From Labor Action, Vol. 14 No. 16, 17 April 1950, pp. 6–7.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
On March 6, the Daily Compass, New York’s semi-Stalinoid newspaper, carried a long interview with Henry Wallace on the subject What is ‘Progressive Capitalism’? That term is Wallace’s program in two words, and he tries to expound its meaning. The exposition is the fullest Wallace has attempted and, fuzzy as it is, the most concrete.
The idea of a “progressive capitalist” alternative to both socialism and “reactionary capitalism” has, of eourse, much greater appeal than to Wallace’s own following, and its currency in the country is not to be measured either by Wallace’s vote in 1946 or by the strength of the Progressive Party. In one form or another, it is also the ideology of Americans for Democratic Action and most other liberals. On Wallace’s side it must be said that, hazy as he is, his rivals in the liberal world (the ADA, for example) do not even make as much of an attempt to grapple with the problem in anything like fundamental terms.
The key passages in Wallace’s explanation are:
“Progressive capitalism is that reconciliation between fundamental American democracy and modern technology which will make possible continuous full employment and expanding production without government ownership of all the means of production ...
“The success of progressive capitalism demands that the leaders of business. labor and agriculture plan with government – and specifically with the President’s Council of Economic Advisers – the key policies of the key industries which have to do with capital flow, wage rates, dividend policies, prices, and volume of production ...
“These key industries are so vital to the general welfare that if management and labor in these industries are not willing to plan with government for the maximum of service to the general public, they should be taken over by the government ...
“But under progressive capitalism, the objective would be to leave as large a segment of the economy as possible under private direction and yet eliminate the causes of unhealthy ‘boom and bust.’”
Full production and full employment are still his main objectives for the system. But production and employment are still at a comparatively high level now: why isn’t he pleased? For a good reason, of course: “The Democrats can bring about full employment only by a huge arms program ... since 1941 there has been full employment only because of huge shipments abroad and heavy expenditures for munitions and planes.”
So full production or full employment themselves are not enough; when he bethinks himself he also.asks: “Full production and employment for what?” This, as is well known, does not stop his fellow-traveler mentality from pointing to full production and employment in totalitarian Russia as “economic democracy.”
He also makes no mention of the skeleton in his own closet. At the only period when he could have put his economic theories into practice, when he was a top dog in Roosevelt’s New Deal as secretary of agriculture, this eloquent advocate of full production found nothing else to do but attempt to solve the crisis of capitalism by the notorious expedient of plowing under cotton and sending every third pig to his porcine ancestors. He was even then, it must be remembered, just as enthusiastic an advocate of full production, but ... in a practical situation, one must be practical.
Wallace has not boasted since then of his role in this economic atrocity, but likewise has given not the slightest indication that he has ever attempted to understand why drastic restrictions on production could have played a part in an attempt to rehabilitate capitalism. We will have to ask that question ourselves in the light of his present interview.
Wallace, in brief, is now advocating a planned capitalism, planned by government, labor and capital in consultation. It is this planning which he equates With the progressiveness of his new capitalism. But his own inglorious experience as a planner of capitalism should be sufficient to raise the problem.
Obviously, planning is not enough. Planning for what? Planning for the plowing-under of cotton is not progressive. Planning for gearing the economy for war is not progressive. Planning for maximizing capitalist profits – there is plenty of this in the system – is not progressive. To this list we can add another from Henry Wallace’s own arsenal.
When Roosevelt appointed Wallace to head the Commerce Department instead of Jesse Jones, a furor in Congress led to a congressional inquiry. Wallace took the stand at the Senate Commerce Committee hearing to give his economic views. He got a bit more specific than usual then too – as usual, too specific for his own good. He sounds better when making a peroration about how nice full employment is.
This is what he told the Senate-hearing (the quotation is from the Los Angeles Daily News):
“He said that business should be privately owned, privately operated and privately managed, but that the government should share with the private investor the ‘unusual and abnormal’ risks and losses involved in striving for expanded private industry.
“When the number of gainfully employed persons falls below the 57,000,000 mark in peacetime, he said the government should take up the slack through public works projects – not as ‘government relief jobs, but as private jobs’ by assigning contractors for such public works to private contractors.”
A modest proposal this was: that the government’s planning be for the purpose of making up the capitalists’ losses by substituting guaranteed profits for the famed advantages of “private initiative.”
We have no idea whether Wallace would present this formula for planning capitalism today, but all of Wallace’s various proposals have one thing in common – and it is this which soundjs “progressive” to him and many others.
The heavy thinkers of American capitalism, even today, still tend to look on the economic system as a semi-automatic mechanism which will operate smoothly and uninterruptedly provided nobody throws a monkey wrench. Depressions? They’re always due to somebody’s mistake – special conditions – wrong policies by government – “lack of confidence” – etc. As ex-Secretary Krug once put it, our economic system is “a jigsaw puzzle,” in which the pieces are supposed to fall into place by themselves.
Wallace has the limited merit of understanding that the jigsaw pieces do not fall into place by themselves, that boom-and-bust is a consequence of the automatic operation of the system, and that the government must take a hand to prevent the capitalists from booming-and-bust-ing the profit system wide open.
