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From The New International, Vol. IX No. 11, December 1943, pp. 323–327.
Transcribed & marked up by Einde O’Callaghan for ETOL.
The United States is today the dominant world political power. This new position is in marked contrast to its position in the First World War. At that time the political and military strategy of the war was determined by the Anglo-French imperialist allies. The United States played a subsidiary though important military rôle in the final months of the war. With the exception of shipping, American economy during that time, while organized on a war footing, did not contribute heavily to supplying military goods for the war itself. America’s economic contribution to the Allies was in private bank loans and auxiliary materials (food, machinery, etc.). The real completion of the organization of the war economy did not take place until virtually the end of the war.
The sudden victory over Germany, following America’s entry into the war, found the United States the dominant capitalist economic power, replacing England as the financial center of the world. It was transformed from a debtor nation to the world’s largest creditor. Thus, this country became the first capitalist power which on the one hand exported more goods than it imported, and at the same time was a creditor nation.
Despite this dominant industrial and financial position, the ruling class lacked the political vision and program which would elevate it to the status in world politics corresponding to its economic power, as, for example, in the case of British imperialism during the pre-1914 decades. This anomalous lag was due in the first place to the fact that the market potential for capitalist expansion at home was sufficient not only to absorb the increasing native capital accumulation, but also to provide, at the same time, markets for foreign investments (particularly British). American direct investment beyond its borders prior to 1914 was primarily in Latin America, in the Far East and in the Pacific islands taken from Spain following the Spanish-American War. (In these instances, political, i.e., direct state intervention, was intimately interwoven with these foreign investments.) These factors, plus the geographic position, resulted in a mass ideology of political isolation permeating all classes.
The sudden transformation of the industrial and financial place of the U.S. in the world capitalism found the politically inexperienced ruling class ideologically unprepared to become the direct politically dominant power in the world. So that in the last post-war period the relation of the United States to Europe and Asia was predominantly economic, i.e., in the form of direct trade investment and loans. The political interventions in these areas that did follow from its economic course were sporadic improvisations rather than acts resulting from a consciously developed and long-range policy.
This empirical, improvised course of American capitalism in world politics was not only a hangover from its pre-war 1914 position in capitalism but was reinforced by the tremendous internal industrial expansion and the fabulous rise in immediate direct profits accruing to the capitalist class, particularly the big monopolies. It led to the paradoxical situation where in the United States, which exported more goods than it imported and was the creditor of virtually all the European powers, placed high tariffs on goods from these countries – i.e., made it impossible for them to continue buying from this country except through new loans, thus creating a vicious spiral which contributed heavily to the greatest economic collapse in capitalist history. The economic crisis which began in the United States in 1939 with the stock market crash spread throughout the entire fabric of American and world economy.
This world crisis was not merely the usual cyclical crisis but a far more deep-going rupture of capitalist society which marked a new stage in the general decline of the social order; the United States, which heretofore had been an exception, now became an integral part of declining world capitalism.
The crisis was fundamentally an expression of the historically outlived character of capitalist society. The expanding social productive forces came into conflict with the limited and restricting consuming power arising from the class nature of capitalism and its division into competing national states. The tremendous over-capacity of productive plant, especially in the United States, and the existence of large surpluses in agricultural production and raw materials created a long period of mass unemployment throughout the world and resulted in a sharpened struggle between the main classes and within the ruling classes.
The universal breakdown of international economic relations – the collapse of world trade, the wholesale repudiation of debts, the destruction of the international gold standard and credit system – further intensified the economic decline in the separate countries and resulted in a social crisis of world capitalism.
The impact of the world crisis intensified the struggle of the classes in all countries. The ruling classes sought to resolve these sharp conflicts as a necessary preliminary step to solving the crises on an international scale. Two main policies were employed, one by the “rich” powers, the “have” imperialists (Great Britain and the United States) and the other by the “have-not” impoverished imperialists (Germany, Italy, etc.). In the former case, the bourgeoisie succeeded in establishing an alliance with a large section of the organized labor movement and neutralizing its struggle through reformist methods; in the other countries, endangered by proletarian revolution and continuous upheaval, the bourgeoisie resorted to fascist totalitarianism, i.e., to nakedly violent rule.
