William Z. Foster

Toward Soviet America



Quack Capitalist Economic Remedies

IN CHAPTER I we have seen that the capitalists all over the world try to find a way out of the crisis for themselves by throwing the burden of the crisis upon the workers and poor farmers through wage-cuts, reductions in social insurance, speed-up in industry, lengthening of working hours, tax laws directed against the producers, inflation of the currency, etc., by intensifying their competition against each other through tariffs, dumping, rate wars, etc., and by preparing to deluge the world with a new blood-bath of war.

This is the main line of capitalist policy. Besides, and in connection with it, the capitalists have developed a whole series of additional “remedies” to cure the economic weaknesses of capitalism and to shield the capitalists from their effects. It is with these measures especially that we shall now deal. They have to do with both of the major contradictions of capitalism; the economic gap between the producing and consuming powers of the masses, and the class conflict between the capitalists and the exploited masses of workers and farmers. First let us deal with those of an economic character.

The Rationalization of Industry

IN THE years following the World War the capitalist countries, under stress of the growing economic crisis, developed a world-wide movement for the rationalization of industry. In this the United States took the lead. Mass production, the speedup in industry, became the cure-all for capitalism. Ford was worshipped as the patron saint of the capitalists everywhere. American speed-up methods spread themselves throughout the capitalist world. The League of Nations officially supported rationalization.

True to their role as “agents of the bourgeoisie,” the Socialist parties in the various countries took up the program of the rationalization of industry and made a fetish of it. They even became more enthusiastic than the capitalists themselves. They put it forward to the masses not only as the way to capitalist prosperity, but also the golden road to the gradual establishment of Socialism. The British Labor Party and trade unions became a tail to the speed-up plans of Mond and other industrialists, endorsing the League of Nations’ rationalization program, the first provision of which is “to secure the maximum efficiency of labor with the minimum of effort.” The German Social Democracy was no whit behind, its unions declaring that: “In full agreement with the memorandum of the German industrialists, we consider that rationalization is the most important condition for the well-being of the nation.” The Socialist party of the United States, including the Muste “left” group, grew no less enthusiastic over this bosses’ plan to still more sharply exploit the workers.

The leaders of the American Federation of Labor, of course, fell into step with the bosses for the rationalization of industry. Their main policy, variously expressed as the B. & O. Plan, the “higher strategy of labor,” and the “new wage policy,” was collaboration with the bosses to increase production. Industrial efficiency became the tin god of trade unionism. Wm. Green said, American Federationist, (Jan., 1928): “The Union is the workers’ business agency for industrial efficiency.” The trade union leaders made a strong plea to the capitalists to let them organize their workers for joint exploitation. They declared that the labor movement had come to maturity; the class struggle was over; class consciousness was out-of-date; now nothing remained to do but cooperate with the capitalists for the industrial speed-up, which would automatically benefit everybody. They hired efficiency engineers for the unions and set out arm-in- arm with the employers to drive the workers ever faster in industry.

But now the whole rationalization of industry movement is ideologically bankrupt. While the bosses, of course, seek to increase the speed-up in the plants that are operating, it is patent for all who have eyes to see that it offers no solution for the crisis. The entire rationalization of industry philosophy was based upon the illusion that capitalist markets automatically extend themselves to absorb capitalist production. But in reality the rationalization movement, by hugely developing the productivity of labor while the consuming power of the masses lagged far behind, greatly sharpened the major contradiction between capitalist production and markets, and it was one of the main factors in bringing about the present world-wide economic collapse. That which was to save capitalism just about ruined it.

The American “New Capitalism”

THE RATIONALIZATION movement reached its highest pitch in the United States. Here it was based on the principles of mass production and “high” wages, “protection” and inflation of the home market by sky-high tariffs and installment buying, and a militant imperialistic drive all over the world to conquer markets for capital and other commodities. This was the so-called new capitalism.

This “new capitalism” was hailed as ushering in a new era. Its proponents declared that it provided the way to liquidate the conflict between capitalist production and exchange, and that, consequently, it had solved the tormenting cyclical crisis. The “new capitalism” was to abolish poverty, to do away with the class struggle and to open up an endless perspective of industrial development. Its champions boastfully shouted that Ford had hopelessly beaten Marx and that there never could be a revolution in the United States. And all the capitalist world, harassed by the everencroaching general crisis, looked to the American capitalist heaven with wonder and hope, patterning after it as best they could. The Social Fascists of the world hailed the movement as the savior of capitalism. Even in the ranks of the American Communist party the theory found expression; Lovestone, later expelled, developing the notion that American capitalism provided an exception to the general laws of capitalism.

But what a sad awakening was in store. The American capitalist dream has turned into a dreadful nightmare. The terrible economic crisis is upon us again and with more devastating effects than ever before. It is exactly in the United States where the drop in production has been most catastrophic, where the army of the unemployed is the largest. Mass production has flooded the limited markets with a tidal wave of unsaleable commodities; “high” wages have turned out to be a tragic joke in the face of the gigantic unemployment and wholesale wage-cuts. The “new capitalism” has proved itself to be very much a part of the old capitalism of the rest of the world. The savior very badly needs saving. And the purseproud Ajnerican businessman is humiliated in the eyes of the whole capitalist world. Indeed, his erstwhile admirer, Mussolini, was unkind enough recently even to blame the world economic crisis upon exactly the boasted American mass production. After all, Marxism has triumphed over Fordism.

In the “new capitalism” the thing counted upon to cure the basic economic weakness of capitalism was “high” wages. Its advocates, with Ford at their head, had a glimmering of the menacing contradiction between the producing and consuming powers of the masses, of the folly of going ahead developing production on the simple theory of unlimited markets. In words at least they recognized the necessity of increasing the low purchasing power of the masses. Their whole conception was best developed by Foster and Catchings in their books, Business Without a Buyer and The Road to Plenty. They argued, with their theory of “financing the buyer,” that economic crises could be averted if, at the first sign of such, the declining purchasing power of the masses was promptly bolstered up by the initiation of broad building programs. President Hoover, as is known, was an advocate of this theory.

