Balancing the books (1989)

From the January 1989 issue of the Socialist Standard

President Reagan came under continuous criticism from Mrs. Thatcher and the heads of governments in several other countries because, for some years, the American Federal Government has been running a large budget deficit; that is to say it nas been spending more each year than its ordinary revenue from taxation and other sources, and making up the deficit by borrowing and thus adding to the national debt.

A second criticism levelled at Reagan was that America has a huge adverse trade balance, exports being insufficient to pay for imports, the deficit being met by loans from abroad. It is not intended to deal with this except to point to a difference between the two kinds of deficit. While it is possible for all governments in the world to run a budget surplus at the same time, it is not possible for all governments simultaneously to run a favourable trade balance. World imports and world exports are the same, one country's exports being another country's imports. The relative position of countries constantly alters: Japan now leads in respect of the size of its favourable balance: some twenty years ago it was the United States, with Japan showing a big trade deficit.

As regards criticism of the American budget deficit by the British and other governments. Tim Congdon in an article "Do these debts really matter?" (Times, November 1988) showed that many of the critics are not in a position to object, in view of the state of their own budgets. The American budget deficit in 1988 was an amount equal to 2.3 per cent of annual national income (Gross Domestic Product), which is less than the deficit in France (2.5 per cent), Germany (2.6 per cent), Canada (3.3 per cent) and Italy (10.2 per cent). The British government, too, has been running a budget deficit for many years, although the amount is less then the American 2.3 per cent of GDP and there is now a commitment to run a balanced budget or even a surplus in future.

The new President, George Bush, turns a deaf ear to the criticisms and intends, it appears, simply to wait in the hope that increased government revenue will wipe out the deficit by 1993, without any increase of taxes. The American House of Representatives' Budget Committee does not believe this and forecasts that the deficit will continue to increase and reach 50 billion dollars by that date (Times, 22 November).

The attitude of governments and economists to budget deficits has undergone a big change since last century both in the United States and Britain, partly because of the different view taken of borrowing. In the nineteenth century and the first half of the present century workers were strongly urged never to get into debt. It is all different today. The workers are under ceaseless pressure to “borrow now, pay later”. This changed attitude has helped to weaken the earlier attachment to the idea that normally Government budgets should be balanced and recourse to borrowing exceptional, as during war or for some large, longer-term government expenditure like expanding the navy.

In recent years, before Reagan's presidency, the tradition of a balanced budget had been re-established in the United States but it was certainly not observed by President Roosevelt during the depression of the 1930s. His government ran a huge deficit from 1933 to 1939 and continued to do so during the war. The Roosevelt “New Deal” signalled the conversion of most economists to the doctrines of J.M. Keynes, involving as it did a new look at budget deficits.

Before Keynes the usual reaction of governments to the onset of a depression was to meet the fall of tax revenue due to reduced incomes from profits and wages by cutting government expenditure and increasing the rates of tax — the aim being to maintain a balance between government revenue and expenditure without borrowing. The Keynesian remedy in a depression was the reverse — cut taxes, increase government expenditure by borrowing and run a big budget deficit.

Under Reagan's presidency unemployment has fallen below 6 per cent, the lowest for 14 years, and there are more workers in work than ever before in American history. As might be expected the Keynesians claim that this is proof that if the government spends more by borrowing and runs a budget deficit this will create more jobs and maintain full employment. It is wrong in theory and is not supported by experience. If a government spends more, whether it gets the additional money by taxation or by borrowing from investors, the inevitable consequence is that the taxpayer and investor spend correspondingly less. The true picture is that capitalism goes through a continuing cycle of depression, expansion, overproduction and depression irrespective of the budget or other policies of different governments. The abnormally low unemployment under the Attlee Labour Government 1945-1951 could not have been due to a Keynesian budget deficit policy because the government was running a budget surplus.

The best example of the irrelevance of Keynesian doctrine is to compare the Roosevelt “New Deal” with the way the British government dealt with the depression in the same years. Roosevelt's policy was Keynesian. The British government's policy was the reverse, that of cutting government expenditure and increasing taxation to aim at a balanced budget. In spite of opposite financial policies unemployment took much the same course in both countries. In the United States it rose from 8.9 per cent in 1930 to a peak of 25 per cent in 1933, and in 1938 — five years after Roosevelt became President — was still 19 per cent. In Britain it reached a peak of 22 per cent in 1932, and in 1938 was still 13.5 per cent.

The Labour Party's view of budget deficits is particularly interesting. They are committed to a big increase of government expenditure and a budget deficit in the belief that it will wipe out unemployment. Yet the last Labour Government, 1974-79, ran a big deficit and saw unemployment go up from about 600,000 to 1,300,000. Labour Party policy, laid down in a Report to 1944 conference had this to say: “If trade is bad or even showing signs of turning bad, then is the time for a budget deficit". In 1976 the Callaghan Labour Government threw the Keynesian doctrine overboard because he said it would cause inflation:

Continued inflation in the UK would lead to further hardship and unemployment. Therefore the Government rejected the panacea of pumping more funds into the consumers' hands so that the internal economy could be expanded (Times, November 1976).

What caused this repudiation was that two different Keynesian policies presented the government with an inescapable dilemma. One Keynesian doctrine is that the cure for inflation is to run a large budget surplus (see Harold Wilson's Remedies for Inflation, 1957. page 11). The other is that the cure for unemployment is a large budget deficit. But under the Labour Government between 1974 and 1976 unemployment and prices were both shooting up rapidly and there is no way in which the budget can be in surplus and deficit at the same time.

While governments have no control over unemployment — it takes its own course — they do have control over the general price level and can stabilise prices if they so decide, as in the nineteenth century up to 1914; or reduce them as in 1920 —1925: or push them up as Labour and Tory governments have chosen to do in the last half century. Why they have chosen to do this (or have slipped into it out of total ignorance of the monetary theories known to governments in the nineteenth century and in 1920-1925) is something of a mystery.

Reverting to the criticism made by other governments about the American budget deficit, the Times (8 November) says that their specific accusation is that it is "the prime cause of continuing international financial instability". We have news for them. As Marx showed, capitalism is an inherently unstable economic system and there is nothing governments can do to make it stable.

Edgar Hardcastle

American Reformists in Difficulties (1934)

From the April 1934 issue of the Socialist Standard 

The Socialist Party of America, among many similar organisations, has on numerous occasions acted in the capacity of a “case history” for the scientific Socialist. It has provided an abundance of evidence to support the Socialist contention that a membership which is ignorant of the basic principles of Socialism can never hope to build up an organisation which has as its object the capture of political power, and its use to abolish capitalism and establish Socialism. Such a membership can at best be used for the capture of political power in order to introduce certain reforms, which, in due course prove themselves futile to solve the basic problems which perpetually confront our class. Such an organisation, whilst it can be most active, cannot, because of its membership's political ignorance, go any further in its objectives than the object of its members without undermining the loyalty of such members.