Under these conditions, the imperialist states were compelled first to reorganize their national (or, in the case of Britain, its Empire) economies, in order to be in a better position to overcome the crisis by a new inter-imperialist struggle for foreign markets, for new fields of capital investment and trade. Thus the breakdown of world capitalist economy forced these states toward concentration on the nationally limited economy over which they had direct political control (the tendency toward autarchy).
This was demonstrated by the attempt of Britain to organize the Empire as an economic unit at the expense of the United States (Ottawa Conference, 1931), and strengthen its control over its European satellite states through the “sterling bloc,” i.e., basing the monetary standard of these countries on the pound sterling instead of gold bullion. In Germany it was manifested by the coming to power of fascism and the reorganization of its national economy in preparation for a world expansion and for war. The United States showed the same trend in the first period of the crisis through the adoption of the “New Deal,” whose foreign economic policy was symbolized by the repudiation of the gold standard, permitting the maximum control over the home market (prices, gold imports and exports, etc.) by Washington.
Thus the world economic crisis and the new economic course which it compelled the imperialist powers to take increased the tendency toward the direct intervention of the state in the economy. The bourgeoisie was no longer able to solve these problems in the old way. The magnitude of the new problems required the intervention of a collective agency which would represent the total interests of the capitalist system, i.e., the long-range interests of the capitalist class even at the expense of the immediate desires of this or that section of the ruling class. This was a partial recognition of the social character of the production which had already passed beyond the confines of capitalist private ownership and control.
In the United States, the bankers and industrialists appealed directly to President Roosevelt (1933) to save their bankrupt system; to prevent a rebellion of the masses in the face of the inability of the ruling class to supply the workers and farmers with the necessities of life despite the tremendous productive capacity of the industrial plant. The New Deal sought to reestablish an equilibrium between production and consumption. Its professed aims were to increase the purchasing power of the workers and farmers and revive production up to the old levels. It endeavored to do this through relief and public works, minimum wages and hours for labor, subsidies to and regulation of private industries and banks, subsidies to the farmers to cut production so as to decrease the surplus agricultural produce on the market.
The New Deal Administration was essentially a bourgeois-labor reformist coalition, which sought to reconcile conflicting class interests.
In the first period of the New Deal, big business was placed in direct control of government regulation of industry through its complete domination of the National Industrial Recovery Boards (writing and administering its codes). This new form of collective control by the monopolists of industry, though it succeeded in defending the profit interests of big business against “small” business, and sharpened the conflict between them, could not subordinate the individual interests of the big industrialists to that of the whole class. The failure of the NRA was manifested long before the Supreme Court declared it to be unconstitutional.
While the economy was revived from the low levels of the crisis and profits were once again being realized, the New Deal failed in its aim of raising production to the level of 1929, or solving the problem of mass unemployment.
There was no “national” solution to these problems. Their solution had to be sought in the international arena. But before this step could be taken, a necessary partial revival was required. Then the main task of American capitalism was to try to bring order in the world as a prerequisite for its imperialist expansion. That is to say, to organize the world in such a way as to enable it to express its industrial and financial power. The main disorganizer of capitalist world relations was fascist Germany, the “have-not” power at the close of the First World War, which, in turn, sought to organize the world under its own political and economic domination.
Similarly, in the Far East, Japan, whose imperialist expansion took place as an associate of Great Britain, was and continues to be the “disorganizer” of “peaceful” American economic penetration. In order to achieve its ambitions in the Far East, American imperialism must first defeat Japan. As a matter of fact, so important is this area to the future of American capitalism that a large and significant section of the ruling class regards it as an even more important front than Europe.
The rivalry between the United States and the British Empire, which was expressed in the sharp competition between the two powers in Latin America and in Europe, was reproduced in Asia. Confirmation of this fact is to be found in the open and tacit support which England gave to Japan in the latter’s conflicts with the United States until the outbreak of the war. This policy on the part of Britain Bowed from her determination to maintain and extend her own imperialist domination and her colonial possessions. However, the British Empire, threatened by the colonial masses whom it subjugated, and by German and Japanese imperialism, could only be maintained through a military alliance with the United States. The Anglo-American conflicts, though continuing in various ways up to and in the war, were subordinated to the common need to defeat the “have-not” powers which sought to drive both out of Europe and Asia.
The rivalries and conflicts in Europe and Asia are similarly reproduced in Latin America, the “backyard” of American imperialism. Following the First World War, the United States replaced Great Britain as the dominant power in South America, a position which it has considerably strengthened since the outbreak of the present war.