But it was all a sham and a delusion. The so-called “financing of the buyer” never took place under the “new capitalism,” nor could it. To suppose otherwise is to assume the possibility of the capitalists progressively giving up their profits. The alleged high wages during the heyday of this theory were confined almost entirely to the skilled workers. The gains to the buying power of the masses in this respect were more than offset by the accompanying huge increases in industrial and agricultural productivity. The whole thing was only an elaborate method of intensified rationalization of industry. The exploitation of the workers was increased, not diminished. The mass of surplus value taken by the employers was relatively and actually greater, not less. The basic economic effect was to still further widen the gap between the producing and consuming powers of the masses. This deepening of the economic contradiction is graphically illustrated by the following figures, taken from Tugwell’s Industry’s Coming of Age and the 1927 U. S. Census of Manufactures:

Wages Paid Value Added by Manufacture
1914 $4,009,000,000 $9,224,000,000
1923 $11,000,000,000 $25,832,000,000
1927 $10,800,000,000 $27,500,000,000

During the Coolidge period American capitalism was able to make a great show of prosperity, not because it had overcome the major economic contradiction of capitalism, but because of a whole series of temporarily advantageous factors. Among these were the huge loans to war-stricken Europe, which translated themselves largely into exports of manufactured goods; the easy conquest of world markets by powerful American imperialism, unscathed by the war, in the face of the broken-down European competitors; the growth of the automobile industry; the development of installment buying, which for a time artificially stimulated the market, etc.

But these erstwhile favorable factors have now radically altered. The automobile industry has become more than saturated; the installment system has exploded; exports have fallen off, with the European capitalist powers constantly meeting the United States with a sharper competition, etc. Hence, the inner contradictions of American imperialism are able to manifest themselves with full force and they are doing so with a vengeance. When Hoover blames Europe and the war for the crisis he is only a shallow apologist for capitalism. The fact is that American capitalism, like world capitalism in general, is rotten at the heart. The present great economic world crisis began in the United States.

The crisis has shown conclusively just how feeble and artificial was the American plan of “financing the buyer.” At the outset of the crisis President Hoover made many spectacular gestures in line with this theory. He called national conferences of industrialists, bankers, and “labor leaders.” Then he filled the country with rosy prophecies that the crisis would be promptly liquidated by the gigantic building, no-wage-cut program outlined by his conferences.

But the whole thing turned out an inglorious fizzle. The “financing of the buyer” degenerated into an attempt by Hoover to exorcize the crisis by pollyanna prosperity ballyhoo. The “great” construction program developed into the biggest sag the building industry has ever known. Even the government building program failed to materialize, the New York American, (Mar. 16, 1932), stating, “The total expended on public works (national, state, local) was actually less in 1931 than in 1929.” And as for keeping up wage scales, hardly were the Hoover conferences concluded than the wage-cuts began, and since then sweeping slashes have taken place in the railroad, mining, steel, textile and many other industries. The Grand Lama of the “high” wage theory, Ford himself, has also put through general wage-cuts. Likewise, the government, locally and nationally, is reducing wages in every direction.

But the most graphic repudiation of the scheme of “financing the buyer” is to be found in the starvation unemployment relief system of the Hoover government. The throwing of 12,000,000 workers into unemployment gave the market an awful jolt because of the reduction in the general purchasing power of the masses. Here was a good chance to “finance the buyer” by giving the unemployed a system of government insurance. But instead they have been given only the most miserable charity dole. To do otherwise would touch the sacred profits of the bosses. The only elements to which the Hoover government has extended assistance in the crisis are the banks, the railroads, the big taxpayers.

Thus the fire of the economic crisis exposes the fact that the results of the “new capitalism” are the same basically as those of capitalist imperialism generally, only more ruthless and devastating. The American capitalist class is as deep in the mud as its European rivals are in the mire, and like them, it throws the burdens of the crisis upon the working class, it rationalizes its industries, enters more desperately than ever into the struggle for international markets, and takes the world lead in preparing war as a way out of the crisis. The “new capitalism” has not cured the contradictions of capitalism, but has enormously sharpened them.

Trusts and Cartels

IN HIS work, Imperialism, (p. 12), Lenin says, “Half a century ago when Marx wrote Capital free competition was considered by the majority of economists as one of Nature’s laws.” But the development of imperialism and the intensification of competition on every front has ended such notions. Now capitalism everywhere strives to eliminate competition and to establish monopoly. Thus the maze of trusts and cartels on a local, national and international scale. The aims of these monopolistic organizations is to screw up prices, to cut labor costs, to control markets, etc. One of their major objectives is to restrict production, to cramp the expansive productive forces within the confines of the narrow markets. To this end every reactionary practice has been used, from suppression of important inventions to wholesale destruction of commodities and means of production. This is typical of the anti-social, parasitic character of decadent monopolistic capitalism, to attempt to limit production for the benefit of a few idle owners in a world where the overwhelming majority of the people are lacking the necessities of life. In Solidarity, (Nov., 1931), P. Boyden gives a number of examples of such commodity destruction, from which the following items are culled:

“A few months ago, in Oakland, Cal., 100,000 gallons of milk were dumped into the river. At about the same time, 40,000 salmon were destroyed in Ketchikan Bay, Alaska. In Los Angeles 120 carloads of cabbages were plowed under in the fields. Not long ago in California a Rotary Club played baseball with 60,000 eggs that were destroyed to keep them out of the market. And it is the same in other parts of the world; in Brazil 2,000,000 sacks of coffee were thrown into the sea, in Australia vast herds of sheep are simply massacred to keep the price of lamb high. Corn is poisoned so that it will be unfit for human consumption.”1

But trusts and cartels have not proved a cure for the economic crisis, any more than has the American “new capitalism.” This is true, both for capitalism as a whole and for the respective industries. Instead of “stabilizing” industry, as their proponents say, these organizations are, on the contrary, feeding the crisis with their policies of rationalization of industry, mass lay-offs, wagecuts and intensified exploitation of the workers. Even their very resistance to price declines prolongs and intensifies the crisis. As Stalin said in a recent speech, “The capitalists are chopping off the branch that supports them. Instead of escaping the crisis, they are aggravating it, piling up new causes for a still more severe crisis.”

Consider the plight of the United States, home of the trusts. Here 24 banks hold assets worth more than those of 20,000 small banks; four great financial interests control 95 % of the total output of electrical power; the entire railroad system is dominated by a half dozen New York banks. Yet the whole industrial-financial machine is prostrate in deepest crisis. Nor have the individual trustified industries been able to shield themselves. The great automobile industry, erstwhile boast of American industrialists, in which three of each four cars are constructed by either Ford or General Motors, is working, as I write these lines, at only 20% of capacity. Or take steel, with two big corporations controlling 52% of the industry, operating at only 20%. The oil industry, home of great combinations, is likewise a picture of anarchy, over-production and paralysis. The other industries, whether trustified or not—coal, textiles, chemicals, etc.—are in a similar pickle. Also the railroads, government-regulated and most highly-monopolized of all American industries, experience the general economic crisis, with two-thirds of their workers either totally unemployed or working only part-time and with bankruptcy knocking at the doors of many companies.

