Editorial: The Rise of Hitler: A Warning to the Workers (1933)

Editorial from the April 1933 issue of the Socialist Standard

The rise of Hitler to power in Germany is an event which the workers of all countries should study with care. It is not an isolated phenomenon, but part of a world-wide overflowing of discontent. It is not a coincidence that the three years since the oncoming of the crisis late in 1929 have witnessed the abrupt and sometimes violent overthrow of governments in different parts of the capitalist world. “National” Governments in the United Kingdom and many of the British Dominions; the advent of De Valera in the Irish Free State; the colossal defeat of “Prosperity” Hoover in the USA; repeated cabinet crises in France; political revolutions and counter-revolutions in South America; the Republic in Spain; political crises in Scandinavia; expulsions of leaders and reversals of policy in Russia; no country has escaped the economic consequences of a capitalist world which is seriously out of joint.

Each country has witnessed the consequent political stresses and strains of new discontents, and new slogans, which had generally brought about new political groupings and new figure-heads. The universal insurgency expresses itself in different ways according to the traditions, experience and constitutions of the various countries. A century ago such economic crises brought to a head deep underlying social conflicts and produced the revolutions of  ’30 and ’48, with their violent overthrow of kings and absolutist constitutions. Nowadays the more advanced countries have developed systems which permit easier adjustment to new pressures, avoiding the disturbance and expenses of the appeal to violence. Countries which have not travelled so far along the road of capitalist democratic government still resort to the old method of the bomb, the rifle, and the machine gun, the mass demonstration, the barricade, and the organisation of insurrection in the armed forces.

In a broad way the cause and the effect are the same everywhere. Everywhere capitalist private ownership reigns. Everywhere the rulers must serve the interests of the capitalist class, but everywhere it is an over-riding condition of social life that rulers cannot ignore the active discontent of the mass of the population. The discontent, even the open rebellion, of individuals and minorities can be bludgeoned into acquiescence, but when great masses of the population are driven by intolerable conditions into organising for common action then the rulers must sooner or later provide a safety valve; placate the movement or find means of dividing it; turn it into new directions or harness it directly to the capitalist state. In no other way can capitalism maintain itself.

Long before the war the British ruling class learned how to incorporate radical politicians and labour leaders in the parties of capitalism. The German capitalists in 1918 jettisoned the Kaiser for a similar end. Fifty per cent of the German voters had registered their disillusionment and war-weariness by voting for the reform programme of the Social Democratic Party. German capitalism thereupon “digested” the SDP and watched it stabilise German capitalism in the troubled post-war years. The military and civil associates of the Imperial Kaiser humbled themselves to the “upstart” labour leaders because they had to have someone who could control the workers and keep them loyal to the fundamentals of capitalism. So for fourteen years the Social Democrats, either in coalitions or in “friendly opposition”, worked out their policy of bargaining for reforms as price of their support. The outcome was inevitable. They have shared the fate that has always overtaken “Labour” politicians and parties when they accept responsibility for the administration of capitalism. Discontent with the effects of capitalism cannot for ever be stifled by Labour promises of better times or apologetic assurances that things might be worse. The membership and influence of the German SDP declined year by year until it had shrunk to a third of its former size. Part of the loss was picked up by the Communist Party, but in the meantime a new group had arisen, led by Hitler. At the election on March 5th he received 17,266,000 votes (43.9 per cent) and his allies, the Nationalists, received 3,132,000 (8 per cent), giving him a clear majority. The Social Democrats received 7,176,000 (18.3 per cent) and the Communists 4,845,000 (12.1 percent).

In one important respect Hitler’s Nazis are just like the Social Democrats and the Communists; they are all parties of discontent. Hitler promises work for the workless; secure government jobs in the police, the Army or the Civil service for 100,000 of his members; higher prices for agricultural products to help the peasants; and protection for the small investor and little shopkeeper squeezed by the big stores and the banks.