Canada has been drawn closer to the sphere of American imperialism and further from the sphere of British imperialism in this war than in the First World War. Britain’s island bases in the West Atlantic are already shared on an equal basis and for the first time in history, by the United States. Even before the United States entered the war, and especially since its entry, the economy of the Latin American countries has become more and more dependent upon the United States – likewise their political regimes and their military establishments. Japan, Italy and Germany have, of course, been ousted from almost every nook and cranny of Latin American life, thus removing three of the most important rivals of American imperialism. England continues to fight a losing battle in the last of its Latin-American strongholds, especially in the Argentine. The naked fact of the tightening grip of American imperialism upon the economic life of the Latin American countries is thinly veiled under the “Good Neighbor Policy,” which cleverly exploits the democratic aspirations and antifascist sentiments of the Latin American peoples for the purpose of extending the sway of American imperialism all over the Western Hemisphere. Consequently, the main aim of American imperialism in the war is world domination through the establishment of international order by means of interstate institutions under its control. This in turn will require the use of military and political means in the post-war period, the extent and type of which will depend upon the concrete social conditions in the different countries following the war.
Under the conditions of modern total war which requires the complete mobilization of all phases of the life of the warring country, the outstanding feature is the state direction and control over the entire economy. Thus in the United States, growth of state-directed capitalism under the Roosevelt regime, made imperative by the bankruptcy of the entire system, was tremendously increased as the country became organized on the basis of a war economy.
Planning for war leads to state direction of capital accumulation and control over the allocation of the productive resources of the country, material and human. In the interests of capitalist society at war, the profit motive of the private capitalists had to be integrated with the needs of the war itself. The state, therefore, decides how much and what type of war goods must be produced; how much and what type of civilian goods are to be manufactured. The production of consumer goods is subordinated to the output of war goods. Through price controls, forced savings, taxation, loans, priorities, labor freezing and control, the Roosevelt government seeks to achieve a balance between production and consumption in such a way as to get the maximum materials for war and the absolute minimum consumer goods necessary to maintain the population. The state direction of the economy has resulted in unparalleled growth of the productive plant and of the output of planes, ships and munitions.
The war economy of state-directed capitalism has resulted in changes in the relations within the capitalist class. Accompanying the wholesale bankruptcy of small manufacturers and wholesalers and shopkeepers (due to concentration of war contracts in large corporations, the curtailment of consumer goods production and the draft of men for the armed forces), the big industrialists have increased their domination of the national economy and their position in the state. Once again reaping fabulous profits, they have launched a planned campaign to oust the New Deal bureaucracy from control of the state production and substitute direct control by big business men. With the aid of the representatives of the big farmers and the Southern Democrats they have won their victories over the New Deal bureaucracy built up for over a decade by Roosevelt. The President himself, conscious of the need of big business support in the war effort and also looking ahead toward the 1944 presidential election, has given increasing support to the right wing, pro-big business section of his coalition Administration (represented by Jesse Jones). The plan of the big industrialists for direct control of the war economy also has in view the problems of post-war United States. Who will own the government-built plants and facilities? How will the tremendous post-war stockpile of war goods be disposed of? What will happen to the government-controlled merchant marine and airplanes? In a word: who will control the post-war economy and determine the internal policies of the country and therefore its foreign economic and political course!
The New Deal bureaucrats and a small section of the capitalists, who believe that the old structure of private monopoly capitalism cannot solve the domestic or international economic problems of the United States, favor a strengthening of state-directed capitalism as a long-range program.
The dominant section of the big industrialists, while accepting the fact that the government will have to continue a number of the “emergency” measures of the war economy into the post-war period, are for the establishment of their own control of the state direction during this period and its telescoping of a brief interim stage. They look forward to the time when once again the state will only supplement their own direct economic operation of the economy and their international relations (and intervene only in periods of crises).
Their fear of state-directed capitalism in “peacetime” flows from the danger that under the democratic forms of government now prevailing in the United States, the other classes – the working class, the farmers, the small business men – all look to the state to help them against big business. The demand of these classes that the state take the responsibility for full employment, for the revival and expansion of small business, and for raising the living standards of the farmers, will inevitably increase manifold in the post-war period. For the big industrialists, increased growth of state-directed capitalism within the framework of bourgeois democracy means permanent uncertainty as to future developments and therefore interferes with their own long-range plans.