It is exactly in the most trustified countries—the United States, Germany, Great Britain, Japan—that the crisis bears down most heavily.

The trusts do not escape the laws of capitalist society. They cannot get away from competition. They compete against the untrustified sections of their own industries; against other industries (coal against oil and waterpower, railroads against autotrucks, etc.) and against the industries of other countries. Besides, their whole position is undermined by the crisis in backward, hopelessly competitive agriculture. But more important than all this is the fact that the whole trend of the trusts is to increase the exploitation of the workers and poor farmers and thus to render these masses still less able to buy back what they produce. The trusts unavoidably widen the fatal gap between capitalist production and distribution, the basic cause of the crisis.

The cartel movement has had no better success than the trusts in checking the economic crisis, either in general or in individual industries. The cartels have the same major objectives as the trusts, to curtail production, boost prices, etc., but their inner organization is more frail, even when headed by “dictators” like Will Hayes and Dudley Field Malone. In the present crisis the cartels, so hopefully welcomed by capitalism generally, are breaking under the strain. It is no contradiction for the capitalists of the various countries to drastically rationalize their industries so that they can the more effectively compete with each other, and at the same time set up international cartels presumably for the purpose of limiting competition and production. This is because these international cartels, in reality, are only new battlegrounds for the competitors ; the fight for markets goes on inside their limits, with the stronger groups pushing the weaker ones to the wall, forcing them to accept smaller production quotas, poorer markets, etc.

This is clearly reflected in the experience of the famous European Steel and Iron Agreement, signed in 1926. This organization faced not only ruinous competition from without, from the steel barons of Great Britain, Poland, etc., but also from within. The New York Times, (Sept. 9, 1931), says that the members of the cartel “engaged in a free-for-all scramble for orders, cartel regulations and prices being entirely disregarded.” It is not surprising therefore that this great cartel has collapsed. Chadbourne’s international sugar cartel is fast going the same road because of the same disease. The New York Times, (Mar. 19, 1932), states that the Chadbourne plan is now “practically abandoned” because of incurable dissensions among the sugar producers.

Mr. Chadbourne attaches very great importance to his cartel. He has declared that in this attempt to limit the world production of sugar and to boost prices “the capitalist system itself is on trial.” If so, then capitalism will surely be found guilty and sentenced to death, for the cartel movement cannot overcome the over-production that causes the capitalist crisis. On the contrary, as I. Lippincott says, the cartel “is a great stimulant to further production, and it thus aggravates the problem which it is designed to solve.”2 Summarizing the experiences of the cartel movement, a dispatch to the Scripps-Howard papers (Mar. 3, 1931) says: “European cartels in steel, rayon, cement, aluminum and coal, and international agreements in nitrates, sugar and coffee were studied by the U. S. Government trade experts in their examination of world price-fixing arrangements. In no case was the objective of the cartel attained in full and, in several instances, the entire project was abandoned.”

Viewing the general capitalist economic collapse and the failure of all trust and cartel remedies to cure it, The Course and Phases of the World Economic Depression, a League of Nations publication, is forced to this lugubrious conclusion:

“When we consider the magnitude of the losses from which the world suffers during a period of economic stagnation similar to that through which the world is now passing it is impossible not to be impressed by the almost absolute failure of society up to the present to devise any means by which such disasters may be averted.”

The Movement for Capitalist Planned Economy

ALARMED on the one hand at the breakdown of the chaotic capitalistic economy in the crisis and on the other at the forging ahead of the Soviet Union with its planned Socialist economy, defenders of capitalism, especially in the United States, are raising a great clamor for a planned capitalist economy. “Give us a plan,” they cry in every key and in manifest confusion. Many of them frankly state that it is a case of either a planned capitalist economy or Communism. Prof. W. B. Donham says in the New York Times of Mar. 15, 1931, “Unless greater stability is achieved, it is doubtful whether capitalist civilization can long endure.” The frightened Nicholas Murray Butler declares in the New York Times of July 12, 1931 . . . “the world today is in the grasp of the greatest economic, financial, social and political series of problems which have ever faced it in history. . . The period through which we are passing is a period like the fall of the Roman Empire, like the Renaissance, like the beginning of the political and social revolution in England and France; it is different from them all, is more powerful than them all and holds the world more in its grasp than any of them.” Mr. Butler then cries out somewhat hysterically for “an international plan designed to show that capitalism is a superior system to Communism.”

Such clamor has resulted in a whole series of “plans” being devised to stabilize the anarchistic capitalist economy. The country is infested with a plague of 5- and 10-year plans, and the deepening crisis will bring more. Among them are the projects of Swope (General Electric), U. S. Chamber of Commerce, Associated General Contractors of America, Civic Federation, A. F. of L., LaFollette, Stuart Chase, Norman Thomas, The Forum, Beard, Donham, etc., etc. These schemes range from mere statistics-gathering and advice-giving to drastic general reorganizations of industry.

What these “plans” usually have in common is a demand for more active participation of the government in the trustification and control of industry. Capitalist “planning” is a step still further into State capitalism. The capitalist government, as the instrument of the ruling class, always has as its main function the furtherance of capitalist industry and the increase of profits at the expense of the workers, and it more and more directly intervenes in industry, hut never was this intervention so direct and far-reaching as the capitalist “planners” now propose. The movement for capitalist “planning” is an effort to hasten the process of monopolization with still more vigorous aid of the government. It also tends in the general direction of Fascism.

It is characteristic that the Social Fascist and Fascist leaders of the Socialist party and A.F. of L., together with many liberals, are advocates of capitalist “planning.” They try to prove that the revolution is not necessary for an ordered economy and prosperity for the workers. As agents of finance capitalism, these elements always manage to find “progress” in every new step that the capitalists find necessary for the exploitation of the workers. The A.F. of L. leaders’ demand now for “planning” and the abrogation of the antitrust laws is just as much in the service of the employers as their support of the tariff, the rationalization of industry, the present wage-cut drive, etc.