The above contentions are illustrated by an item which appeared in The New Leader, organ of the Socialist Party of America, of December 16th, 1933, under the caption “ Party Standing Imperilled in California," with also a sub-caption, "Desertion by Sinclair, and Communist Manoeuvres cause Confusion in Party." The writer of this news item, a New Leader correspondent, opens his article as follows:—

   “With the election of Hyman Sheanin as State Secretary of the Socialist Party to succeed Harold Ashe, removed by the State Executive Committee because of recently acquired Communist views, and the desertion of the Party by Upton Sinclair to seek the Democratic nomination for Governor, the Socialist Party in this State faces a new situation. Because of 'united front’ manoeuvres by Communists and their sympathisers within the party, quite a number of party branches have been more or less divided, some verging on disruption.”

This situation is by no means a “new" one in the Socialist Party of America. On several occasions the organisation has been split from top to bottom. Evidence for this can be found in plenty by the student of that party's history. One need only read the work of a Socialist Party member, Nathan Fine, entitled “The Labour and Farmer Parties in the United States, 1828-1928," for such evidence.

The interesting part of the aforementioned article is the attempt to explain the cause of this new division in the ranks of the Socialist Party of America. From the sub-caption it would seem that only two factors, the desertion of Upton Sinclair and the Communist manoeuvres, were responsible. The writer even stresses the latter cause, the "Communist manoeuvres":—

   “ . . . This appears to be the result of plotting by Communists, and it has had its effect upon some members who joined the Party in the last several years. These unschooled members have fallen victims to certain fears which include apprehension that a complete collapse of capitalism is just around the corner, that the Fascists are going to get us soon, and that our only salvation is unity of action with the handful of Communists who are active in California. The psychology is for all the world like those party members who in 1919 flocked to the party faction that was coming under the control of Moscow and which was soon talking of 'Johnny get your gun'. (Italics mine.)

These “unschooled members’’ are not altogether to be blamed for their muddled condition. For, in examining the files of the party organ, The New Leader, we find that influential members whom we are to assume are “schooled“ have subscribed to these self-same views. If "the “unschooled” and newer members were guilty of believing that capitalism is collapsing, so too, were much older members who have had plenty of “schooling.” An example of this belief by one of the older members is the following:

  “Four years of industrial chaos, bottomless misery and general despair under Republican administration have amply demonstrated the pitiable incapacity of the ruling classes to prevent a catastrophic collapse of their much-boasted economic order." (Italics mine.) Morris Hillquit, in the “New Deal,” November, 1933.

In the same paper, Norman Thomas, standard-bearer of the party for the office of President of the United States, says the following on the menace of Fascism in this country:—

  “Moreover, a vote for Socialism this year is a vote against the danger of turning the opportunities which exist under the N.R.A. into a drift toward a Fascist society . . .” (Italics mine.)

Only a week or so back, this organisation called a mass meeting in New York’s famous Madison Square Garden, to demonstrate against Fascism in Austria, which ended in both the Socialist Party of America and the Communists demonstrating against each other, with the Secretary of the Communist Party having a chair broken over his head.

Is it to be wondered at, then, that members of this party, with their views on leadership and their hero worship for the two above-mentioned leaders, should take these leaders’ views seriously? To these misinformed workers the great stir and stew of the Communists over these questions passes as action, intelligent and revolutionary action, and attracts them.

Once again, too, is the theory of leadership, so dear to Socialist Party of America members, tried and found wanting. Once again after many years of activity in this party, during which time he has enjoyed the admiration and adulation of the membership, Upton Sinclair, the leader, deserts his admirers to join an avowedly capitalist party. His name is added to the already long list of “leaders" who have deserted the Socialist Party of America for more profitable fields of endeavour. Sinclair, in California, joins Paul Blanshard in New York. Both will do their best to put over Roosevelt's “New Deal." Once again, too, does the party cover its shame by a posthumous discovery that what they have lost is no loss at all. We are informed by the correspondent already quoted: —

  “The treachery of Sinclair is quite as damaging, as he also has had an effect upon some unschooled members. Sinclair had formerly posed as a left winger, especially in matters relating to Stalin and his fellow commissars. His seeking of the Democratic nomination for Governor has revealed how shallow his political and economic thinking has always been." (Italics mine.)

We are almost tempted to say “sour grapes" ! Not alone is it bad enough that this “comrade," who was torn between Stalin, Norman Thomas and Roosevelt, should finally turn to the last-named leader, but what is much worse, he takes with him others of the Socialist Party, who are, in turn, tom between their devotion to that party and Upton Sinclair. For we are informed:—

  “The result is that we lose some uninformed members who follow Sinclair, while others come under Communist influence.”

After the correspondent has stated what he thinks are the factors responsible for this split in the party's ranks, he then gives the real due to understanding this condition:—

  “Old time comrades who have watched this development have come to the conclusion that the Party has been too careless in admitting people to membership who know little or nothing of Socialist principles. The well-informed younger comrades agree with this point of view. The Party has also been too tolerant and has not exercised that discipline that is necessary to build a growing working-class party.”

Here, then, is the kernel and cause of this and past splits in all such organisations. The scientific Socialist and his party have not paid mere lip service to this view but have seen to it that all who apply for membership in their ranks shall understand and accept at least the Declaration of Principles of Socialism. As is so well stated in the Socialist Party of Great Britain’s little pamphlet, “Socialism and Religion ” : —

  “Hence the test of admission to the Socialist Patty must be neither more nor less than acceptance of the essential working principles and policy of Socialism as a class movement. To demand more is to degenerate into a sect; to require less is to invite anarchy and embark on the slippery incline of labourism and compromise. These essentials of Socialist principles and policy are outlined in the Declaration of Principles of the Socialist Party (of Great Britain). They can be easily understood by the average worker, and they comprise the irreducible minima of the principles and policy of Socialism; narrow enough to exclude all who are not Socialists, yet broad enough to embrace everyone who is. They form, in consequence, a reasonable and sufficient test. . .”

Because the Socialist Party of America, like its kindred parties the whole world over, ignored the above essentials for membership, its history is full of crises when ignorance and confusion have led—as is inevitable—to schism.

It is most doubtful if they have even learned from their recent experiences. For the correspondent whom we have quoted ends his article with the following:—

  “The betrayal of the Party by Sinclair may prove a terrific blow. The Socialist Party vote may be such that it will lose its official standing. In that case the enormous number of signatures required to get on the ballot will make it almost impossible for the Party to nominate candidates. The peril the Party faces as a result of Sinclair’s action is recognised by every real Socialist, and the utmost will be done to avert it.”

Here is the usual plea of the vote-catcher for still more vote-catching when he sees that the votes are turning elsewhere.

Those who place an intelligent membership before a large but politically inexperienced one see in this further proof that the Socialist Party of America is not a Socialist party. For the workers who support it the future can hold nothing but disappointment, and often despair.

To those workers in the United States who seek the only solution to their problems, Socialism, we of the Workers' Socialist Party open our ranks. We have the one thing worth having, an organisation devoted to the overthrow of capitalism and the establishment of Socialism.

Sid Felperin.