The conflict between the New Deal bureaucracy and the big industrialists and bankers is graphically symbolized by their differences on the proposed plans for international currency stabilization and inter-government international banks for capital investment and loans. The New Deal bureaucracy aims to establish an international managed currency (dominated by the dollar) and administered through an inter-governmental institution; and an inter-governmental international bank for capital and loans; which means a strengthening of the state-directed capitalism both at home and abroad. The big industrialists and bankers, however, want the minimum of state interference in money manipulations (within the country and internationally) – since this means state control of the economy – and direct dealings with other countries through their own corporations, banks and economic institutions. That is why they favor a return to the gold standard for the dollar and as the standard of international money; and a privately owned international bank for capital investment and loans. The interstate economic institutions, according to this plan, would exist merely to aid this main course.
These industrialists and bankers, like the New Deal bureaucrats, are anti-isolationist, “international-minded.” But on the economic field they are for their own brand of internationalism: a type of monopoly-capitalist control which the New Deal bureaucrats hold cannot meet the new problems raised up by the present decay stage of capitalist development.
Another section of the ruling class, represented most vocally by McCormick of the Chicago Tribune and including in its retinue the America Firsters (Gerald K. Smith), Coughlin, the KKK, favors a program of “nationalism,” i.e., political isolation from Europe and concentration of exploitation of Latin America and the Far East.
This reactionary bloc includes the most blatant anti-labor, anti-Negro, anti-Semitic elements and is the rallying center for the future development of a mass fascist movement in this country. At present, while this grouping is active and growing, particularly in the Middle West, and its influence has been expressed by the widespread growth of anti-Semitism and violent actions against the Negroes in various cities (Detroit, Beaumont, Newark, etc.), it is supported by only a small section of the big capitalists and has little influence in Washington or in national politics.
However, in the post-war period, a long stage of capitalist crises – mass unemployment, further impoverishment of the middle classes, discontent within the ruling class itself – will undoubtedly mean the growth of this movement and bring a more intimate connection between it and influential sections of big business. The fate of this movement is therefore intimately bound up with the further development of the impacts of the war economy and with the fate of post-war American capitalism.
Above all, the future of an American fascist movement which may attract large numbers of the demobilized soldiers and sailors, depends upon the political development of the working class.
From the moment that the war broke out, steps were taken to convert the United States into an arsenal for the Allies. This process was further speeded up with the fall of France in June 1940. So that at the time of Pearl Harbor, and the American military entry into the war, plans were extended for a complete conversion of the economy to a war basis. This time America’s allies were dependent upon the United States for planes, tanks, munitions, ships, as well as food and clothing. The United States undertook to supply these needs and simultaneously to equip an armed force of over ten million (in contrast to four million in 1917–18).
With great difficulty, and in the face of the initial reluctance of big business to reorganize industry in the common interest of capitalism, American war economy advanced rapidly.
The unprecedented demands of the global war for heavy materials of destruction had an immediate and direct effect upon the whole system. Production leaped upward at an unbelievable rate. The great pre-war problems of unemployment, capacity utilization of industrial plant, increasing production absolutely, raising foreign and domestic capital investments and trade, while lowering and finally eliminating the costs of the crisis, were guaranteed to be temporarily solved, for the duration of the war period, when German imperialism invaded Poland.
In 1939, the first rises in the economic indices were to be noted: since then production has continued upward at a record-breaking rate. The basic industries now work at capacity or near-capacity. This rise in production has absorbed the millions of unemployed. Unemployment has now reached the lowest point in American history, since 800,000 jobless is regarded as less than “normal.” In contrast to the virtual elimination of unemployment, the numbers of employed workers had risen to 42,000,000 in 1940 and to an estimated 62,000,000 at the end of 1943 (including the armed forces).
This expansion of production which ended unemployment and brought about a corresponding absolute growth of the proletariat, was accompanied by a change in the character of production from that of producer and consumer goods for a peacetime economy to a continually increasing production of war goods. At the present time the entire national economy is based on this production of war goods.
In 1940, the record American peacetime year, production which reached the high yearly income level of one hundred billion dollars, was still largely in durable and consumer peacetime commodities, with only two billion dollars, or one-fiftieth, in war goods. At the end of almost three years since 1940, production, measured in terms of national income, will reach an estimated one hundred and fifty-five billion dollars, of which eighty-five billion dollars, or over forty times that of 1940, will go into the production of war goods. This change in the character of production will reduce available consumer goods by twenty-eight billion dollars, creating an immeasurably more difficult situation for the mass of workers which must bring with it political development of increasing importance.