But these capitalistic economic “plans” must and do fail. They are wrecked on the same reefs as the trusts and cartels: viz., the inability of capitalism, whether “planned” or not, to sell its commodities in a market that lacks the wherewithal to buy them; and the hopelessly competitive character of the capitalist system. Capitalism “cannot eat its cake and have it.” “Planned” capitalist economy cannot bridge over the basic economic and political contradictions of capitalism. It is as fruitless as capitalist “efforts” to end war.

In fact, capitalist economic “plans” are not plans at all, in the sense of a fundamental control of the whole resources and production of society, as the Russians practice it. At most they are only a crude sort of government regulation. Private ownership of industry, exploitation of the workers, production for profit, competitive scramble for markets—all foundation stones of capitalist economy make totally impossible the orderly balance between production and exchange and the thorough mobilization of all economic forces, either by agreement or compulsion, that is fundamentally necessary for real social planning. In such “plans” as that of Charles A. Beard in, America Faces the Future, which is an example of modern industrial utopianism, such basic objections to capitalist “planning” as profit-making and competition are glossed over with a glib phrase or two and the whole problem is considered merely as a technical one, instead of primarily as one of class struggle.

By going in for “planned” production, capitalism would steal a leaf from the Soviet book, despite the frenzied denials of Matthew Woll. Stuart Chase says: “The American problem is to ‘plan’ without revolution.” But this will not work; it is a case of the whole Soviet book or nothing. Planned economy and capitalism are mutually exclusive. Rubenstein correctly declares: “A plan is in contradiction to the very structure of capitalism.”3 As Milyutin says: “Planned economy presupposes the dictatorship of the proletariat, the abolition of private property in the means of production, the socialization of the means of production—in other words: the victory of Socialism.”4 Only when the industries are socialized, when exploitation has ceased, when production and the markets, freed of the profit motive, automatically balance each other—that is, under Socialism—is a genuine planned economy possible. The central principle of Socialist planning cannot be grafted onto the alien capitalist system. Socialism in the Soviet Union works with a plan, because its whole nature calls for planfulness and system. Capitalism has never developed a plan in any country, because it is in its very substance planless, competitive, chaotic.

All the capitalist “planners” enthusiastically cite the experience of the War Industries Board as a glowing example of the success of their principle. But they overlook one fundamental fact which wrecks all their calculations. This is that during the war period the question of finding a market for the products of industry presented no problem. Capitalism’s task now is not to improve production, which was all the War Industries Board did, but to find markets for its commodities. The movement now for capitalist “planning” will come to a no better end than the even more enthusiastic movement for the famous slogan, “Mass production and high wages,” in the “new capitalism” era.

But the capitalist “planners” have also passed from the word to the deed. Only calamitous failure has been the result. In the United States capitalist “planning” has proved no more effective in checking the crisis than have the Economic Councils of Germany and France. We have already remarked the sad fate of Hoover’s “planned” building boom and his “planned” maintenance of high wages, but the most outstanding examples of Hoover’s “planning” are the adventures of the Federal Farm Board in wheat and cotton. These are comparable only to the exploits of Jack, the giant-killer, or Sindbad, the sailor.

With wheat and cotton in deep crisis from over-production, the Hoover government set out blithely to “stabilize” these great crops, of course, in the interests of the capitalist elements in agriculture. The government’s confidence was equalled only by its arrogance and stupidity. It set up the Federal Farm Board and gave it $500,000,000 with which to begin its great work of capitalist “planning” by cutting production, regulating sales and boosting prices.

Let us first see what happened to wheat: the Farm Board bought some 330,000,000 bushels of wheat and carried on a wide propaganda for reduced acreage, backed up by refusals of the banks to make loans to small farmers. The general result was that the price of wheat dropped about 40 cents a bushel, production was 35,000,000 bushels more in 1931 than in 1930, the unmarketable surplus of wheat is larger than ever and the Farm Board has thrown away vast sums of money. Quoting Stone, the head of the Farm Board, the New York Times, (Nov., 1931), says, “The Farm Board’s holdings of wheat on Oct. 31, totalling 189,656,187 bushels, represented an investment of $1.17 a bushel . . . about $222,000,000. It was worth on Oct. 31 about (57 cts. a bushel, WZF) $120,000,000 or $102,000,000 less than cost.”

Capitalist “planning,” Hoover brand, made a no less brilliant showing in cotton. Again, as in the case of wheat, the market price of cotton has fallen about 60%, many millions of dollars have been squandered, and production, despite the Farm Board’s notorious slogan, “Plow under each third row of cotton,” has been increased 700,000 bales over last year. Says the New York Times, further quoting the “planner,” Mr. Stone: “In cotton the Farm Board on Oct. 31, held 1,310,789 bales, representing on the same basis as wheat, an investment of 18 cents a pound, or about $120,000,000. The value of the cotton at quotations on Oct. 31, was about (6 cents a pound, WZF) $45,000,000, or a loss of $75,000,000.” These official figures of the Farm Board show a loss to the government of $177,000,000. But this by no means covers all; it accounts only for the devaluation of the stocks now on hand. There should be added another $100,000,000 or so on account of the vast quantities of wheat and cotton sold for less than the purchase price. Besides, there are the many hundreds of millions lost by the farmers themselves.

Thus operates capitalist “planning” even under powerful American imperialism. The wheat and cotton farmers have been impoverished to the point of pauperization; the crisis of over-production has been intensified; hundreds of millions of dollars have been handed over to the bankers and speculators in wheat and cotton. And meanwhile, as the storehouses are bursting with the unsaleable wheat and cotton, millions of unemployed workers and their families clamor in vain for bread and clothes. All this is a clear example of the suicide economics of capitalism, of the forces that impel the workers and poor farmers towards the establishment of a Soviet United States.

The Question of an Organized Capitalism

THE DEVELOPMENT of the movement for capitalist “planning” raises afresh the question of whether or not an organized capitalist system is possible, for proposals of a “planned” capitalist economy are proposals of an “organized capitalism.” Here the Social Fascists come forward in full panoply. They are the special champions of the theory of organized capitalism, although the present crisis has given them a sad jolt. Hilferding, (Arbeiter Zeitung, Vienna, Jan. 1, 1930), says: “The year of 1928 was a year of powerful development of organized capitalism. A new capitalist era commenced in 1929. Modern capitalism is overcoming and removing everything which made for the anarchy of capitalist production.”

