Victory for what? (1985)

From the May 1985 issue of the Socialist Standard

  It is now fairly commonplace to read that the First World War was a useless massacre in which millions died for nothing. This is much less commonly admitted in the case of the Second World War, perhaps because the war time propaganda which billed it as a "war to defend democracy" has not yet worn off. Yet the Second World War was just as much a business war as the First World War. in that its primary cause too is to be sought in a clash of economic interest over markets, raw materials, trade routes and investment outlets between two rival blocs of imperialist powers.

  This was well brought out in a carefully-researched book written in France during the war, but not published until 1945. by Henri Claude entitled De la crise économique à la guerre mondiale (From the Economic Crisis to the World War) After showing how the 1930s crisis had led to the division of capitalist countries into two groups pursuing different economic and trading policies ("liberalism" and "autarky") depending on whether or not they had access to gold (as a means of international payment) and raw materials. Claude goes on:

The economic crisis thus led to an opposition between two antagonistic forms of capitalism: liberal capitalism and authoritarian capitalism. This antagonism has been too often seen as "ideological" for us not to show that in reality it was solely a conflict of material interests.

What, in fact, was the real meaning of this world liberalism?

It had a very precise meaning at the beginning of the industrial era when England began to export its manufactured products. As England was at this time the only industrial nation all that was required for it to find external outlets was that no customs barrier should "artificially" stop at frontiers its products whose costs of production were lower than those of the rest of the world. Originally liberalism meant, crudely: "The world for English products". "Economic liberalism" thus expressed perfectly the interest of British industry. Later, when England was forced to struggle against the industries which came into being nearly everywhere, it partly gave up this "liberalism", but did not however cease to demand its application by the others; for the fate of its industry, trade and banks depended on the freedom which the other nations granted it. The wealth of the City remained linked to the free play of supply and demand, to the open market, to world trade. Everything that restricted the freedom of exports and the commercial and financial operations of the City caused it a serious prejudice. The policy of autarky which banned its commercial and financial expansion into certain zones and which fixed prices without paying attention to “world” prices was thus its most redoubtable enemy.

What would become of the London market if the appetite for autarky was to gobble up the major part of the planet? Thus one of the members of the Stock Exchange. Mr Maguire, rightly insisted, in a speech at the Bankers’ Institute, on the necessity, for England's interests, of maintaining as far as possible the freedom of the market in other countries. "The whole history of the Stock Exchange", he declared, “is tied to the principle of the maintenance of the free and open market where the law of supply and demand operates without hindrance".

The United States also felt the same need for liberalism amongst others. The mass production of manufactured goods and the extremely developed industrialisation of its agriculture allowed it to beat all its competitors on the world market, provided that this market was free. It therefore considered all measures of economic nationalism taken by the other nations, and in particular autarkic measures, as an obstacle which hindered it from selling to the extent of its productive capacity and of its low production costs. "Freedom of trade", President Roosevelt was to say. "is essential to our economic life. With the victory of totalitarian conceptions the system on which American society is based would be compromised" (speech of 28 May 1941, Le Temps, 29 May 1941). This did not prevent it practising a rigorous protectionist policy to defend its own market, but “this contradiction" in no way goes against the logic of imperialism which seeks to push aside all that obstructs it externally, without ever making any self-criticism.

Neither could the US accept the system of bi-lateral agreements for, unlike Germany, it was an exporter of both raw materials and manufactured products, which ruled out it concluding compensation agreements with the agricultural countries. It had to be able to sell manufactured goods to the agricultural countries and agricultural products to the industrial countries. It is thus that is to be explained the policy of Cordell Hull (US Secretary of State) in favour of commercial treaties signed on the basis of "economic liberalism" and of what is called "the most favoured nation clause", a policy which was the exact opposite of Germany’s and which openly worked against it. In fact the American leaders did not fail to underline the opposition and permanent conflict between their commercial methods and interests and those of Germany. In January 1939 Mr Landon. former Republican presidential candidate, noted that an intense struggle "to the death" was going on between the democracies and the totalitarian countries. "It is", he said, "an economic war based on new methods of economic penetration" (Information, 24 January 1939). On 10 April 1939 a Havas News agency wire from Washington was even more explicit:

  The disastrous economic and social consequences of the extension of the zone of influence of autarkic commercial methods are insisted upon here. According to the White House and the State Department, the whole world is rapidly heading towards a conflict between two irreconcilable economic systems. In presenting the problem from its economic angle, the White House spokesmen wish to make American public opinion aware that the menace, pointed out many times by Mr Roosevelt and again on Saturday evening by Mr Cordell Hull, is ceasing to be remote and that the time could rapidly come when the whole economic and social system of the United States would be endangered

England and the United States thus temporarily had the same industrial, commercial and financial interest to fight autarkic imperialism.

All the other countries whose financial power was based on gold necessarily found themselves on the same side of the barricade. Common financial interests were the real cement that bound the democracies together and not. as some would have us believe, the fact that they had the same political regimes.

Statements by statesmen and economists on the "war aims" of the Allies afterwards provided a brilliant proof of this. The British Prime Minister, Chamberlain, declared at the beginning of the hostilities in a speech on the economic reconstruction of the world after the war that full freedom of trade must be restored and that autarky and the methods arising from it must disappear from old Europe. A few hours after this speech. Mr Cordell Hull declared on behalf of America that he was in full agreement with Mr Chamberlain (L'Oeuvre, 2 February 1940). Commenting on this speech the Tribune de Lausanne wrote: "One can thus reasonably hope that autarky, which is an instrument of combat, will be cast aside along with the canons, the tanks and the machine-guns when the war economy gives way to the peace economy” (quoted in Le Temps, 4 February 1940). At the same moment, Paul Reynaud (French Prime Minister) declared at the opening session of the Société d'Economie Politique that the ultimate war aim of France and Great Britain was a return to liberalism, particularly economic liberalism (Le Temps, 7 February 1940).