Through the lend-lease system, the state supervises the distribution of war goods and becomes the instrument through which the vast foreign trade of the country now passes. Even before the war, the acute international situation compelled a greater and greater intervention of the state in the field of foreign political and economic relations. Lend-lease is a governmental affair; it has become the chief means by which loans travel from this country to the Allies. The debts of the latter are now directly owed to the state. This, too, is in sharp contrast to the last war, when the immense loans made to the Allies came principally from private bankers and industrialists (J.P. Morgan & Co. and others).
So vast are the requirements of war that the construction of new plants for old industries and the construction of new plants for new types of industries were essential to the prosecution of the conflict. The construction of these new plants, mounting to billions of dollars, was accomplished by the state, and where private industry engaged in plant expansion, there too it was primarily through loans from the state.
The war brought to an end the domestic reformist course of the New Deal. The social reforms of the earlier period were frozen in such a manner that the War Labor Board became the arbiter which has final powers to set aside collective bargaining agreements and to determine the conditions of labor of the working class (wages, hours, union shop, etc.).
The new rôle of the state in this war has been accompanied by the passage of subtle totalitarian measures, which, while they have not touched on the more prominent and spectacular forms of civil liberties, have been extremely effective on the economic field. Here the totalitarian direction has been unmistakable and is reflected in congressional anti-labor legislation, the no-strike pledge, the War Labor Board, the wage freeze and the hold-the-line order, and the direct interference in the affairs of the labor movement by the state and even more dangerously by the President as the personification of the state.
The degree of totalitarian development has depended and will continue to depend on the military stages in the war (victory, difficult struggle and defeat) and the degree to which the labor movement is prepared to carry on the struggle against the ruling class. Up to now the ruling regime has utilized only such measures which have been required by it to realize its needs in mobilizing the country for war. But the next stage in the war and the post-war problems are growing increasingly acute and these are in turn reflected in the increasing totalitarian direction of the Roosevelt regime.
The greater the intervention of the state in the economic process, the more difficult does it become for it to appear as “above the classes”; the more openly will its bourgeois character be made plain to the broad masses. The process which is developing in the midst of the war will become more clear with each passing month. For already, America’s military, political, economic and social policies have become unmistakably more reactionary.
War production demanded more drastic controls over the working class and these were gradually attained with the aid of a reactionary labor officialdom, tied to the Administration. But the outstanding counteracting force to the reactionary turn at home is the militant spirit and will to struggle of the American working class. In this, it is carrying on the tradition which made possible the foundation of the new trade union movement based upon industrial organization: the CIO. The existence of this kind of movement has created a base for working class struggles of incalculable importance.
The extreme dissatisfaction of the masses who bear the main burdens of the war at the same time that they observe the enrichment of the capitalist class, is expressed in strikes, sit-downs, in violation of pledges given the state by their craven leadership, slowdowns, opposition to speed-up “incentive” schemes. The absence of a strong mass revolutionary party, added to the existence of a reactionary labor leadership, has prevented the political organization of the American working class and the maximum expression of its opposition to the ruling class and its Washington Administration.
The aforementioned dissatisfaction of the masses was given living expression in the heroic miners’ strike. This significant struggle in the face of the united and ferocious opposition of the reactionary ruling class, the New Dealers, their liberal hangers-on and the Stalinists, coupled with the extreme restlessness of the working class and its various sections, especially the Negroes, chafing under the conditions of the war, and resisting, now openly, now covertly, the economic measures of the ruling class, represents the first sign of a decisive break in the Roosevelt-labor bloc. The recent union conventions, where reactionary labor leaders succeeded in forcing their class-collaborationist policies down the throats of the workers, in reality concealed the deep ferment in the ranks of labor. Thus the first evidence of a schism between Roosevelt and labor which came with the defection of Lewis in the elections of 1940, has grown wider at its base than at the top (but it is definitely here and destined to become wider).
A definitive break with Roosevelt is an indispensable step for the future political development of the American workers. It will mark a tremendous step forward only provided it does not take the form of support to the Republican Party under the leadership of Willkie or some other liberal and provided it does take the positive form of independent political action of the working class through its own political party.
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