The theory of organized capitalism is found best developed in Hilferding’s and Kautsky’s conception of super-imperialism, and it is a foundation premise of Social Fascism in general. Kautsky and other Social Fascist theoreticians hold that the process of capitalist trustification is overcoming and will continue to overcome the contradictions of capitalism. That is, eventually trustification will become world-wide, thus at once liquidating the economic crisis, abolishing the class struggle, and dissolving the war conflicts between the rival imperialist nations into an organized and monopolized world system of production and distribution. Meanwhile, as this develops, capitalism will at the same time, by a process of purchase by the ever-more democratic State, be gradually turned into a system of Socialism. This is the theory of the peaceful evolution of capitalism into Socialism.

But this whole theory of organized capitalism goes contrary to the most basic development of capitalism. The capitalist system cannot be “organized”; it is fundamentally competitive and chaotic. An ordered, balanced social system is incompatible with the private ownership of the industries and land and with production for profit. Monopolization, instead of diminishing the contradictions of the capitalist system, is increasing and deepening them. While trustification undoubtedly brings a modicum of regulation and system within the confines of its direct organization, it at the same time, aggravates the conflicts within capitalism as a whole. With the development of monopolization, in this period of imperialism, of the decline of capitalism and of the rise of Socialism, the collisions increase in severity between trusts and untrustified industry, between the trusts themselves, between industries as such, between the various imperialist nations, between the producers and the exploiters, and between the decaying capitalist system and the advancing Soviet Union. This process of growing conflict and struggle is thus stated in the Program of the Communist International:

“The development of capitalism, and particularly the imperialist epoch of its development, reproduces the fundamental contradictions of capitalism upon an increasingly magnified scale. Competition among small capitalists ceases, only to make way for competition between big capitalists; where competition between big capitalists subsides, it flares up between gigantic combinations of capitalist magnates and their governments; local and national crises become transformed into world crises affecting a number of countries and, subsequently, into world crises; local wars give way to wars between coalitions of states and world wars; the class struggle changes from isolated actions of single groups of workers into nation-wide conflicts and subsequently, into an international struggle of the world proletariat against the world bourgeoisie. Finally, two main forces are organizing against the organized might of finance capital—on the one hand the workers in the capitalist states, on the other hand, the victims of oppression of foreign capital, the masses of the people in the colonies, marching under the leadership and hegemony of the international revolutionary movement.”

The decisive trend in capitalism is towards the sharpening of its contradictions. Nor will this be overcome by the process of trustification. As the tendency develops to “organize,” that is, to trustify sections of capitalist economy, this tendency is out-run by the counter-tendency to sharpen and deepen the antagonisms within the capitalist system and between it and the new Socialist system of the Soviet Union. In short, the very process of capitalist monopolization speeds capitalist society ever faster along the road to imperialist war and proletarian revolution. Lenin thus analyses capitalist development:

“There is no doubt that the development is going in the direction of a single world trust that will swallow up all enterprises and all States without exception. But the development in this direction is proceeding under such stress, with such a tempo, with such contradictions, conflicts, and convulsions—not only economical, but also political, national, etc., etc.—that before a single world trust will be reached, before the respective national finance capitalist will have formed a world union of ‘ultra-imperialism,’ imperialism will inevitably explode, capitalism will turn into its opposite.”5

Futile Efforts to Quench the Class Struggle

THE MAJOR social contradiction of the capitalist system is the conflict in interest between the owning capitalist class and the producing working class. This gives rise to class struggle, the capitalists always seeking to more intensely exploit the workers, and the workers struggling to retain the products of their labor. The class struggle, as we have already seen, becomes ever sharper with the intensification of the general crisis of capitalism, and it eventually culminates in the proletarian revolution.

Necessarily, the capitalist class has always had as a fundamental objective the liquidation or softening of this revolutionary contradiction. But the facts demonstrate that it is proving no more successful in accomplishing this than it is in its efforts to wipe out the basic economic contradiction of capitalism, the conflict between the capitalist modes of production and distribution. In spite of all the efforts of the capitalists to quench the class struggle, by damping down or beating out the workers’ opposition, it flares up ever broader, more vigorously and more menacing to capitalism.

Throughout the capitalist world the trend of the exploiters is towards Fascism; that is, to push through their offensive against the working class by policies of extreme demagogy and violence. The speed of the development of Fascism and the forms that it takes in the various countries depend upon the extent to which the capitalist crisis has progressed. Fascism develops along two main channels; that is, open Fascism and Social Fascism.

In Italy and some of the Balkan countries, where the revolutionary crisis early became acute, Fascism came into power by the violent seizure of the State power, followed by the wholesale smashing of workers’ unions, cooperatives, political parties, the complete liquidation of bourgeois democracy, the setting up of government trade unions, etc. In other countries the capitalists, approaching the crisis at a somewhat slower pace, follow, at least at the outset, the “dry road” or “legal” way to Fascism. By this process of fasciszation the Bruening government in Germany is gradually developing the Fascist dictatorship; the MacDonald government in Great Britain is going in the same direction; Japan is openly menaced by Fascism; and in the United States many Fascist tendencies are in evidence, as exampled by the dictatorial methods of Hoover in the question of unemployment relief, etc.; by the decline in prestige of parliamentary government and the demand for a “strong man” dictator; by the demand of the American Legion convention for a “peace-time National Council of Defense”; by the appearance of many Fascist “planning” schemes (Swope, Woll, etc.), and by the wave of unpunished lynchings, wholesale arrest and deportation of militant workers, etc. One of the most basic features of this trend of world capitalism towards Fascism is the gradual fasciszation of the conservative trade unions and Socialist parties.

From Social Reformism to Social Fascism

IT HAS always been a policy of the capitalist class, especially in the imperialist countries, to split and weaken the working class by making certain concessions to the skilled workers. This provided the base of Social Reformism. The Socialist parties of the world and such trade unions as the American Federation of Labor fitted themselves into this bosses’ strategy, seeking to develop the skilled workers as a privileged aristocracy of labor. They based their organization, economic and political, upon the skilled workers, ignoring or openly betraying the unskilled workers, as a thousand sold-out strikes testify. They cultivated illusions among the skilled workers that their interests lie in collaboration with the bourgeoisie rather than in class struggle of the workers. Social Reformism was and is a tool of the capitalist class in its struggle against the working class. The Social Reformists are in reality, as Lenin called them, “agents of the bourgeoisie in the ranks of the workers.”