All this is something that European capitalists realized a long time ago, because there the decay, of capitalism has gone further and faster. But for the U.S., Wallaee is a step ahead of the Tafts. He knows that government has a permanent role to play in saving capitalism from its own “excesses,”
This insistence on the role of government in business has a progressive air in the U.S., because it is counterposed to the superannuated views of the broken-down remnants of rugged individualism. Its ambiguity as a “progressive” idea in itself is sufficiently highlighted by the realization that fascism, in its economic role, comes into being to do precisely the same general job: preserve the capitalist profit system through government action rather than through trusting to the blind operation of economic forces.
It is because Wallace does not understand this ambiguity of government-in-business that he can talk about the “economic democracy” in the Russian prison state. Full production and full employment are thoroughly planned there, aren’t they? The fact that they are planned by the GPU and a totalitarian state is a regrettable blemish on this “progressive” economy ...
And so in his Compass interview, we still find Wallace defining progressiveness under capitalism in terms of planning per se. Nowhere in this interview does he bother to indicate what economic program is to be followed by this capitalist planning. The objectives? On that he is eloquent enough, as usual. But how, under the profit system? Not plowing-under, not war production, not guarantee of capitalist losses – how?
We are not interested in stressing at the moment that he has nothing to say about this; if he had thought of raising the question, he might have proposed something, whether it be worth less or more than his previous excursions into the problem. The interesting thing is that the nature of “progressive capitalism” is defined at every point in the interview without regard to any such question.
Planning equals progress: such is the rock-bottom foundation of his thought. It is the link between his views on “progressive capitalism” and his views on the wonderful experiment in “economic democraey” in Russia, and intimately connected with his Stalinoid politics. It is the modern link between old-fashioned capitalist reformism and contemporary neo-Stalinism.
It explains why the same man can grow pieeyed with enthusiasm at being shown the planned prison camps of Russia (as he did on his tour of that country some years ago) and, for the United States, advocate private enterprise. The remaining contradiction is resolved by envisioning a capitalism in which the capitalists will voluntarily allow themselves to be planned by government.
And how will this happen? The same man whose objection to socialism is that “I see no likelihood of anything of that sort for many decades” is asked by the interviewer: “How will you get these capitalists to cooperate?”
His answer is frank enough if somewhat eyepopping in view of his objection to socialism:
“I started working on the reactionary capitalists in face-to-face conferences of one sort or another in the late ’20s. They had a brief moment of being willing to cooperate in 1933. [For what economic program, we have seen.] Again they cooperated from 1943 to 1945 for the purpose of winning the war ... But there is still no indication they are willing to do the necessary planning to make the capitalist system work in terms of full employment in peactime industries.
“Technically speaking, it is not necessary for the capitalists to cut their own throats. The capitalist system can be made to work, but thus far I have seen no indications that the top leaders are willing to make the necessary adjustments.”
And later in the interview, in a phrase which, deserves to be framed:
“The greatest obstacle in putting over progressive capitalism is the lack of progressive capitalists.”
The interviewer did not ask him to explain the reason for this unfortunate lack, Wallace indicates, however, that he expects a new depression to produce the progressive capitalists, or rather reform the souls of the presently reactionary ones. A prerequisite, however, is the end of the cold war, and one is not told how the bad, bad capitalists are going to be cajoled into doing this before their reformation.
But even without this slight difficulty, even if a depression (to be produced by peace – what a commentary on capitalism!) throws the fear of the lord into the capitalist breasts, this situation will indeed make the capitalists more amenable to government intervention – they will even yell lustily for it – but will not make them more amenable to planning for the people’s welfare rather than for profits. This is not even due to the capitalists’ devilish preference for filthy lucre rather than for human interests. They really believe that only through the expansion of profits can the best interests of the people be preserved.
The reasoning is simple: The best interests of the people depend on the maintenance, of this best of all possible systems, capitalism. Capitalism depends on profitability. Ergo, there is no necessary contradiction between profits and welfare.
With this basic theorem Wallace agrees. And on the basis of this theorem, it is the “reactionary capitalists” who are right and Wallace who is wrong.
It is profits which are the lifeblood of capitalism and not human welfare. Wallace himself recognized that as explicitly as a fuzzy-headed elocutionist ever could, when he had to do something about the depression. The otherwise incredible program of plowing under cotton and pigs at a time when people were starving and shivering made sense only because of this fact about capitalism. It may have been insane but no more insane than capitalism itself.
Production was restricted – strawberries were dumped into the Schuykill – oranges were burned in California – and Wallace’s AAA program was instituted in order to create artificial scarcity in the face of surplus. Scarcity was created, in order to raise prices to the point where new production of the commodities would become once more profitable. The New Deal saw only one way to break unemployment and create more jobs: get the capitalists to produce again. But no capitalist will produce unless he sees a profit in it. This is so not because the capitalist is a bad, bad reactionary who refuses to listen to Wallace in face-to-face conferences. It is so because that is what the capitalist system is founded on: the profit incentive to production.
And so the New Deal planned – to make capitalist production once more, profitable, for the capitalists. The old cycle returned, modified today only by an even more effective way of maintaining production in the face of limited production for human consumption : by pouring billions into economically useless commodities, war goods – production for destruction rather than for consumption.
And so Wallace admits: “I suspect it [the New Deal] was a failure,” and describes it as “patching up an old car that broke down along the road, and then picking up gadgets at each filling station.” Wallace himself functioned mainly as a gas tank among the spare parts of the Roosevelt administration. But he knows no more than he did then why it broke down, and why it needs a cold war to keep going now.
Last updated on 7 January 2024