Workers' Socialist Party

Cooking the Books: Big Deal! (2020)

The Cooking the Books column from the August 2020 issue of the Socialist Standard

When Boris Johnson announced the bringing forward of a modest package of public works, he remarked that,  ‘it sounds positively Rooseveltian. It sounds like a New Deal. All I can say is that if so that is how it is meant to sound to be’ (Times, 30 June). He was referring to the policies pursued by the Roosevelt administration in America in the 1930s.

When Roosevelt assumed office as President in 1933 the US was confronted with an unprecedented economic crisis – a huge fall in output, mass unemployment, a frozen financial system. To try to deal with this, his administration adopted a programme of public works (for which he is remembered) and of restricting production until stocks cleared (which is not remembered, but which is essential before capitalism can recover from a slump).

Re-elected in 1936, he expanded the public works programme. Capitalist production recovered to some extent but in 1937-38 there was another recession. As for unemployment:

‘When Roosevelt ran for re-election in 1936, the unemployment rate was 16.9 per cent, almost twice what it had been in 1930. (…) When Roosevelt ran for the unprecedented third term [in 1940], unemployment was 14.6 per cent.’ (LINK).

No wonder a Times sub-editor, in a note explaining Roosevelt’s New Deal to readers who might not have been familiar with it, wrote:

 ‘The extent to which it helped the US economy to recover from a deflationary recession remains a matter of debate. Some argue that FDR, as the president was known, did not spend enough and that it was the Second World War that finally put the US economy back on track as government spending soared.’

The ‘some’ referred to who wanted FDR to spend more are left-wing reformists, and currency cranks, who do not understand how capitalism works. The Roosevelt administration could in theory have spent more on putting people to work on infrastructure projects but this would have had to have been at the expense of private capitalist investment, a fall in which would have had the opposite effect of more unemployment. But it is true that mass unemployment in the US only ended when the government mobilised resources to fight a war.

The New Deal was opposed by some sections of the capitalist class who regarded it, as Johnson’s hero Churchill put it in an appeal to Roosevelt in 1937, ‘this war on wealth and business, this war on private enterprise’ (quoted in the Guardian, 29 June). Most capitalists, however, were more level-headed. Roosevelt himself was reported as having said, in May 1935, that ‘I want to save our system, the capitalistic system.’

By capitalism he meant private capitalism as production for profit by private capitalist enterprises. This survived as the dominant form of capitalism in the US. It was never really in need of ‘saving’. Nor was capitalism in its more accurate sense of production for profit on the basis of wage-labour, since those Roosevelt wanted to save private capitalism from – the fascists who wanted America to emulate Hitler’s Germany and the ‘communists’ who wanted it to emulate Stalin’s Russia – were merely advocating alternative ways of operating this.

Roosevelt's "New Deal" (1934)

From the June 1934 issue of the Socialist Standard

The whole world has been watching with interest the progress and results of President Roosevelt’s “New Deal,” more correctly described as American capitalism’s strenuous effort to rescue itself from the morass of depression.

After three years of deepening crisis, falling prices and wages, increasing bankruptcies, and unemployment that reached the unheard of total of from 15 to 17 millions, the country was seething with political unrest. The Hoover regime, which had attempted to conjure the depression away by wish-magic and optimism, but had otherwise done practically nothing to alleviate the economic dislocation, was overwhelmed in the democratic landslide of the 1932 elections. Roosevelt and his party swept the country with their attacks on the “criminal inactivity” of the Republicans, and with lavish promises of a New Deal that would bring back “ Prosperity.”

In general, although there is much intertwining of interests in the propertied class the Republican Party stands for big business and the financial interests. The Democrats are the party of the smaller business men and the mass of the farmers. The most voluble, agitated and organised of all those adversely affected by the depression were precisely these latter groups. Millions of small property owners were hopelessly in debt, their savings gone or tied up in closed banks. The farmers’ earnings and standard of life had been declining for years before the crisis which but intensified their problems. Amongst the workers cut after cut in wages, plus mass unemployment and the constant threat of it, had generated a great volume of discontent. This was, however, largely unorganised and inarticulate, notwithstanding sporadic outbursts. All these elements looked to Roosevelt as to a messiah. Emotional tension at the time of the elections was intense and enthusiasm for the victorious “hero” almost universal, even amongst many of the rank and file Republicans.

Immediately after its inauguration in March, 1933, the new Government was granted extraordinary emergency powers by the overwhelmingly Democratic Congress. Then came the passing, almost without criticism, of a series of drastic laws drawn up by Roosevelt and his group of economic advisers which set up a whole battery of new administrative bodies for a concerted attack upon the problems of ”recovery” and “relief.” Of these bodies the Agricultural Adjustment Administration and the National Industrial Recovery Administration (the N.R.A.) are the most important. As we are chiefly concerned with the interests of the industrial workers, it is the N.R.A., and particularly its labour provisions, that we shall mainly consider.

The N.R.A. came into existence in June, 1933. First it established a General or “Blanket” Code of Fair Competition, which all employers were asked to sign and adhere to. A national propaganda campaign, using all means of ballyhoo, mobilised the vast pro-Roosevelt sentiment behind the scheme. By August 1st over 700,000 employers had signed and received the badge of the Blue Eagle. Compulsion was threatened if persuasion failed—a piece of bluff characteristic of many aspects of the New Deal.

The Blanket Code established a maximum working week of from thirty-five to forty hours, minimum wages varying from twelve dollars to fifteen dollars per week, and made certain classes of child labour illegal. Section 7a of the code guaranteed workers the right of collective bargaining through representatives of their own choosing. The N.R.A. further called upon each industry to draw up a code adapted to its own special needs, each code to be in harmony with the Blanket Code and approved in its details by the N.R.A. The following condensed account of the Steel Industries Code is given as a sample:—

  “The Steel Code . . . provided for a trial period of ninety days. At the end of this period the steel companies declared it workable . . . It provided for a forty-hour week of labour averaged over three months, with a maximum for each employee of not more than forty-eight hours in a 6-day week. The right of collective bargaining was conceded. Representatives of the N.R.A. were empowered to inspect the records of the Iron and Steel Institute to obtain full 'information concerning production, shipment, sales and unfilled orders, hours of labour, rates of pay and other conditions of employment,’ in order to stabilise production.” (The World Almanac, 1934.)

To date, over 400 codes have been put into force and it is estimated that about 20 millions of workers or 90 per cent. of those eligible come within their regulations.

A primary feature of the whole “recovery” programme has been the efforts to artificially stimulate a general rise in prices by credit and currency schemes, and by limiting price-cutting and controlling production through the codes. Because the crisis was accompanied by falling prices it has been assumed by almost all capitalists that if only prices could be pushed up “prosperity” would be here again. Yet it is evident that unless rising prices result from a growing demand for goods, the effect must be to curtail sales. This fact is recognised by the recovery administration. Roosevelt and his economist advisers have, for perhaps the first time in the history of capitalist politics, insisted on the need for greater purchasing power amongst the masses if "prosperity" is to be regained and maintained. This attitude is partly, no doubt, a political manoeuvre to attract working class support. It is certainly emphatic enough, and none of the New Dealers have more clearly expressed it than H. A. Wallace, the present Secretary of Agriculture. In his pamphlet, "America Must Choose" reprinted in part in the New York Times, February 25th, 1934, he says:—

   "There can be little doubt that the trouble traces, in whole or in part, to a maldistribution of income. That doctrine is implicit in our New Deal, which seems to me to rest on irresistible logic. We are trying to build up consumption per capita at home as a substitute for new consumers abroad. Our new method involves a planned redistribution of the national income, in contrast with the unplanned redistribution that takes place regularly, usually unhappily, in every major economic crisis the civilised world over. ...
  "Our New Deal seeks to promote consumption more soundly. It directs purchasing power to those in need by wage advances and alleviations of debt. It lessens the need to force exports. It looks toward balancing production with consumption at home."