Immediately on taking office Hitler imposed fresh taxes on the big departmental stores and chain stores with the professed object of helping the small shopkeepers. He promised also to find posts for out-of-work professional men (doctors, lawyers and others), and it is because a relatively large number of bankers, proprietors of big stores and the more successful professional men are Jews that the party has taken on a violently anti-Jewish character. Every Jewish doctor driven out of practice, every Jewish lawyer barred from the courts, every Jewish schoolmaster and civil servant dismissed, makes another vacancy for one of his members. He was supplied with funds by German heavy industry, by armament manufacturers both in Germany and in France, and by American and other business men and financiers who had investments in Germany for which they needed protection. With the help of these funds Hitler’s party has known how to rally all kinds of discontent into a great movement representing half the electorate of Germany. Therefore Hitler has had to be “digested” as fourteen years ago were the Social Democrats. The stately and imperious Hindenburg and the aristocratic Von Papen, representing the military caste and big landowner, have had to receive on terms of equality the Austrian house-painter Adolf Hitler. Dr Hugenberg and the Nationalist Party, representing big industrial capitalists, have had to enter into coalition with him. Hitler will now have to administer capitalism. He will have to curb the demands of his followers, disappoint them, and ultimately lose many of them to new political adventurers, whereupon the capitalists and landlords who now use him will scrap him and use his successor.

The great lesson to be learned from the decline of the Social Democrats is the sterility of the policy of reforms and of reform parties. The day on which a reform party reaches power is the day on which the evil effects of capitalism begin to sap and undermine the strength of the party, turning the members’ blind loyalty first into bewilderment and then into dissatisfaction, causing them to drift into new parties.

The depths of mental bankruptcy of the reformists are shown by the comment of the Fabian New Statesman (London, March 11th, 1933). After explaining that Hitler scored because he appealed, with banners and uniforms and parades, to the electorate’s love of glamour, the German correspondent of the New Statesman says that the Social Democrats should have done the same, and should have given more prominence to pageantry and less prominence to social reforms. In other words, the workers are to be enticed, not even by the old plan of “bread and circuses”, but by circuses without the bread! This is what forty years of Fabian reformism has brought to the working-class movement!

The second lesson is one which has been entirely missed by the Labour Press in Great Britain, that is the evidence given by the Hitler episode of the overwhelming importance of controlling the political machinery. Six months ago, although the largest party in Germany, Hitler was not in control of the German Parliament and the machinery of government. He was ridiculed and derided by the members of the Government, and insulted by President Hindenburg. His party officials were hauled into court on charges of treason, and thrown into prison. Others were forced to flee the country. His newspapers were suppressed, his offices were raided by the police, his troops were forbidden to parade or wear uniforms in the street. When they attempted defiance they were driven off just like the Communists.

Now, having become possessed of the political machine and confirmed in power by the electors, he is able to turn the tables on his former opponents. He has removed the Governments of all the States of Germany. Former Cabinet Ministers have been arrested, beaten and made to suffer many indignities. Newspapers have been suppressed and their offices raided – from Conservative Catholic newspapers at one end of the scale to Social Democratic and Communist newspapers at the other. The Communists, in spite of their 5,000,000 voters and their year-long boasting of their belief in “mass action” and military revolt, have been cowed into complete submission without offering any real resistance whatever. Events are proving to them what they refused to learn. The organised political majority which controls the political machinery of the modern State is in a position to dominate, and can enforce submission on minorities. There is no road to Socialism except through the control of the machinery of government by a politically organised majority of Socialists.

Notes on Industry (1933)

From the April 1933 issue of the Socialist Standard

Profits in the Depression

As is to be expected, the average rate of profit has fallen during the “ crisis ” years since 1929. A minority of firms have made little or no profit or have suffered a loss. Most firms have made profit, although not at the rate of the earlier period. Some firms have prospered exceedingly out of the general depression.