The great financial expert. Mr T. Jenny, wrote a few days later:

   In practice only one thing could threaten — temporarily — the value of gold. That would be a development leading all countries to retreat behind insurmountable barriers, reducing exchanges between nations to the rudimentary system of barter, where there would no longer be any need for an international means of payment because there would no longer be international payments properly so-called. But are not the Allies fighting precisely to spare the world this return to barbarism, to allow peaceful exchanges between the various countries to resume their growth tomorrow? (Le Temps, 12 February 1940).

  If France and England were thus making war to maintain their financial power, it is quite obvious that the United States, whose stock of gold had been increasing unceasingly since the outbreak of the war, would be led to line up beside them. Commenting on the growth of this stock of gold in May 1940 the New York Times wrote: "Many American bankers and economists have already announced that this enormous metal holding will become useless if the totalitarian dictators are victorious" (quoted in Le Petit Purisien, 24 May 1940).

During the war the financial and price stabilisation methods, similar to the totalitarian ones, proposed by the economist Keynes and Major Attlee were rejected as "contrary to the very principles for which the Allies are fighting" (statement by Sir Robert Kinderley. Governor of the Bank of England, Le Temps, 15 January 1940) and as "not only alienating from the war those who were supporting His Majesty's Government by their loyal effort" but also as "tending to exclude any possibility of US intervention" (statement by the Chancellor of the Exchequer. Sir J. Simon. 25 August 1940).

The nature of the links which united the Western democracies against the totalitarian States can thus be clearly seen.

On the other hand, Germany, Italy and Japan were in the same camp because these countries found themselves facing the same economic obstacles. The creation of the Asiatic Bloc and of the European Autarkic Bloc had the same irreductable opponents: England and the United States.

Also, Germany, Japan and Italy were linked by common methods. The mark, the yen and the lira had the same common enemy in currencies based on gold and not subject to exchange control. Germany, Italy and Japan had the same commercial and financial interest to reduce, by extending the autarkic areas, the zones where the pound and the dollar reigned; for the capital which had accumulated in the hands of German. Italian and Japanese industrialists from public works, rearmament and the production of substitutes had no value and could only be invested within the limits of the autarkic areas. Hence the necessity for capital called "national" to extend the space where it kept its value to the detriment, evidently, of capital called "international", i.e.. foreign capital based on currencies and gold.

The capitalist world thus found itself divided into two blocs whose commercial and financial interests and whose methods of expansion were constantly coming into opposition on the world's markets. As a report by the Economic Committee of the League of Nations noted in 1938:

  Efforts to penetrate export markets have contributed to accentuating the contrast between the commercial system based on a free currency and the commercial system based on a controlled currency By the former is to be understood the system in which the money received in payment for exports can be freely employed and in particular can be used for purchases in third countries. By the second, on the other hand, is to be understood the system in which the foreign currencies received by traders are blocked and can only be employed for purchases in the countries to which the exports went. The Committee is of the view that everything should be done to reduce the clashes between the countries with a free currency and those with a managed economy.

It is this split in the capitalist world, this antagonism between forms of expansion, methods of financing and monetary conceptions which, superimposed on the classic struggle for markets, distinguishes the Second from the First World War.

In 1914 German capitalism and English capitalism were not only of the same rank and nature; they wore the same clothes. Mr Bethman-Holweg dressed the same way as Lord Grey.

But while in 1938 Mr Eden's elegance was still very 1900ish, German imperialism wore a brown shirt and boots. This difference in dress revealed the break in the unity of the capitalist world brought about by the economic crisis of 1929. While the Second World War was, like the First, a consequence of the necessity for capitalism in general to find "external" markets and for each imperialism in particular to expand at the expense of its competitors, this fundamental struggle was doubled this time by secondary conflicts which gave to this war a particular face and features: struggles of gold against barter, of secured currencies against controlled currencies, of the free market against autarky, of "international" finance capital against "national" capital, the antagonism was everywhere, in the expansionism as well as in the forms of expansion.

The essence of the conflict was thus economic, and nothing but economic. It did not result at all from the difference of political institutions, any more than the alliances resulted from the similarity of regimes.

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  It only remains to add that, although the Allies' original "war aim" of restoring economic liberalism on the world market ceased to be so frankly proclaimed as the war dragged on as it had been by the British and French Prime Ministers in 1940 (after all, restoring world economic arrangements which benefited the capitalists of the Allied powers was hardly an issue on which to appeal to people to kill and get killed), it nevertheless remained the Allies' over-riding reason for wishing to see the defeat of Germany and Japan. Plans for the post-war reconstruction of liberal capitalist trading and financial arrangements were discussed from as early as 1941, even if out of the limelight. These discussions culminated in a Conference held in Bretton Woods, in New Hampshire. in July 1944 at which the IMF and the World Bank were set up as the main institutions of a post-war liberal international payments system to be based on currencies tied to gold at a fixed rate. The outlawing of the "autarkic" trading practices of pre-war German and Japanese imperialisms was confirmed in 1947 with the drawing up of the General Agreement on Tariffs and Trade (GATT).

  Thus was ensured the continued domination of the world by the capitalist powers which benefited from liberal world economic arrangements, and in particular American imperialism. However, in allying themselves with a power which practised the same economic and political methods as the German and Japanese enemy, American, British and French imperialism conjured up another challenger to their domination of the world: state capitalist Russia, which obtained as its war prize an Empire in Eastern Europe. So the struggle for world domination between "the old and fatter bandits". and their younger and more vigorous rivals continued as it will for as long as capitalism is allowed to last.