In considering this aspect of the New Deal it is important to note that the schemes of the administration to raise wages have been timid in the extreme. Compare them with the bold experiments in banking control, crop reduction and business control through the codes. The fixing of minimum wage-rates affects only the lower-paid strata of workers, directly at all events. How higher-paid workers may be affected is well shown by A. Epstein, a writer on reform questions, in ah article, "Is it a New Deal?" (Current History, March, 1934): —

   "Under the new dispensation, many less efficient workers were completely cast out of industry. On the other hand, many of those who were formerly considered cheap and inefficient were discovered to be able to do almost as good work as that formerly done by employees who received more than the minimum wage in the codes.
  "Since the codes did not abolish the employer's right to hire and fire, he was able either to dismiss entirely his most expensive help or to rehire them later at wages more nearly approaching the minimum. The endless possibilities in such reductions were quite unexplored. Even now there is no way of estimating whether or not the meagre accruals in purchasing power of the lowest-paid wage-earners exceed the reductions in the wages of higher-paid employees. There is no conclusive evidence whatsoever that the N.R.A. . . . with its unwieldy mechanisms for enforcement, has actually resulted in increasing labour's total purchasing power. The contrary is more likely to be true."?

Unorganised white-collar workers are especially liable to be affected in the above manner. L. W. Zimmer, in charge of the employment bureau of New York University, reported last October that "The $20 to $22 job is now about a $15 job, because employers tend to keep their wages around the N.R.A. minimum." He added that the number found jobs was not appreciably above that of the same period of the preceding year. (N.Y. Telegram, October 11th, 1934.)

Despite the fact that one of the avowed objects of the N.R.A. is the abolition of "sweating," the minimum wage rates are only about one-half of the figure, $26.77, which in 1932 was declared by the Department of Labour to be a bare subsistence wage for a family of five. It is well known, moreover, that great numbers are receiving less than the minimum. Fear of unemployment and victimisation effectively prevents complaints to the local N.R.A. Similar evasions in hours of labour are widespread.

The actual increase in individual earnings where there has been a growing demand for workers owing to increasing business has been very small. The American Federation of Labour in its annual review of industry for 1933 reports average weekly wage rates in 16 industries as being $20.53 in November, 1932, $20.56 in November, 1933, and $20.83 at the end of January, 1934. Retail food prices, according to Bureau of Labour Statistics, had risen 20 per cent. between April, 1933, and February, 1934, whilst clothing and furnishings had risen 27 per cent. It is thus evident that the average worker’s standard of living and purchasing power was actually declining during the first seven months of the N.R.A.

The attempt to absorb any large proportion of the unemployed by the reduction of hours to 35-40 weekly is futile so long as business continues at a low ebb. So great had been the spread of short time prior to the New Deal, that the average hours worked in June, 1933, were: crude petroleum industry, 42.6 hours; iron and steel, 37.9 hours; soft coal, 28.5. (Monthly Labour Review, August, 1933.) The average over all manufacturing industries for the first five months of 1933 is estimated at 34.7 hours.

It is, moreover, almost certain that with industrial recovery, machinery and speeding up will enable output at the code hours to equal or even surpass that reached with the longer hours of the pre-depression period. It is extremely significant that the makers of machinery are experiencing what is perhaps the sharpest pick-up shown in any industry. The New York Times (September 24th, 1933) reported that makers of machine tools did 400 per cent. more business in August than in the preceding March. This report further says: “The largest call for new equipment comes from textile mills, which are seeking high-speed machinery to replace the obsolete looms they find too expensive to operate under present high production costs. Producers of men’s and women’s garments are also investing freely in machinery capable of producing more goods in the limited working time allowed under the recovery codes. . . . Manufacturers of machinery attribute the present demand for labour-saving machinery to the desire of producers to keep up previous production schedules while remaining within the limits of the working hour provisions of the recovery programme.” Could anything show more clearly the tangle of contradictions in which the N.R.A. is involved, how its provisions are nullified even when obeyed to the letter, by the inescapable trends of capitalist “enterprise” ? It may be added that so great have been the advances in machinery and other means of production during the years of depression that students of the question agree in believing that with industry restored to its high 1929 level of output, 4,000,000 workers would remain unemployed. Only a further expansion of total production would reduce that figure.

Especially significant is the recent decision to close all of the 900 silk mills for one week on account of large unsold stocks. The textile code authorities have given this order, and violators are threatened with legal penalties. Hundreds of thousands of workers will be laid off.

During the first four months of the Roosevelt administration there was a swift improvement in business. This is generally attributed, in part at least, to the endeavour of manufacturers to lay up stocks before the rise in the costs of production which were expected to result from the Roosevelt policies. The New York Times index of business activity registered its lowest point, of 47.9, in March, 1933. (100 is the estimated “ normal,” but this, to-day, is arbitrary, and a return to it would still be under slump conditions.) The index rose rapidly, and momentarily touched 99 in mid-July, one month after N.R.A. was born. Then began a slow decline, reaching 72.5 in early November. Since then there has been a slow, wavering advance to 87.5 on May 5th. As there has been an improvement in business over most of the capitalist world in the past few months, it is doubtful, to say the least, to what extent the N.R.A. has been instrumental in assisting recovery in America.

There has been a moderate reduction in unemployment. The A.F. of L. report for May, 1934, states that unemployment was reduced from its peak of 13.6 millions in March, 1933, to 10.1 millions in October, but that between October, 1933, and March, 1934, 780-thousand had lost their jobs again. Statistics on unemployment in the U.S. are, however, notoriously incomplete and unreliable. The A.F. of L. figures do not take into account agricultural and certain other classes of workers. The estimate of the Alexandra Hamilton Institute, which does take these into account, places the high point of unemployment at 17 millions. The A.F. of L. estimates that the total wages paid per week increased by 23.7 per cent, between March, 1933, and March, 1934.

Let us now look at the way in which the trend to recovery is affecting the capitalists. In the aforementioned A.F. of L. report it is stated that "the first fifty-one companies to report for the first quarter of 1934 showed total profits of $18,740,000, compared with $6,332,000 in 1933. Dividends, the Federation said, were $15,000,000 higher in March. 1934, than in March, 1933.” (New York Times, May 6th, 1934.) This tendency is precisely what one would expect. It is inevitable that, with the upward trend of production, the increase in returns on capital will be more rapid than the increase in income to the workers. Just as the slump in production was due to conditions which forced down the rate of profit, so the expansion of production can only result from conditions which cause the rate of profit to rise. Profit is the sole motive to production under capitalism, N.R.A. or no N.R.A.

