From Labor Action, Vol. 13 No. 45, 7 November 1949, p. 3.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
One of the frankest and most important statements on the present state of the American economy was made on October 25 by one of the leading economists in the country – Professor Sumner H. Slichter of Harvard, a high official of the Committee for Economic Development. Dr. Slichter was speaking at the dinner of the annual convention of the commercial finance industry.
Dr. Slichter is politically a conservative and – it goes without saying – no heartier exponent of the capitalist system could be found. In fact, what he had to say was designed, if anything, to restore the faith of his well-fed audience in capitalism – if it needed a restorative. He bade them be optimistic and told them why they should be. And his reason turned out to be an analysis which thus far we have seen in full form oply in the resolutions and analyses of the Independent Socialist League. (See the resolution on the United States published in the May issues of Labor Action.)
We think Slichter’s words deserve to be published in 14-point type on our front page every week for a year. At the moment 8-point type will do:
“From a narrow economic standpoint, the cold war in which the United States and Russia are adversaries is a good thing. Dr. Slichter said. In effect, he said, it has proved a boon to the capitalistic system which the Communists are trying to scuttle.” – N.Y. Times, Oct. 26.
Slichter said, among other things:
“It [the cold war] increases the demand for goods, helps sustain a high level of employment, accelerates technological progress, and thus helps the country raise its standard of living.
“In the absence of the cold war, the demand for goods by the government would be many billions of dollars less than if is now and the expenditures of both industry and government on technological research would be hundreds of millions less than they now are.
“So we may thank the Russians for helping make capitalism in the United States work better than ever.”
And he declared that a real bust – a really severe depression in the U.S. – is “difficult to conceive” as long as the benefits of the cold war are with us.
There is no repetition of the 1929 crush due: this was his message of cheer. And that which is keeping the bust away is the unprecedentedly fast descent of the whole world into the maelstrom of the threatened Third World War. Without it – back to the apple stands.
The ISL analysis has also warned against the notion that a simple repetition of the Great Depression is inevitable and just around the corner. The blind economic forces making for capitalist crisis are still at work amid the underpinnings of capitalism, as in 1929 and before. But something new has been added – the new dominant position of war economy in the substructure. (One economist recently labeled the same phenomenona “truce economy,” another the “cold-war economy” – it doesn’t matter.)
What it means is that the long-standing capitalist crisis can be “averted” only by steering for the still more devastating crisis of world atomic war. If the delegates to the National Conference of Commercial Receivable Companies at the Waldorf-Astoria found comfort in the vision, thus bluntly put before them by Slichter, the far greater number of people who could not afford the price of a seat at theif dinner table ought to be stirred to think about the views of Independent Socialism on the major problem of our times.
All over the world (except in the United States) the social system of capitalism is visibly dying in mortal agony – overthrown by the totalitarian (but non-capitalist) despotism of Stalinist bureaucratic collectivism in one part of the world; tied up in inextricable knots even in Western Europe where it still hangs on. The only road to freedom for the people leads away from both capitalist decay and Stalinist barbarism, toward socialist democracy.
The United States, aristocrat of the world, seems to be the exception. While night falls on the lower slopes and valleys, on its peak of power and wealth the last bright beams of the sun seem twice as lustrous. On old Europe, the nightfall of capitalism descends in a gray misery. Over American capitalism, the dusk threatens to end with a blood-red splash of sunset.
If Slichter can view the ghost at the Waldorf-Astoria feast with something approaching equanimity, the liberals- – who find nothing wrong with capitalism but object only to its inevitable consequences – are in no such fortunate position. Their dilemma is sounded in a cry of agony by financial columnist Sylvia F. Porter two days after Slichter’s speech. Miss Porter is one of the more prominent economic experts and presumably a social scientist, but her anti-Slichter column is, for half its length, a glandular explosion.
“I’m not stunned,” she writes, “I’m disgusted ... it’s false, it’s harmful, it’s damnable.” (Damnable is also the last word in her column, and the first world of its title.) “Insidiously dangerous!” she says.
Then, pulling herself together, she gives five reasons why a “peace settlement with Russia” and the end of the cold war would help American economy. They are: (1) Demand for our goods from the Iron Curtain domain would pour in. (2) Billions of U.S. capital would then be willing to risk investment abroad. (3) We could spend billions on domestic economic improvement, schools, cancer research, etc., instead of on arms. (4) We could cut taxes. (5) We could turn technological progress toward peacetime uses.
Now, anyone should sympathize with Miss’ Porter’s moral reaction (which alone is the motor of her economic rationalization). Highly moral liberal wishes, however, mix poorly with the realities of the social system which Miss Porter supports no less than Slichter. Her liberal morals extend only to condemning the consequences of capitalism.
Is it still possible for an enlightened economist, especially a liberal one, to fail to ask why the above five factors failed’ to provent a crash twenty years ago?
There was no Iron Curtain throttling off Eastern European demand. There was no such pressure as she points to now On American capital’s timidity. Schools, cancer research, etc., ad infinitum, were just as needful and in demand. Taxes were down. Technological developments, having only peacetime uses beckoning them, were throttled or nibbled at.
But the wall came tumbling down and could not be put up again except in the form of war fortifications. It took the Second World War to restore prosperity. All that Slichter says is that the Third World War is even more effective; in advance.
Miss Porter challenges wrathfully: “Production for destruction, billions spent for goods that are useless except for killing. Since when is that ‘a good thing’? Economically as well as socially, morally, politically?”
Miss Porter, especially as a New Dealer, ought to know “since when” the economic category of destruction has been known as a good thing. The AAA plowing-under of pigs and cotton is a small chip off the same block. Socially it was fantastic. Economically, as Porter could explain, it made sense – for a social system which produces crises in the midst of abundance.
Slichter’s cold-war medicine is a far more efficient serum for the system. It does not ask that cotton be laboriously produced in order to be destroyed. It goes directly to the job. Its prosperity is based on goods which are produced for the SOLE purpose of destruction – of being themselves destroyed and, better yet, destroying other goods (lives too, but that’s less important from the “narrow economic standpoint” of capitalism).
But Sylvia Porter is a liberal – which means that she wants many things we socialists want, and capitalism too. If Slichter is right, she would have to make a choice. Peace and plenty through socialism, or that bright spotlighted peak in the advancing night?
Last updated on 11 December 2022