The following table shows the up and down movement of profits since 1909. It is compiled by the “Economist" and relates (as regards the more recent years) to about 2,000 typical companies. In each case the figures are based on profits and losses declared during the 12 months from January 1st to December 31st. The figure for 1932, 5.9 per cent, on ordinary shares, shows that the investors are still doing quite comfortably: —

             PROFITS AND DIVIDENDS

	Ratio	Average	Average
	of Profits	Dividend on	Dividend on
	to Pref. &	Preference	Ordinary
	Ord. Capital	Capital	Capital
	%	%	%
1909	7.4	4.3	6.3
1910	8.2	4.5	7.0
1911	9.9	4.9	8.5
1912	... 10.2	5.2	* 8.5
1913	... 11.7	5.1	10.2
1920	... 15.2	5.0	12.6
1921	... 10.3	5.2	10.2
1922	7.0	5.2	8V4
1923	9.8	5.3	9.3
1924	... 10.3	5.4	9.8
1925	... 10.9	5.5	10.3
1926	... 11.3	5.4	11.1
1927	... 10.5	5.3	10.8
1928	... 11.1	5.4	10.6
1929	... 10.5	5.5	10.5
1930	9.8	5.7	9.5
1931	7.2	5.2	7.2
1932	5.8	4.2	5.9

(“The Economist: Commercial History and Review of 1932,” February 18th, 1932.)

The Prudent Pro

Some companies have managed to do extraordinarily well. Woolworth’s paid 70 per cent. this year and held a dinner to celebrate it. Other companies in a comparable position have been more reticent. The Prudential Assurance Co., Ltd., have just declared a dividend of 37½ per cent, tax free on their “B” shares. The original shareholder paid 4s. for these shares, and can now sell at about 55s. The “A” shares are even more interesting. Starting with 40 per cent. tax free in 1919 the dividend rose steadily year by year until it reached 94⅙ per cent. in 1928 and 1929. Then came the slump and the dividend fell to 91⅓ per cent. in 1930 and 1931, and right down to 84¼ per cent. in 1932. But hard times cannot last for ever, and this year the shareholders were able to pick up again with 92 per cent. tax free plus a special bonus of 7⅙ per cent. These shares cost originally £l, and now stand at about £26. Another insurance company, the Pearl Assurance Co., Ltd., paid a modest 50 per cent. tax free for 1932.

The Daily Telegraph (January 6th, 1933) reported the Advertising Association Research and Publicity Department as authority for the statement that 80 firms which are prominent users of advertisement showed average profits exceeding 38 per cent. on their ordinary shares in 1932. This figure is, however, probably inflated by the inclusion of a few firms which paid a very high rate of profit.

Then Lewis’s, Ltd., of Liverpool, paid 275 per cent. on their deferred ordinary shares, the same as last year. Half-a-dozen newspapers which reported on Lewis's profits and on the Prudential's profits managed to convey that they had done well without disclosing actually what the rates of dividend are.

As the Pru. advertises extensively in the Press, including the “Labour” and “ Left-wing Labour” papers, the advertising revenue probably has what is known as a sweetening effect on the editors and their staffs. As a sub-editor on a well-known sensational weekly was heard to remark, “We are allowed to attack anyone and everyone—except our advertisers.”

The Ebb and Flow of Unemployment

Owing to the scrappy way in which newspapers treat social questions, it is not easy for the reader who has no other sources of information to get a full and clear view of what is going on even when the question is one which is always being written about, e.g., unemployment.

A very common misconception is that unemployment, owing to the displacement of workers by machines and to other factors, has been steadily growing since the end of the war. This view is particularly popular with those who hold that the present crisis is essentially different from pre-war crises, and that capitalism will never recover from it. Actually the changes in the numbers of unemployed have followed the same kind of course as in pre-war crises.

The years since 1918 can be divided into a number of well-defined periods.

In 1919 and 1920 there was some “demobilisation" unemployment, followed by a period in 1920, when unemployment was at a very low level, lower than in the years before the war.

Then, in 1921, came the sudden crisis which sent unemployment up to the 2½ million level.

During 1922 and 1923 unemployment declined to a level of about 10 per cent. or 11 per cent.

From 1923 to 1929 (apart from a short period in 1926 due to the General Strike) unemployment was not increasing, but remaining fairly stable at about 10 per cent. or 1,100,000. Actually, in July, 1929, there was less unemployment than in July, 1923, in spite of a very big increase in the total number of insured workers. In other words, there were many more workers in work than there were six years earlier.