It is evident, therefore, that the principle upon which the labour policy of the New Deal is in theory based, that a greater proportion of the national purchasing power must go to the workers, is not materialising, and it is not likely to.

Next month we will consider the N.R.A. and Trade Unionism.

R. W. Housley

Workers’ Socialist Party (U.S.A.)

The Phoney Revolution (1957)

From the October 1957 issue of the Socialist Standard

Part One: The Burnham Thesis

The roots of James Burnham’s Managerial Revolution go back to the early 19th century Utopian Socialist, St. Simon, who first systematised the notion of the managerial society. Burnham’s second edition of this concept was neither analytical nor in the strict sense statistical, only crudely and melodramatically descriptive. Nevertheless, it met a need in that it gave food for thought to a theory hungry intelligentsia and presented them with a plausible view of what was supposedly happening in contemporary society.

Burnham and the Reformists

Not that the motley crowd of reformists who acclaimed the managerial revolution were prepared to swallow Burnham whole. They eschewed his cynicism as to the effectiveness of any kind of political action; his blatant totalitarianism and bizarre fatalism based on “iron historic laws.” Nor did they share his brutal frankness that this managerial revolution would only be for the working class a change of masters—managers instead of capitalists, and, vide Burnham, a change in some respects for the worse. Rather they diluted the doctrine with democratic and quasi idealistic assumptions. They agreed that a hierarchic social structure was inevitable, even desirable, with an administrative and technical elite at the apex. Political expediency, however, compelled them to a tender regard for the broad based “masses,” who would be comfortably supported in that station of life to which it pleased “management” to call them. Indeed, leftists in their quest for novelty renamed the managerial revolution 20th century Socialism, and in their incorrigible fashion turned Burnham’s nightmare into a Fabian day dream.

Burnham’s proposition

Burnham’s book was tricked out in the pseudo Marxist terminology favoured by Trotskyists and Communists alike. Perhaps many mistook his heavy style for weight of argument, and his metaphysical determinism for scientific exposition. Again, the fact that Burnham as an ex-Trotskyist had been subject to the political paranoia peculiar to the creed, made it easy for him to pass over to the grandiose assumptions of the managerial revolution.

These assumptions can be briefly summarised. It is a fallacy, said Burnham, to believe that Socialism is the only alternative to capitalism. In fact, he contended that the abolition of capitalist property relations holds no implications for the realisation of Socialism. Nevertheless, the present system was doomed. It had lost its power due to the impact of economic crises, modern wars and changing industrial techniques on an already enfeebled system. The New Deal in U.S.A., large scale State organisation carried out by the Soviet and Nazi dictatorships, even the effects of the war economy on Britain, had compelled the major Powers along a path which so far as the old methods of capitalist production were concerned there could be no return. So argued Burnham.

Burnham’s Managerial Class

According to Burnham, capitalism in any significant sense was virtually finished, and the phase we are entering, contrary to Marxist predictions, is not Socialism, but the managerial society, a social set up where control is vested in the administration of business and government by an elite of highly trained and educated men. In short, a society dominated by the manager and technician. Economic evolution, he argued, compels the State to exercise ever greater control and even direction over the means of production. But he concluded, whether managers are representatives of private or public concerns, their power will grow with the growth of economic and technical development. Thus, the managers will emerge as a distinct class, with their own class consciousness, class interests and privileges.

Managerial Society Universal but not Indivisible

Paralleled with this internal development of managerial society, there will externally be a struggle between the three major states or super-states for world supremacy. These super-states will consist of Europe, pivoted on Germany; Asia, whose focal point will be Japan; and America, based on the U.S.A. Each of these states will be autonomous managerial societies based on state ownership of the means of production and political control by the managerial class. We may mention that Burnham wrote his book in 1940 and at the time deemed a Nazi victory possible.

The Three Phases of the Revolution

The managerial revolution, vide Burnham, will be divided into three phases, although the phases may overlap. First, the managers will seize political power from the capitalist class and reduce them, to impotence. Secondly, the curbing of the masses and their indoctrination with managerial ideologies. Thirdly, the struggle between the world Powers for economic supremacy. In Burnham’s view the process took the classic course in Russia. In Germany the working class was curbed first and the capitalists later. Leaving aside the fact that all of Burnham’s major prophecies regarding the outcome of the war were false, what he had to prove was that Russia, via the Bolsheviks, and Germany, via the Nazis, had eliminated capitalism. Further, that the New Deal had been a mortal blow to U.S.A. capitalism and that in the major capitalist countries control of the means of production were passing under the control of the managers. It can be said that Burnham’s premises have no more foundation now than when he first put them forward.

Burnham’s Fallacies

When Burnham argued that the managerial revolution occurred first in Russia, this would seem inconsistent with his own logic. According to him the managerial revolution can only take place as the result of an economic and technical development which renders the capitalist organisation of production superfluous along with the capitalist class. No such process, however, had taken place in Russia. The task of the Bolsheviks was not to supersede capitalism in Russia, but to develop it. Burnham strove to show that Soviet Russia was neither capitalist nor Socialist, but he evaded the basic proposition  that the relations between wage workers and a state employer enchain the working class in Russia to the laws of wage labour as elsewhere in capitalism.

Nor was he on any stronger ground when he argued that the Nazi Germany had begun a new social order. He offered as a proof of this the fact that mass unemployment had been wiped out in Germany. Remembering the vast armament programme of the Nazis and the placing of the economy on a virtual war footing, it would have been strange if the Nazis had not done so.

Burnham tried to clinch his point by saying that capitalist countries like England could not even in total war abolish mass unemployment. Once, however, the war effort was under way mass unemployment was abolished here. He also contrasted what he believed to be the overall efficiency of the alleged managerial set up in Germany with what he termed backward nations like England. Yet, according to official English sources, war production efficiency was superior to that which obtained in Nazi Germany.

Nor did his picture of a virtually non-capitalist economy correspond with the facts. German capitalism all through the Nazi regime and right up to now exhibits the monopolistic and interlocking character which it had in pre-Nazi times. One has only to think of the iron and steel industry dominated by men like Wolf and Flick, Transport, the building, chemical and electrical trades, largely controlled by the Quandt family, or the monopolistic concentration of potash, oil, textiles, glass and cement. While names like Krupp and Klockner were still in Nazi Germany household words. Not only were these monopolists powerful capitalists, but also active participants in their businesses. As such they do not fall into the category of mere coupon clippers or managers in Burnham’s sense of the term. Moreover, these powerful capitalists or groups of capitalists were able, by the familiar devices of inter-connected directorships, plural and proxy voting, share exchanges, profit pooling, etc., to exercise a closer control over the German economy than their counterparts here.