The hey-day of Social Reformism was during the early, “peaceful” stage of capitalist development and in the first phase of imperialism. This general period may be said to have closed with the beginning of the World War. In this period, with the world capitalist system generally on the upgrade, the capitalists, especially in United States, England and Germany, could and did make many concessions to the skilled workers. Few of these, however, seeped down to the unskilled and semi-skilled, who remained in a state of poverty. Upon this economic foundation Social Reformism built for itself a strong mass following among the workers.

But the development of the general crisis of capitalism has changed the complexion though not the basic role of the Social Reformistic “lieutenants of capital.” The employers, trying to find a way out of their difficulties and to preserve their profits at the expense of the workers, intensify their wage-cut drive, reduction of unemployment benefits, etc.; not even the skilled workers, although they are partly shielded, escaping the rapid downward trend. The old system of concessions to the skilled workers, the basis of Social Reformism, becomes increasingly narrowed down and is succeeded by more direct and rigorous methods of repression.

Adapting themselves to the needs of the employers, the reformist Socialist and trade union leaders have developed their movement into an organ of the bosses for the Fascist repression and intensified exploitation of the working class. They have practically grafted the Social Democracy and the conservative unions onto the capitalist State and the employers’ exploitation machinery. They devote to capitalism their long-established prestige as workers’ leaders, their strong organizational control over the masses, and their unquestioned demagogic skill in covering up their services to capitalism with pleas that it is all necessary in the building of Socialism. Where necessary they do not hesitate to use open violence against the revolutionary toilers. The policy of the Social Democracy is basically that of Fascism; the beating back of the proletarian revolution, the saving of capitalism and the profits of the employers at the expense of the workers. The principal difference is that Social Democracy hides its Fascism under a mask of Marxian Socialism. Thus, in the period of the decline of capitalism, Social Reformism becomes Social Fascism.

The Fasciszation of the American Federation of Labor

IN THE A.F. of L. the process of fasciszation is far advanced. In fact, the top leadership of this organization, the Greens, Wolls, Lewises, etc., are already practically open-Fascist. They are brazen defenders of capitalism. They have become the chief strike-breaking agency of the employers. To this end they work hand-in-glove with the Hoover government, the American Legion, the Ku Klux Klan, the National Civic Federation, the Chambers of Commerce, the churches, and all and sundry other institutions of the employers for the exploitation of the workers. Their policy is to make the trade unions more company-union-like than the company unions themselves. Politically illiterate and with the sycophancy typical of parasites, these leaders take their “opinions” readymade from the most reactionary sections of the bourgeoisie. They greedily lap up every mess of capitalist economics and politics that their masters set before them. Developing Fascism in the United States has a main foundation in the leadership of the American Federation of Labor. Their system of craft unionism, maintained as against industrial unionism to prevent unity of action by the workers and to furnish additional jobs to officials, is a shameless method of union scabbery. Their endorsement of election candidates of the capitalist parties, or “reward-your-friends” policy, is a plain sell-out of the working class. Their support of the rationalization of industry is part of the speed-up program of the bosses. Their systematic betrayal of the Negroes, women and young workers dovetails into the employers’ special exploitation of these sections of the workers. Their long years of peddling the interests of the unskilled workers and their breaking up of attempts of these workers to organize constitutes the greatest of all their crimes against the working class. They are saturated with graft—racketeering was born in the A.F. of L. With their huge salaries, ranging from $10,000 to $20,000 yearly or as much as those of United States governors, senators, etc., they have nothing in common with the workers in their way of living and thinking. So faithful a servant of capitalism is the A.F. of L. leadership that, if one wants to know its policy in any field of politics or economics, all that is necessary is to find out the policy of the bosses and you have the answer.

The present tasks of the A.F. of L. leadership, dictated by the employers, are to defeat the demand of the workers for unemployment insurance and relief, to push through the employers’ wagecutting campaign, to advance the preparations for imperialist war, to beat back the advance of the Trade Union Unity League and the revolutionary minorities in the reformist unions.

In the question of unemployment the A.F. of L. leadership sinks to the greatest depths of cynical betrayal of the workers. The Vancouver, 1931, convention of the A.F. of L., re-affirming the existing policy, said: “Compulsory unemployment insurance legislation such as is now in effect in Great Britain and Germany would be unsuited to our economic and political requirements and are unsatisfactory to American workmen.” When Green, Woll and Co. say this they speak for their capitalist masters, not for the workers. The A.F. of L. convention which could adopt such a decision was made up of 90% high-paid officials; the workers had no voice or representation. The A.F. of L. membership, who favor unemployment insurance, have never in any way been consulted or given an opportunity to express their opinion on the question. The A.F. of L. leadership, either openly or by their silence, have endorsed every attack of the police upon unemployed demonstrations. The millions of unemployed workers, destitute of unemployment insurance and in a condition of semi-starvation, have the A.F. of L. very much to thank for their present plight. It may be that under the growing mass pressure many A.F. of L. leaders will be forced to tip their hat to “unemployment insurance” of the Groves Law type, (half a dozen governors having endorsed it), but this demagogy will not change their real opposition. The A.F. of L. leaders are a central pillar of the Hoover program of starving the unemployed.

The A.F. of L. leaders are also a principal instrument of the bosses for cutting the workers’ wages. During the past two years, despite the Hoover-Green no-wage-cut agreement, the wages of the workers in practically every industry have been slashed and the A.F. of L. has not waged a single major strike against this offensive. Where the militancy of the workers has forced strikes, (Ohio miners, needle trades, etc.), these have been betrayed into means for accomplishing wage-cuts. Agreeing with the bosses that the standards of the workers must come down, the A.F. of L. leaders have adopted a policy of “voluntary” wage-cuts. They are accepting cuts off-hand in the building, textile, printing, clothing and other industries all over the country, and glorying in them as victories. Matthew Woll called the recent “voluntary” cut of the railroad workers, which was a most shameful sell-out, “an achievement such as we have never before witnessed in the United States.” In their wage-cutting program the A.F. of L. leaders do not hesitate to cut the wages of organized workers even below those of the unorganized. In the Colorado mines of the Rocky Mountain Fuel Co. the U.M.W. of A. leaders “voluntarily” gave up 50% of the workers’ pay in order to enable that company to out-compete its competitors. In West Virginia, the U.M.W. of A. leader Van Bittner declared that he would “outscab the scabs,” and signed an agreement with the Pursglove Company, cutting the already starvation wages of its 1600 workers from 30 to 22 cents per ton, thereby reducing them far below the unorganized miners of the vicinity. The American Federation of Full Fashioned Hosiery Workers, (U.T.W.), in the Fall of 1931, accepted a cut of 35% to 45%, shamelessly announcing that its purpose was to undercut the production costs of the non-union mills and to drive them out of business. In all this wage-cutting campaign no unions have been more active than the Socialist-controlled needle trades organizations.

