[FACTS& FIGURES MORE on international capital flows this…]

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FACTS& FIGURES MORE on international capital flows this week, to follow up last week's item on the US becoming a net importer of capital.

This development is a combination of short-term and of longterm trends.

The short-term trend is a huge flow of capital into the US through bank transactions and stock market operations.

Foreign purchases of US government and company securities have far exceeded US purchases of foreign securities for several years. The purchasers are mostly from the Middle East and Europe. According to Business Week magazine "In a dramatic reversal of traditional capital flows, foreign money is flooding into the US, and a good portion of it is helping to finance the burgeoning US budget deficit. Bankers Trust Co. estimates that this year foreigners will double their purchases of US government securities to $25 billion Causes here are the suitability of the US as a safe place to invest in, especially for Middle East oil millionaires; and, more short-term, the high level of the dollar, of US interest rates, and of the US stock market.

US banks had been building up huge assets abroad for many years. In the 1970s they sucked in enormous funds from the oiexporting states, and pumped out even more in loans. Now the inflow from the oil exporting states is drying up; and, with the international debt squeeze, the outflow to industrialising Third World states is dwindling even faster.

In the second and third quarters of 1983, the US became a net importer of bank-loan capital to the tune of $4.6 billion in quarter 2.

But the biggest element in the short-term inflow is recorded in the US official Federal Reserve Bulletin as "statistical discrepancy". This uncharted inflow was $41 billion in 1982! The Federal Reserve reckons this may represent foreign capitalists building up assets with nonbank financial enterprises in the US.

Direct investment

Longer term is the shift in the porters of di foreign emert Joesnest o1 prises, rather than of securities or bank-loan debts).

In the '50s and '60s, the US absolutely dominated world foreign direct investment, accounting for some 65% of the outflow in 1960-62.

Relatively little foreign direct investment went into the US in those years, however: it took in only about 8% of the world total flow.

This pattern began to change seriously in the late '60s and early '70s. As the absolute dominance of the US within world capitalism declined in the face of West European and Japanese competition, the US's share of the world total outflow declined to about 50% by 1977-9, and its share of the inflow increased to nearly 30%.

Then after 1979 direct investment started pouring in, mainly through West European takeovers of US companies. $14 billion in 1980, $22 billion in 1981, $10 billion in 1982, $3.5 billion in the first half of 1983. Since 1981 the inflow has far exceeded the outflow.

Foreign investment from the US is still about 40% of the world total stock; but foreign investment into the US is now perhaps 20% of the world total stock.

Dollar crash

What does it all mean?

Longer-term, these developments are part of the relative decline of US capital from its former unchallenged supremacy. It is still number one: but it faces increasingly sharp competition from numbers two and three, EEC and Japanese capital. trade colori repart al The international same trend.

The old Third-Worldist way oi seeing the world, as 'imperialism (a single blob) versus 'the masses' (another homogeneous bloc) was always un-Marxist. It had some apparent plausibility when the US was all-dominant. Today everyday reality contradicts it more and more glaringly. • The rise of Third World states as capital exporters is another development contradicting that simple view; more on that next week.

Shorter-term, the massive, lurching surges of capital across the world indicate that the world capitalist system is becoming more and more unstable.

A sudden reversal of the capital flow into the US - which is quite possible: after all, the authorities don't even know how most of that inflow is coming in! - could send the value of the lollar spiralling downwards ¿no the dolar is stil the bast currency of international trade, at the same time as it is the main currency of international speculation. If the dollar goes, the world trading system goes.