State Regulation and Capitalism

But, argued Burnham, was there not a great deal of regulation and direction of the state, including curtailment of investment, carried out in Nazi Germany. But if this is the characteristic mark of the managerial set up, then English capitalism was equally qualified to be accounted a managerial society. A qualification which in England’s case Burnham would not grant. Burnham contrived to show that market laws and the profit motive were no longer crucial to the German economy. While it was true that the outcome of imperialist rivalries and the needs of German rearmament had blocked certain economic avenues, this had only led to a more intense search for new outlets by means of an aggressive policy of expansion. Thus, extension of markets, export of capital and expansion of capital accumulation were the dominant features of Nazi Germany, just as they were the dominant features of pre-Nazi Germany, and just as they are dominant features today. (Here, of course, we specify West Germany.)

Again, vide Burnham, the index to the advance of managerial society lies in the extent to which state capital replaces private capital. But here once again the evidence which Burnham offered is unconvincing and even paradoxical. In Germany in 1937 the capital invested in state enterprise was only about 7 per cent, of the nominal capital of joint stock undertakings. But if, according to Burnham’s logic, the maturity of the managerial society is an ever-increasing ratio in favour of public financing of industry as against the private industrial sector, then Germany was, under Hitler, still overwhelmingly a capitalist nation.

We might also remember that in 1938 and, taking account of the different price levels, profits distributed in Germany were 1,200 million marks, and undistributed profits were over 2,000 million marks. According to the Oxford Institute of Statistics (The Economics of Full Employment), “Profit margins were extraordinarily high in Germany in 1938 as compared with other countries or with conditions prevailing in Germany in the ’20s.” Also the same source states that between 1933-1938 there was a decline in Germany in real wages. Nor did German capitalism remain a static economy. Some concerns expanded, others declined. Some made huge profits, others made small profits. Some even went out of existence. In short, under the Nazis the economic set up had all the basic features associated with the economic behaviour of capitalism. As such it hardly corresponded with Burnham’s picture of a non-capitalist, non-profit economy.

State Intervention and Capitalism

Burnham also advanced as a crucial proposition in support of his managerial thesis that state intervention, he instanced the New Deal, undermines the basis of capitalist society. In principle Burnham had to argue that state intervention is a move away from capitalism to the managerial society. But state intervention is a typical feature of capitalism, and its purpose is to, and does in fact, strengthen the structure of the capitalist economy. While groups of capitalists in America opposed state intervention via the New Deal, the undoubted intention of Roosevelt was to strengthen and stabilise capitalist property relations, and in this he succeeded. The fact that state intervention of some sort has been a consistent and permanent feature of capitalism, including the state regulation and interference of its mercantilist period, exposes the poverty of Burnham’s argument.

Burnham and U.S.A. Capitalism

It was American capitalism which Burnham made the touchstone of his contentions. For this he leaned heavily on Berle and Means study, The Modern Corporation and Private Property. They stated that “The dominant institutional feature extant in America is the large corporation. Typically they said this is controlled by its management, who have no substantial ownership interest in it and consequently receive no benefit from it apart from their salaries.” They add that in 1929 65 per cent. of the 200 largest corporations, totalling 80 per cent. of their assets, were management controlled. Burnham, however, went far beyond the findings of Berle and Mean. Indeed, only a total misreading of their work could lead one to conclude that they were advancing a theory of the managerial revolution. Apart from what they termed pure management; i.e., Burnham’s definition of the managerial class, they included in management those whose interest was financial and profit making.

Since the publication of Berle and Mean’s book, The Securities and Exchange Commission of the Temporary Economic Committee (T.N.E.C.) carried out an exhaustive analysis on the same lines, which emphasised an aspect of corporation control ignored by Burnham. The report stated that “In about 140 of the 200 largest corporations the blocks of shares in the hands of one interest group were large enough to justify with other indications, such as representation on management, the classification of these concerns as more or less ownership controlled.” This, of course, is even truer for the vast number of smaller companies. The same report stated that the 2,500 officers and directors of the 200 companies own more than two billion dollars’ worth of stock, which amount is heavily concentrated in the hands of about 250 men. Again, it can be noted that the dominant group need hold as little as 20 per cent. of the total stock providing sufficient proxy votes can be arranged, and the rest of the stock can be sufficiently dispersed. It is true that the salaried employers of big corporations—managers in Burnham’s sense—may by investing their savings or even judiciously speculating with the funds of the corporation in which they are employed, strengthen their financial position and reach the status of capitalists. But it was no part of Burnham’s case to prove that there can be and are changes in the personnel of the capitalist class.

What Burnham failed to prove

But even apart from the decisive controlling interests of the powerful capitalist groups who are outside Burn-ham’s managerial classification, he failed to answer the crucial question, and that was in what way do the most important managers employed by capitalists have interests and aims different from their employers? Further, if the mode of production of the managerial society is to be neither capitalist or Socialist, in what way will it be different from both? Burnham himself was aware of the basic weakness of this part of his case, and although he strove to get round it, he left the whole matter up in the air. Thus we find in the end that Burnham’s managerial society, with its integration of state with capitalist industry, is merely a new name for an old process, the development of monopoly capitalism.

We might conclude by saying that Burnham typifies the arrogant, peevish intellectual. He qualified to become a leading Trotskyist by making all the political errors it is possible to make. Some might have been dangerous— if anybody had taken any notice of him. Thus, in 1936, he was not only still asserting that the Soviet set up had a Socialist basis but further, that in the event of a war between Russia and other capitalist powers, the workers should turn their arms against their nationals in support of Russia. Now he has stopped being a Trotskyist, he has not, however, stopped being foolishly dangerous. He is now advocating American world domination—and at this point we leave him.

Ted Wilmott

Part Two

More About Roosevelt's "New Deal" (1934)

From the August 1934 issue of the Socialist Standard

An important element in the N.R.A. is the provision in Section 7a;

   “That employees shall have the right to organise and bargain collectively through representatives of their own choosing, and shall be free from the interference, restraint, or coercion of employers of labour, or their agents, in the designation of such representatives or In self-organisation. . . .” 

The N.R.A. was, of course, framed in such a way as to seem to uphold the prevailing American myth that the interests of capitalists and workers are, at bottom, one and the same. Certainly, Roosevelt, in several broadcast speeches, has attacked certain unnamed, selfish capitalists, who wickedly exploited their workers, but he has made it clear that these are an insignificant minority, that the great mass of employers" are thoroughly fairminded, sound at heart and good Americans to the core. The American Federation of Labour has always officially accepted this absurdly false view of capitalism, and so its leaders saw nothing anti-working class in offering the N.R.A. the fullest co-operation. They openly gloried at the chance to obtain for the first time in American history a sort of quasi-official status for themselves and their organisations.

Under the stimulus of what seemed to be benign encouragement from the President himself, there began a period of intensified activity on the part of the labour unions, and a great drive for membership. Within a few months millions of workers had been recruited, raising the number of organised from about 2½ millions in January, 1933, to around 5 millions in May of this year. Optimism filled the breasts of the unionised workers and their sympathisers amongst the Liberal Radicals. However, within a few months it was dear that the “collective bargaining” guarantee was to have very different consequences from those expected by Roosevelt’s worshippers.

The interpretation of “Section 7a” has led to the bitterest conflict between the unions and employers, more particularly in the Steel and Automobile industries, which have for many years maintained an “open-shop,” anti-union policy with the strongest persistence. Alarmed at the great strides in unionism, and determined to brook no interference from outside organisations, the great capitalist concerns in these and other industries have insisted and acted upon the assumption that “company unions,” largely financed and controlled by themselves, properly complied with the provisions of the N.R.A.