Not only does the A.F. of L. take the initiative in forcing through wage-cuts, but it also actively breaks the resistance of the workers, the unorganized or those united in the Trade Union Unity League, when they strike against reductions of their standards, examples of this being the recent strikes in Western Pennsylvania, Kentucky, Lawrence, Paterson, New York, etc. It used to be that when the employers broke strikes of their workers they called in such professional scabherders as Farley, Pinkerton, the Feltz-Baldwins, etc., but now they use the Greens, Lewises, Doaks, Schlessingers, Hillmans, etc.

Notoriously, the A.F. of L. leaders are militaristic jingoes, and support every phase of the imperialists’ war program. They are rabid enemies of the Soviet Union. The A.F. of L. convention poisonously declared: “We regard the Soviet regime in Russia as the most unscrupulous, most antisocial institution in the world today. Between it and our form of political and social organization, there can be no compromise of any kind.” Their hatred of the U.S.S.R. is a class hatred, as is that of the employers. They fear the revolution like all other exploiters of labor, usually more acutely than even the capitalists themselves.

Naturally, to enforce in the unions the policies of wage-cuts, starvation of the unemployed, speed-up, etc., more and more use has to be made of Fascist methods of control of these organizations. Democracy, never vigorous in the A.F. of L. and railroad Brotherhoods, has now been practically wiped out. The organizations are dominated from top to bottom by bureaucrats and gangsters; including the “Socialist” unions. The rank and file have little or nothing to say on vital questions of policy. Union elections are a farce, the ruling cliques stealing as many votes as they may require. Often they even refuse to put the opposition candidates on the ballot. Conventions are packed with administration henchmen. The union journals are closed to all serious discussion. And when the workers object to this growing Fascist regime they face gangsterism and expulsion from the organizations.

The employers directly assist the reactionaries in controlling the unions. Rebellious workers in the unions are, upon the proposal of the union leaders, blacklisted from the industries. More than ever the check-off is used to hold the workers in the organizations by force (anthracite, needle trades, textiles, etc.). In Illinois, for example, the miners have led several revolts against the U.M.W.A. but are still compelled, by the check-off, to remain members.

Fascism everywhere seeks to amalgamate the trade unions with the State, so that the workers may be the more effectively controlled, Mussolini’s “trade unions” being actual State organs. Gradually the A.F. of L. and railroad unions are becoming Statized, being already practically the official government unions. Their foreign policy dovetails completely with that of American imperialism and obediently follows all the windings of the State Department. Significantly, Mr. Hoover, together with a flock of governors, senators, mayors, generals, etc., went to the Boston, (1930), convention to tell the A.F. of L. leaders to fight against unemployment insurance. And during the 1931 coal strike of the National Miners Union in Western Pennsylvania, President Hoover, Secretary Doak, and Governors Pinchot and White actively interfered to break the strike, assisting and often calling upon the coal operators to rebuild the U.M.W.A. and arranging conferences to this effect.

Between the police and the A.F. of L. bureaucrats there is a close working arrangement. At the top Matthew Woll and the Department of Justice cooperate in the issuance of their periodic joint “red scares”; at the bottom, the lesser officials turn the names of revolutionary workers over to the police. The Department of Labor, when 35 members of Local 28 of the Sheet Metal Workers got out an injunction against their crooked officials, sent its agents to terrorize these workers as “Reds,” (New York World-Telegram, Apr. 1, 1932) this being a direct support of A.F. of L. racketeer leaders by the Federal government. Nor do the courts fail in protecting the A.F. of L. officials against attacks by the workers. They issue injunctions against the TUUL unions on behalf of the A.F. of L. And in Southern Illinois, Gebert, Tash, Frankfeld, et al., were indicted for criminal syndicalism, being charged by the State with “maliciously, unlawfully and knowingly combining, federating,” etc., “to injure the character of the United Mine Workers of America.”

The Fasciszation of the Socialist Party

TRAVELING to Fascism, the Social Democrats, internationally as well as in this country, are fulfilling every task assigned them by the employers. In summing up their intellectual fasciszation, the Program of the Communist International, says:

“In the sphere of theory, Social Democracy has utterly and completely betrayed Marxism, having traversed the road from revision to complete liberal bourgeois reformism and avowed social-imperialism; it has substituted in place of the Marxian theory of the contradictions of capitalism, the bourgeois theory of its harmonious development; it has pigeon-holed the theory of crises and of the pauperization of the proletariat; it has turned the flaming and menacing theory of class struggle into prosaic advocacy of class peace; it has exchanged the theory of growing class antagonisms for the petty bourgeois fairy tale about the ‘democratization’ of capital; in place of the theory of the inevitability of war under capitalism it has substituted the bourgeois deceit of pacifism and the lying propaganda of ‘ultra-imperialism’; it has changed the theory of the revolutionary downfall of capitalism for the counterfeit coinage of ‘sound’ capitalism transforming itself peacefully into Socialism; it has replaced revolution by evolution; the destruction of the bourgeois State by its active upbuilding, the theory of proletarian dictatorship by the theory of coalition with the bourgeoisie, the doctrine of international solidarity—by preaching defense of the imperialist fatherland; for Marxian dialectical materialism it has substituted the idealist philosophy and is now engaged in picking up the crumbs of religion that fall from the table of the bourgeoisie.”

