Falling profits impel capitalists to war as surely as thirst drives donkeys to water. 2001 witnessed a 54 percent drop in the profits of the Fortune “Global 500,” the world’s 500 largest corporations.

Discussing these results last year, this column spoke of capitalism’s “rising need for war. … The owners of the oil monopolies and the big banks have a profound interest in ‘expensive oil,’ not cheap oil, even if achieved through war. A significant share of debt around the world owed to Wall Street is repaid from oil sales. … ‘Low’ oil prices endanger debt service. It is entirely possible that escalated war in the Middle East could temporarily double or triple the price of oil, bringing the owners of Exxon and Citibank momentary relief from their declining profits.”

With capitalist economies stagnating in 2002, the profits picture worsened. According to Fortune’s newest compilation, the Global 500’s profits fell another 56 percent in 2002. Employment fell 3 percent. Sales (revenues) fell 2 percent, the second consecutive year of sales decline, unprecedented since the Great Depression. The 500s’ profit margin on sales fell to 1 percent ($133 billion in total profits, on revenues of $13,729 billion). In 2000, that margin was 4.7 percent.

By mid-2002, the monopolies’ profits picture was looking even bleaker. War talk escalated. George W. Bush turned to blatantly doctored “evidence” to justify a preemptive attack on Iraq. By mid-February 2003, oil prices had climbed over 70 percent from a year earlier.

Now there are signs of a rebound for the largest U.S. and Japanese monopolies. Not a recovery for workers here or worldwide, not for the unemployed, not even for smaller capitalists, but a rebound for U.S. and Japanese monopolies.

First quarter 2003 profits rose 33 percent for the Business Week 900, which include the largest U.S. monopolies. Sales rose 11 percent. And many of Japan’s largest industrial corporations showed gains in the quarter.

There are two sources for this rebound. The first and most important is the continued rapid growth of China and Vietnam, states created by socialist revolutions. These now account for around 14 percent of world industrial and agricultural production, almost double their share a decade ago.

Of great importance for a capitalism drowning in “overproduction,” China’s purchases (imports) from capitalist countries have been growing at double-digit rates. China’s purchases from Japan were up 50 percent in January-April of this year compared to the same period in 2002. China will probably surpass the U.S. as Japan’s largest export market within five years. China’s purchases from several other Asian export-driven capitalist countries grew almost as much.

War is the other factor in the 500s’ profits rebound. Washington’s aggression brought a sharp rise in oil prices. The profits of U.S. energy monopolies jumped 296 percent in the first quarter from a year earlier. This accounted for fully one-third of all profit gains in the quarter. Exxon Mobil led all monopolies with an extraordinary $7 billion in first-quarter profits. Citigroup, the main imperialist bank, was second, with $4.1 billion in profits, up 22 percent from 2002.

And Washington has learned that wars “flush” capital into the U.S. from the rest of the world, as capital escapes instability and losses abroad. The Federal Reserve’s new Flow of Funds Accounts reports that “net U.S. acquisition of financial assets from the rest of the world” jumped to $866 billion (at an annual rate) in the first quarter of 2003, compared to $394 billion in the same quarter a year earlier. These “acquisitions” more than exceed total growth in the U.S. gross domestic product.

Monopolies’ profits rose 33 percent in the first quarter. But overall U.S. corporate profits rose less than 10 percent. This indicates that corporations below the top 500 level are stagnating or suffering setbacks. Unlike China’s growth, the gains by monopolies have been made at the expense of the rest of the world, and of workers and oppressed here. Unemployment, homelessness and hunger are rising in the U.S. and worldwide.

“Overproduction,” rising debt loads and increasingly frenzied speculation make an economic “heart attack” increasingly likely. The 500s’ gains are setting the stage for greater wars and crises. Only the workers of the world in struggle can bring a permanent end to these wars and crises.

The author can be reached at pww@pww.org