The A.F. of L. has repeatedly urged the Government to come out uncompromisingly in support of the workers’ “rights” under the N.R.A. and against the “open-shop” and company unions. But, as was to be expected, the Government spokesmen, though making rhetorical speeches, apparently favourable to the workers, have sat on the fence on this question, neither daring nor desiring to break the power of the strongest industrial capitalist groups in the country. In the meantime the organisation of company unions has gone on apace, and they now embrace several millions of employees. It is certain that in granting their workers an unsolicited 10 per cent. wage advance recently, the Steel and Auto industries were motivated chiefly by the desire to win over their workers to the company union idea.

The N.R.A. has greatly strengthened the employing class for industrial conflict with the workers. The advantages which they normally possess have been enhanced by the almost complete organisation by industry which the N.R.A. automatically gives them. The workers, on the other hand, are for the most part unorganised. Even after their recent growth the labour unions only embrace about one-tenth of the total number of workers. For purposes of genuine collective bargaining the growing company unions are sheer fakes, having limited “rights” of negotiation, but no means of applying adequate pressure on the employers. In the April, 1934, issue of “The Nation’s Business,” issued by the United States Chamber of Commerce, the chief advantage of company unions over trades unions from the capitalist point of view was stated quite frankly: “The company union does not affiliate in any manner with organisations outside that industry, and generally not outside the operations of a single employer. The employers demand this aloofness or isolation, because its abandonment would mean the strength of alliance for his employees and the ability of his employees to have counsel not dependent upon that company’s pay roll.”

In the numerous strikes that have occurred during the last year a dominant motive has been the desire of the workers to enforce union recognition, which many had naively assumed to be settled once and for all with the coming of N.R.A. In the main, the A.F. of L. leaders have co-operated with the N.R.A. authorities through the Labour Boards in efforts to persuade strikers to return to work on the strength of promises. Where persuasion has been ineffective and the strikes have been prolonged, the State forces have, in the manner usual to pre-N.R.A. days, been used against the struggling workers. The following brief, vivid digest hardly suggests that the workers under the benign wings of the Blue Eagle are on the verge of a millennium:—

   “The New York Sun reported in November that 1,176 policemen were on continuous strike duty, the highest number on record in the department. In the Pittsburgh area the great steel, coal and automobile companies have struck back at their militant workers with the use of armed thugs, barrages of tear and bombing gas and lead. In the coal fields of central Illinois there have been beatings and lawless raids by armed men. In New Mexico the State militia was brought in to break the coal strike, led by the left wing National Miners' Union, and strike leaders were tried by drumhead court martials. In the fruit and cotton strikes, under radical leadership, in the San Joaquin Valley in California, night riders have terrorised Filipino workers; Mexican workers have been threatened with the bull pen and deportation; men have been kept in jail without trial for weeks and then their cases dismissed for want of evidence. The American Civil Liberties Union reports that more than 16 strikers have been killed. 200 injured and hundreds arrested since July 1st, and that more than 40 sweeping injunctions have been issued against workers.” (The Social Questions Bulletin, February, 1984.)

The source of the above quotation is interesting as indicating the intense interest in economic and especially in “labour” questions that four years of depression and the world situation have developed in this country even in the most unlikely quarters. The Bulletin is issued by The Methodist Federation for Social Service.

With the industrial improvement of the past few months has come a rising wave of capitalist criticism directed at the N.R.A. One business house after another has attacked the administration, claiming that its measures are strangling rather than helping recovery. A growing number of capitalists now regret their panicky stampede of a year ago. At that time, as Mrs. Roosevelt in a recent address put it with, shall we say, a little dramatic licence, “Industrial leaders were coming to the government at Washington and saying: ‘Take our business and run it for us.' ” Now, with the first whiff of revival, she complains of their eagerness to throw off all government interference. 

In a summary of the reports of over one hundred local organisations of the Chamber of Commerce throughout the country it is stated that, “There was a large group of complaints about unequal consideration for employers and employees, with so much favour to the latter as to cause disturbances, the effect of which upon recovery locally was feared.” (New York Times, May 1st, 1934.) We have indeed seen how thoroughly the philanthropic policies of the N.R.A. have “favoured” the workers!

The heads of the N.R.A. are wide awake to the rising tide of opposition, and prominent Democrats (who will have to fight the forthcoming elections on the strength of the "vast benefits” the recovery administration has brought to the "common man”) are replying to the attacks with vigour. One class of attack, as, for instance, the much publicised report of the committee headed by Clarence Darrow, claim that the N.R.A. is fostering monopoly and strangling the small business man. There is obviously much truth in this, for by their very nature the clauses in the codes limiting competition mean the virtual suspension of the so-called anti-trust laws. There is abundant evidence that many big industrial concerns which may have strong objections to the labour clauses in the N.R.A. very decidedly approve of the standardisation of trade practices under the control of self-goveming trade associations which the code system provides. From the first, prominent industrialists have been solidly behind the “New Deal,” and have held high official posts in its administration. Charles M. Schwab, head of the Iron and Steel Institute, has declared, “The action of the automobile, textile and other industries in formulating and executing their various codes is . . . the great practical result which has been accomplished thus far. The principles which they adopted are in line with what we have advocated and hoped for over these many years.” (N.Y. Times, May 25th, 1934.) The Nation, which dubs the Steel Code the Magna Charta of Monopoly, points out that “plural voting based upon volume of sales is such as to ensure control by two or three largest steel producers.” "Price cutting loopholes of almost every conceivable variety have been foreseen and corked up.” (May 23rd.)

By the usual irony of history the swarms of petty and middling capitalists who rushed to the support of Roosevelt during his campaign, and who were, according to the rousing speeches of the New Dealers, to be amongst the chief beneficiaries of the recovery programme, are now turning out to be its victims. Many of them must be bitterly wondering if after all they have been but pawns in the game of the powerful interests. They, along with millions of disillusioned workers, will be ready material for the next swing of the political pendulum.

In the old traditional manner, the New Deal is being attacked and defended by appeals to the historical sentiment of the electorate, to their supposed attachment to the ideal embodied in the “glorious constitution.” Ogden L. Mills, cabinet member with Hoover, thunders the awful warning that "the New Deal conflicts with the fundamental principles upon which our government is founded, and to the extent that its philosophy overrides or supplants them it is a revolutionary one.” (N.Y. Times, May 20th.) On the other side of the fence, Richberg, legal counsel for the N.R.A., glowingly proclaims the N.R.A. to be a ”counter revolutionary movement definitely and deliberately designed to perpetuate our American institutions and instrumentalities of individual liberty and self-government.” (N.Y. Times, May 13th.)

