor.

Worst The worst period of slide mid-1960s to a fraction over 3 per cent in 1975. Since then the rate has climbed feebly back to 4 per cent, but in the present recession it threatens to plunge to a new low figure, possibly not very far from zero.

Many of the recently announced financial results of major companies have been very dramatic. Only two of the major airlines (Delta and National) seem capable of making a profit. Even those that expected to be helped by the forced cutback of traffic resulting from the PATCO strike are reportedly having second thoughts.

The four main automobile companies lost a total of $1½ billion in the third quarter of 1981. Automobile production was 26 per cent lower than a year earlier: the lowest level in up to well over $70 billion - a 10 per cent rise on a year ago, though business earnings are down over the same period. As a result the number of business failures is also going up. The value of businesses going bankrupt went up fro $2.7 billion in 1979 to $6.5 billion this year.

Austerity

The financial problems of both corporations and individuals have been placing greater strains on America's banking system. The last major recedssion, after the 1973-4 oil price crisis, resulted in an ominous number of bank failures in the US. 27 banks failed between 1974 and 1976, some of them quite large (though relatively speaking all US domestic banks are tiny compared with their European counterparts).

Now once again galloping recession is accompanied by growing talk of imminent bank failures: the Greenwich Savings Bank (the seventh largest of its kind in the US) is bankrupt and is at present being bailed out with the help of the Federal Government.

Recently the Morgan Guaranty Trust Company one of New York's giant international banks) had to rescue a group of bankrupt New York City Savings Banks.

In addition, the number of mortgages in arrears has doubled over the last two years.

Bank

All this does not mean that a major financial crash is imminent in America, to match the crashes of 1929 or 1933 when every bank in the country closed down.

But even in the most sober financial circles the + 2,000 + 1,500 1,000 + 500 - 500 - 1,000 - 1,500 - 2,000 1979 A Millons of doliars possibility of financial disasters is increasingly openly discussed. That is not surprising since those measurable aspects of the financial and : economic systems which are believed to have contributed to previous financial cyclones -high interest rates, high debt relative to income and liquidity, the growth of business failures, fears of recession - are all worse than they were in 1974-75; and in most cases worse by far than they were in 1929.

From Keynes to Reagan since the Kennedy administration in the early 1960s, US governments have been conscious that the fall in profitability, and its financial consequences, are something basic to the health of American capitalism.

Kennedy and Johnson (1960-68) . aimed touse forms of Keynesian state Combined earnings of General Motors, Ford, and Chrysier, 1980 spending policies to improve profitability while at the same time meeting some visible social needs.

Nixon (1968-74) still to some extent continued this "consensus' • It was after all Nixon who is alleged to have said, "We are all Keynesians now". (Though later evidence suggests this should have read: 'We are all [two expletives deleted] Keynesians now")

But Nixon, like so many other governments of the same epoch, experimented with wage and price controls when government spending policies did not seem to stem the decline. 'Carter (1976-80) initiated a conscious policy of austerity, mostly for the working class, as a way of improving the position of the capitalists.

But, in comparison with the new Reagan administration, all of these predecessors had an attitude towards the problems which now, in comparison, looks half-hearted.

From the beginning the Reagan administration has = 111 1981 Est. seen the problems of A ican capitalism exclus as insufficient capil investment resulting insufficient profitab The fall in the rat profit is specifically I lighted in the admini tion's first outline o: economic plan as the tral problem (along inflation) which has ti solved.

As the next article show, the fervour • determination with w the Reagan governi seems to approach aim is not matched by consistency and poli practicality either of ideas or of its p proposals.

Carter

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in the profit rate was from around 9 per cent in the