The years 1923 to 1929, which newspapers at the time habitually referred to as years of “depression" were, in fact, years of expanding production and trade, and increasing profits; Then, late in 1929, began the “crisis," with unemployment soaring up to 2½ or 3 millions, and a percentage (23 per cent.) only reached before for a short period in 1921.

The present “crisis" will eventually give place to a new period of expansion, but the fact that there were never fewer than 1,100,000 unemployed in the “boom" year 1929, shows what may be expected by the workers when prosperity returns for the capitalists. At its best, capitalism in England holds out little prospect of reducing unemployment much below 1 in 10 of the workers. That will be “normal" unemployment.

The Displacement of Workers

Closely linked up with the question of unemployment is the displacement of workers either by labour-saving machinery and methods, or by the rise of new industries and the decline of old ones. That process goes on steadily, but it does not mean (as the “Technocrats" have thought) that the number of workers employed gets steadily smaller. This can be illustrated from the course of events in this country during the years 1923 to 1932, about which the Ministry of Labour has made a special inquiry. (See Labour Gazette, November and December, 1932.)

In the first place the total population of the United Kingdom increased by 1,800,000 during those nine years, and the number of insured workers, aged 16 to 64, increased by about 15 per cent., or 1,670,000; from 11,140,000 in 1923, to 12,810,000 in 1932.

The next thing to notice is that in July, 1929, the year of maximum production just before the crisis, the number of insured workers actually in work was more than 10 per cent. greater than it was six years earlier, and it had been increasing more or less steadily in the intervening years. So that, in spite of machinery and the decline of certain big industries, there were 11 men and women actually in work, in 1929, for every 10 who were working in 1923.

How can this be explained? Some facts and figures will make the position clear.

Between 1923 and 1932 a number of industries were declining or were installing labour-saving machinery, or both, and consequently the number of workers employed was being reduced. Nearly 300.000 men were pushed out of coal mining between 1923 and 1929, and another 300,000 by 1932.

The number of non-permanent workers on the railways decreased by 60,000 in nine years, and insured workers in Government employment decreased by 46,000. Including the miners, there were about 400,000 fewer workers actually at work in the declining industries in 1929 than in 1923, and a further decline of about 1,000,000 due to the crisis between 1929 and 1932.

But while these industries were reducing their number of workers, the expanding industries were taking on far more men up to 1929 than were being displaced elsewhere. While mining was shrinking, electrical generation and the manufacture of electrical machinery was rapidly growing. Artificial silk was replacing cotton. Motor transport was replacing railway transport. While the staffs of the Central Government were being reduced, the Local Authorities were taking on more men.

Dividing all industries and transport services into the declining group and the expanding group, we find that while the declining group got rid of about 400,000 workers between 1923 and 1929, the expanding group of industries and services increased the number of workers actually in their employment by 1,400,000—a net increase of 1,000,000 for insured trades as a whole.

Since 1929 the crisis has thrown another one million men out of employment in the declining trades, but the expanding group have still managed to increase, although only very slowly. As remarked above, for the whole group of insured trades, the number in work in 1932 and now is still about the same as in 1923, in spite of the heavy fall in employment since 1929, and, after making all due allowance for any increase since 1923 in the number of unemployed not on the register.

It is interesting to notice that while mining and many manufacturing trades have been badly hit, the distributive trades have increased enormously, from 1,100,000 workers in 1923, to 1,700,000 in 1932.

The National Income

Mr. Colin Clarke, M.A., has made estimates of the amount and distribution of the National Income in the years 1924—1931. ("The National Income." Pub. MacMillan, 1932. 8s. 6d.)

He shows (p. 72) that the National Income (including net income from Overseas) increased from £3,586 millions in 1924, to £4,006 millions in 1929, these being years of expanding production and trade.

He estimates that the wage earners receive about two-fifths of the total national income (39.9 per cent, in 1929).

On the assumption that the average family consists of, roughly, man, wife and two children, he estimates that the national income, if equally divided, would have been sufficient in 1929 to provide £349 per family, or £6 14s. per week. (P. 78.) If an amount were deducted to provide for the existing rate of new capital, and excluding income from overseas, the figure would be about £310 per family in 1929, or just under £6 a week.

