Lewis Corey

The Decline of American Capitalism


PART TWO
Prosperity, Profits, and Wages


Summary


THE prosperity which flourished in 1923-29 was the result of an unusual combination of the long-time factors of expansion. In the revival of 1922, building construction, in which the war had created a great shortage, led the upward movement. It was invigorated by the development of electric power and the automobile and of new or comparatively new industries such as radio, moving pictures, and chemicals. The old stimulus of the undeveloped inner continental areas was partly replaced by the export of capital and imperialism, an exploitation of the international long-time factors of expansion.

These developments produced increasingly higher profits and their conversion into capital by means of an increasing output and absorption of capital goods, the basis of prosperity. Both the investment of capital and the growth of industry’s capital equipment proceeded on an immense scale.

As is usual in prosperity (it is a very condition of its being), the profit-makers scored the largest gains. The farmers were wholly excluded, and their exclusion was itself an element of capitalist prosperity. While the workers’ real wages rose in 1921-23, because of falling prices, they were practically stationary thereafter. Wages fell relatively to profits. Yet the productivity of labor and surplus value rose more than in any other recent period in American history.

There was, thus, no “policy of increasingly higher wages” in the pre-1929 prosperity. It was a policy of higher profits. And the pretense was completely exposed by the depression, when wages were slashed mercilessly. But the policy reappears in a slightly different form in the ballyhoo of Niraism: the government is to “fix” wages, to “balance” profits and wages in the interest of an everlasting prosperity. The practice of state capitalism is everywhere, however, one of protecting profits, not wages. And under the reign of Niraism wages are falling. Wages must fall in the epoch of the decline of capitalism because the making of profits and their conversion into capital is restricted, as exhaustion of the long-time factors of expansion tends to lower production and profits. This tendency may be interrupted by short-lived spurts of prosperity, by the “black magic” of imperialism and war. The interruptions will be temporary and eventually disastrous, intensifying the decline of capitalism.

Whether “unfettered” or under “controls” capitalist production imposes definite limits upon the rise of wages. The limits move downward in the epoch of decline. Underlying the limits, both in prosperity and depression, in upswing and decline, is the accumulation of capital and its contradictions, which constitute the dynamics of capitalist production.


Last updated on 28.9.2007