All signs point to the developing of a first-class political fight in the near future. Many conflicting capitalist interests are involved, and the form of industrial regulation eventually adopted will necessarily be a compromise between the differing sections. It is impossible to forecast the outcome with any assurance. Much depends on the degree of industrial recovery reached. To any considerable revival of foreign trade there are many obstacles, of which the great growth of artificial trade barriers is only one. Any serious attempt to reorganise American agriculture and manufactures on more nationally self-sufficient lines will entail vast and destructive conflicts, arousing readjustments including the scaling down by government aid of the industries built up primarily on an export basis.

The N.R.A. is involved in a tangle of antagonisms and contradictions. These are a product of the normal development of capitalism the world over. The Socialist does not say that the trends of capitalism cannot be hastened or slowed down by legislative measures, but he does emphatically declare that such modifications are slight and that the general problems of the system can neither be overcome nor circumvented by such methods. This is not to say that America has not now reached a new stage in its evolution, an epoch of still more highly monopolistic and centralized and state regulated capitalism that will bring special problems of its own.

One thing can certainly be said of future developments—that, whatever they may bring, the workers will continue to get the worst of the bargain until they cease to be deluded by the red herring of reform, by attempts to patch up capitalism, and until they unite for the only programme that can solve their problems—the abolition of the whole rotten system itself and the establishment of Socialism.

Though there is abundant discontent, and though the Communists, with their usual cockeyed vision, profess to see “a revolutionary upsurge stirring the American masses,” there is in actual fact a lack of class-consciousness and an abundance of the most confused thinking amongst the workers. This, to a Socialist, is lamentable— but understandable. Economic developments are producing conditions that make the case for Socialism more strikingly clear than was possible in the past era of rampant individualism, and collectivistic ideas of sorts are floating around and being discussed in the most unlikely circles. But in the building up of a sound and powerful party of Socialists, for which The Workers' Socialist Party affords a nucleus, a very great amount of work remains to be done, and must be done. If you are interested, fellow worker, study our principles. If you are convinced, join our ranks.

R. W. Housley

Workers' Socialist Party of the United States

WPA Strikes (1939)

From the December 1939 issue of The Western Socialist

Karl Marx, in his writings, predicted that some day the capitalists would have to take care of their slaves; that they would be forced to feed and otherwise keep alive an ever increasing army of unemployed workers. Modern capitalism has fulfilled this prediction with a vengeance.

In this era of chronic depression millions of workers are forced to remain idle. Their mental and physical energies cannot he utilized in a society based upon production for profit. These unemployed workers and their dependents must be either left to starve or be given a handout in the form of a dole or work relief. Handouts become the order of the day because the exploiting class cannot kill the goose that lays the golden egg. Furthermore, it is impossible to place these millions of workers in cold storage until they are again needed. The problem of what to do with these "useless” slaves would be rendered much simpler to the capitalist class if a few million were killed off in a war. (It must he remembered, however, that the capitalist nations do not wage wars with the object of getting rid of the unemployed.)

The following "solution" was actually proposed by John D. C. Weldon in the Magazine of Wall Street, Dec. 1935, who said. "Ten million potential workers and a total of possibly 30,000,000 people are outside the circle of work, production, and income. They are not only a burden — they are an economic loss — to speak with grim realism, the country would be relatively prosperous if they were annihilated.”

One of the mockeries of capitalism is that in the midst of this growing reserve army of unemployed, there exists a shortage of skilled workers. This is quite conspicuous in Great Britain and Germany. Only this month the N. Y. Times has been carrying British advertisements for skilled engineers. Thousands of industrial workers and farmers are being shipped into Germany. Even in the United States, there exists a shortage in many trades, notably airplanes. shipbuilding, and toolmaking.

Experience demonstrates that the old method of private charity can no longer cope with the conditions resulting from widespread unemployment, and thus the government is forced to administer relief. Though many capitalists oppose relief expenditures by the government as “wasteful extravagance” “harmful to business’, and that vague abstraction, “demoralizing the recipients”, unfolding events compel the capitalist class, through its executive committee, Congress, to hand out a dole. Buying off the discontent of hungry workers is more efficient than maintaining an enormous police force or employing other repressive apparatus to keep the workers in subjection. Disorders, riots, and possible insurrections of desperate workers are thereby averted.

Despite the realization by the property owners and their political representatives of the effective role that government-sponsored work relief and welfare play in the continuance of the status quo, their efforts are directed toward the reduction of the cost of relief. Economy measures are pushed in an effort to reduce the amount of dole paid welfare recipients and work relief employees, tending to bring the payments down to the bare subsistence level. Added to this is the old attempt to discourage the taking of welfare by placing a moral stigma thereon. The most recent application of this policy manifested itself in reduction of the rolls by quota cuts, extension of the work month to 130 hours, pay slashes and "30-day starvation furloughs.” These, together with the red tape, and the contemptuous attitude adopted toward welfare clients and WPA workers, are the typical methods employed to rid the relief rolls of idle workers. The result of these constant harrying attacks is to impair the precarious and already too low economic standing of the workers.

The tendency is to drive the standard of living towards and below the subsistence level. Yet, at the same time, for obvious reasons, they must see to it that this standard of living does not fall below the starvation level. There does arise, however, a point where the workers must and do resist. Through their limited WPA unions and unemployed organizations they attempt to withstand the pressure. This determination not to submit is inevitable and is the result of necessity and experience. Success can and has been obtained for the limited objective of resisting this pressure. Resistance has taken on various forms of activity including mass demonstrations, delegations, work stoppages, and strikes. In regard to the A. F. of L. strikes on the WPA in July 1939, there arises an interesting situation. The capitalist government ruling the U. S. A. refuses officially to recognize strikes on the part of WPA workers on the trumped-up grounds that "the people” can not strike against themselves. F. D. Roosevelt said, "You can’t strike against the government.” This statement becomes absurd in the face of the antagonism between workers and capitalists.

The real objection by capitalists to strikes of this kind is that they indicate a tendency that may develop into a threat to the capitalist state. This situation can be compared to the sit-down strikers disregard for private property. Though it is not a clearly formulated threat to the capitalist system, it does constitute a definite measure of loss of respect for the sanctity of the state. Confronted with these WPA strikes, the New Deal government loses some of its glamour and "benevolence.” The F. B. I. investigations, threats of arrest, removal from jobs, and the barring of home relief to WPA strikers betrays the real character of the New Deal. Whenever it becomes necessary, the capitalist state, as employer, confronting recalcitrant workers, is quick to strip off the velvet glove and wield its naked iron fist.

In view of this fact, it become apparent that victory for the working class depends upon control of that power, the state, which now strives to keep the workers in subjection and attempts to allay their discontent by offering them work relief and doles, which are. as other reforms, insufficient. The capture of “state power”, rather than the resisting of "state pressure”, must become the objective of the workers.

The concessions in the nature of reforms given to the workers under capitalism may temporarily alleviate but will never eradicate the misery of the working class. The continuation of capitalism with or without relief will only serve to perpetuate the hardships and suffering of the workers, both employed and unemployed. Capitalism has to have relief in order to exist. Ridding society of capitalism with its inevitable unemployment is the only solution. It can be seen that no amount or variety of reform will ever be able to abolish the workers' discontent. On the day that this discontent becomes crystalized into socialist understanding, we will see the end of capitalism and all its evil effects.

Peter Martel