Edgar Hardcastle

Letter: The Use of Trade Unions and Strikes (1933)

Letter to the Editors from the April 1933 issue of the Socialist Standard

A correspondent raises the question of the usefulness of strike action. As the letter is rather long and deals with other matters not directly concerned with the main point, we have omitted certain passages condemning the Communist advocacy of armed revolt, and the notion held in certain quarters that capitalist wars should be supported because, so it is argued, they hasten economic development and encourage the growth of the Socialist movement. The letter then continues:—

But precisely the same or similar arguments go to show that the strike is a weapon only advocated by anti-socialist elements of society. The argument usually put forward is that since wages are determined by the socially necessary time required to reproduce labour-power at the moral and historical standards of a particular epoch, there is a minimum level to which this tends under the pressure of the exploiting class. But wages are not the value of labour-power, hut the price of labour-power, that price being regulated by conditions of supply and demand. Thus, say the strikers, by temporarily withholding supply, we are able to resist the encroachments of our masters.

This reasoning is false. The practical results of strikes prove it to he utterly untrue.

The price of labour-power, like all other prices, is not determined until the buyers face the sellers on the market. Moreover, the price even then is not fixed until the actual transaction takes place. Does the strike give the workers greater bargaining power than they would have had without it ? The answer is “No.”

Until the workers strike they face the masters as an organised number of unions. They can hold their organisation intact by their economic power (the sum total of their subscriptions, and the discipline wielded within the union upon the members). Faced with the competition of the vast unemployed army, they have certain advantages in the form of sick benefit, pension, and other schemes which give them a certain extra bargaining power as long as they do not strike. As soon as a strike takes place, they lose those advantages. Their funds are depleted, the masters having far greater resources. A cunning compromise is usually the result of the strike, that compromise generally working in the favour of the masters because of the ineptitude of the average trade union leader. The unions go back to work, half- starved and without any financial backing. Then comes the real struggle. Now that they are thoroughly whipped by the strain of the strike, the masters insidiously undermine all the silly little concessions which .they thought they had gained, and within a few months the unions are back in their original position, except for the fact that they are now thoroughly demoralised and consequently less capable of thinking clearly on the real issues of the class struggle. Apart from all that, sectional frictions and the dead weight of the unemployed beat them every time. It is useless to argue that it hastens development, this strike business. Of course, it does, but that is no reason for a socialist to advise the workers to cut their own throats in the interests of historical development. That were merely suicidal insanity. I think that the socialist must look for some other weapon on the economic field. That weapon is Socialism. The only strike that could be successful would be a strike on the part of the majority of the workers, class-conscious and determined, but such a majority would have long since relegated the economic struggle to the background in their mighty fight for political control of armed force.

I am not arguing against ca-canny as a weapon. That is in a different category. But I think that there is some reason in the idea that to advocate strikes as an economic weapon is anti-socialist.

It seems apparent that the most important factor in the struggle for wages is not the bargaining power of an unconscious, unco-ordinated, uneducated. class such as ours is, but the necessities of capitalist production. When the wages of our class fall below the historical and moral standard of comfort, output falls with it, and capitalism has to rectify it. I don’t think we ever will get wages far above or far below that level. Certainly the strike will not help us.

Yours truly,

“ BARI.”

Reply.

In order to remove any possible misunderstanding let us first make dear why the S.P.G.B. supports trade union organisation and strike action. It is not because these are the road to Socialism: they are not and cannot be that. The only road is the conquest of political power by a politically organised Socialist majority. The case for organising in trade unions is that the conditions of working-class life and labour could and would be worsened if no organised resistance were offered to the downward pressure of the employers. Failure to make this organised resistance would, in addition, make Socialist propaganda and organisation even more difficult than it is now, for these are not helped, but hindered, by a lowered standard of living and a condition of disorganisation among the workers.

The argument of our correspondent is faulty in several respects. In the first place the value of trade union organisation does not consist solely in the number of strikes that can be brought about. The very existence of the trade union (with the weapon of the strike, or ca'canny, to be used in the last resort) is itself a factor which influences negotiations about the level of wages, just in the same way that the existence of armed forces is a factor in the negotiations between governments, even although in most cases war is not resorted to, but only threatened. When the employers in an industry contemplate an attack on wages or conditions of employment, they take into consideration the possibility of a strike and the expense they will suffer by it. If the expense appears too great for the gain anticipated they will not push the claim to the extremity. One of the “expenses" they consider is making their employees disgruntled. They know quite well that disgruntled workers do not make for high output. For this reason, even when workers have been beaten in a strike, the employers sometimes prefer not to reap all the fruits of victory. Hence, the strike emphatically does give the workers greater bargaining power than they would have without it. The process is by no means the mechanical thing our correspondent appears to think it is. Even if the workers were beaten in every strike (and they are not) it would still be true that the strike is not futile as an economic defensive weapon.

Unless the condition of the market at any given time is such that the employers would welcome a stoppage of work, there is usually some margin about which they are prepared to bargain. If there is in existence an organised body of workers, able to bring about a strike, the employers will make some concession (an increase in wages or the abatement of part of a decrease) in order to avoid the strike. One factor in negotiation is, of course, the ability of the respective sides to weigh up the strength of the other side. If either side underestimates the strength of the other there will be a strike or a lock-out. On the workers' side there is a fairly narrow limit to such a war of starvation, but even then it often does not pay the employer to have his works held up for so long. So that in fact strikes do in many cases result in some gain for the workers, and lock-outs do sometimes end in the employers withdrawing all or part of their demands.

A second error in our correspondent's argument is the implication that there is a fixed "historical and moral standard of comfort" of the working class and that if they are forced below this standard their output falls and the employers then have to raise wages again for their own benefit and without any effort by the workers.

It is true that output would fall if the workers were forced below a bare physical minimum of subsistence, but in the main workers who are in work are above that standard. They could therefore have their standard of comfort reduced without being forced below the bare minimum of subsistence.

It may also be true that a lowering of the historical standard of living would, for a while, result in less capable work, but it has yet to be proved that the workers in a given industry would not get used to the lower standard and ultimately provide work of the same class as formerly, assuming they were not actuated by the spirit of resistance. The English employers during the 19th century were considerably helped by the emigration of large numbers of active and dissatisfied workers.

Expressed in terms of purchasing power, the English workers' standard of living is considerably higher than that of workers in certain other countries and considerably higher than it was in England, say, eighty years ago. Part of the rise in the English workers' standard of living between 1850 and 1900 may be explained by changes in the technique and methods of industry, but another part can only be explained by the organised efforts of the workers to improve their conditions.

It is quite true that the employer who pays a higher wage will be induced to maintain his profits by reducing his total wages bill in other ways—for example, by introducing more labour-saving machinery. Consequently the effort to raise wages, shorten hours, and improve working conditions are themselves factors which influence the development of industry. However, this does not mean that the efforts are not fruitful from the working class standpoint. It is unquestionably better to be exploited at a higher wage in a modern factory than it was to be exploited at a lower wage in a less efficient factory fifty or one hundred years ago. But for the standards won and maintained by organisation and strikes the workers would be exploited under worse conditions and at a lower wage than actually exist.

One reason for under-estimating the value of trade union organisation since the war is that the heavy fall in prices has been overlooked. When prices are rising a strike for, say, 5s. will appear to be a victory for the workers if they get 2s. 6d., even although this may be insufficient to compensate for the increased cost of living.

When prices are falling, as they have been since 1920, the opposite error is often made. If employers demand a 5s. decrease in wages, and the workers can get this reduced to 2s. 6d., it may in fact be a victory, for the workers if the fall in wages is less than the fall in prices.

Actually the whole tendency since 1926 has been for the purchasing power of full-time rates of wages to rise, owing to the fact that prices have been falling faster than wages. Although the so-called General Strike of 1926 was a failure in its immediate purpose, it probably had a very considerable effect in warning off the employers in the big industries from lightly entering on lockouts to enforce reductions.

It is beyond dispute that had there been no trade union organisation the employers would have taken far greater advantage of the crisis to depress wages than in fact they have been able to do.

Editorial Committee.