The practice of the Socialist parties and trade unions conforms to this Fascist theoretical degeneration. There have been no demands made upon them by capitalism in crisis which they have not obeyed. When the capitalists of the various countries called upon them to organize the great World War they responded by identifying everywhere their interests with those of their national bourgeoisie and by mobilizing the workers for the slaughter. And ever since they have worked with their capitalist masters to help them prepare the next war. In Great Britain the MacDonald “Socialist” government maintained intact the great war machine of British imperialism; in Germany the Social Fascists voted for the rebuilding of the German navy; in France they prepared the infamous universal military service law now in force; in Poland, Czecho-Slovakia and many other countries they vote the war budgets. Everywhere they are the special decoy ducks of capitalist pacifism, the shield of imperialist war. In the war plans of the capitalist nations against the Soviet Union the Social Democrats play a leading role. They scoff at the danger of capitalist war against the Soviet Union and thus disarm the workers’ defense; they make the capitalist war appear as a fight against autocracy in the U.S.S.R. The Social Fascists hate the Soviet Union because they see in it the living refutation of their whole policy, a menacing threat to the capitalist system of which they are the most profound theoretical and practical defenders. They have never hesitated, (in Georgia and elsewhere), to take up arms against the Soviet Union. The exposures in the recent political trials in Moscow showed that the Second International is working hand-in-glove with the French imperialists in preparing armed intervention against the U.S.S.R. As a recent resolution of the Communist International says: “The Social Democracy has turned itself into a shock-brigade of world imperialism which is preparing for war against the U.S.S.R.”

The special task of the Social Fascists is to discredit the Soviet Union among the workers. As we have seen, they are the most skilled in building up arguments against the Soviet Union, covering their sophistries with a cloak of pseudo-Marxism. They take up every capitalist anti- Soviet lie and assiduously propagate it among the workers. These they alternate with hypocritical pretensions of friendship, knowing that the masses are sympathetic to the U.S.S.R. A few quotations will show their malignant attacks upon the Russian revolution and their true attitude towards it:

“Russian Soviet imperialism, which has robbed a whole series of non-Russian peoples of their rights and principles, is striving to extend its rule still further and to cause trouble between other countries. This is the greatest danger of war.”6

“The Soviet Government has been the greatest disaster and calamity that has ever occurred to the Socialist movement. Let us dissociate ourselves from the Soviet government.”7

“I agree in the main with Prof. Beard’s vigorous statement: ‘One thing, however, is certain; the Russian government rules by tyranny and terror, with secret police, espionage and arbitrary executions.’”8

In the great revolutionary upheavals following the World War the Social Fascists saved European capitalism. In Italy they betrayed the revolution into the hands of Mussolini. In Germany, in their efforts to preserve the capitalist system, they shot down thousands of revolutionary workers. All this was done in the name of fighting for Socialism. The MacDonald “Socialist” government simply displayed its true Social Fascist character by shooting and jailing thousands of revolutionary workers and peasants in India. The Social Fascists were the main force in the speed-up, rationalization movement, their real leader being Henry Ford, not Karl Marx.

Now again, when capitalism is trying to find a way out of its deep crisis by reducing the standards of the workers, its main allies are the Social Fascists. The world Social Democracy is not better than a strike-breaking, wage-cutting, dole-slashing tool of the employers. In every capitalist country the Social Fascists are cooperating closely with the capitalists, accepting as their working principle that in the crisis the workers’ living conditions must come down. In the United States J. P. Morgan speaks over the radio for the starvation, “block-aid” system, and so does Norman Thomas. In Great Britain, with the aid of the Labor government, the bosses have deeply cut the wages in every industry, besides making sharp reductions in the State unemployment insurance. In Germany the Bruening and other capitalist governments, all the while receiving the active support of the Social Democratic party, have cut the wages of the workers and the benefits of the jobless to starvation levels.

The Socialist parties of the world are the third parties of capitalism. They do not fight for even the most elementary demands of the workers. They are a part of the capitalist machinery for taking the bread out of the mouths of the workers and their families, the principal barrier to the revolution. That is why in Great Britain, Germany and other countries the capitalists have supported Social Fascists to head their governments. In every case their record has been one of subservience to the program of the exploiters. In practice their policy of the gradual building of Socialism has resolved itself simply into a desperate effort to keep the breath of life in capitalism. Their so-called nationalization of industry is only a covert aid to capitalist trustification. In no country have they achieved the slightest progress towards Socialism, or even made serious proposals looking in that direction. The Liberal English writer, Ratcliffe, says in Current History, (Dec., 1931): “The first nominally Socialist Prime Minister of England has at no time proposed a single Socialist measure.” The same may be said with equal truth of every “Socialist” Prime Minister in every country. Even Norman Thomas has to grudgingly admit that “the record of parliamentary governments by Socialist parties in Europe is no record of thrilling achievement.”9 Manuilsky states the case correctly when he calls the Social Democracy, “a party more reactionary and counter-revolutionary than the bourgeois parties were in the past when capitalism was still on the upgrade.”

The Social Democracy not only increasingly applies more Fascist methods itself against the workers, but it further serves its capitalist masters by preparing the ground for open Fascism. In Italy the betrayal of the great metal strike by the Socialists opened the door to Mussolini. In Austria the Social Democracy disarms the workers before the advancing Fascism. In Great Britain, by their betrayal of the great general strike and by the debacle of the Labor government, the Social Fascists threw demoralization into the ranks of the workers and petty bourgeois sympathizers, giving direct encouragement to Fascism. In Germany the Social Fascist leaders are clearing the way for Fascism through their theory and practice of “the lesser evil” With the argument that the starvation capitalist system is a “lesser evil” than the dictatorship of the proletariat they support the Bruening government, with its wholesale wagecuts, suppression of the workers’ rights and program of gradual fasciszation. Under the name of Socialism they call upon the workers to vote for the monarchist, von Hindenburg. In many places they join hands with the Hitlerites and police for armed attacks on the Communists. To the Social Fascists the major danger is the Communist revolution; to defeat this the end justifies the means.

The “fight” between Social Fascism and Fascism is so much “sound and fury signifying nothing.” The two movements are blood-brothers. Manuilsky says: “Fascism and Social Fascism are two aspects of one and the same bulwark of bourgeois dictatorship,” and Stalin says: “Fascism is a militant organization of the bourgeoisie resting upon the active support of Social Democracy.” Their quarrel is only a case of friction between two methods of repressing the workers, between two sets of capitalist agents fighting for the fleshpots of office and control. The Social Fascists would maintain the semblance of capitalist democracy as the best means of forestalling the revolution and they would be its administrators ; whereas the Fascists would sweep aside this fake democracy and its champions and proceed to more direct methods of repression. But an accommodation of these conflicting ideas and interests is being arrived at by the gradual fasciszation of the State and of the mass organizations of the Social Democrats. In due season the Social Fascist leaders, in the name of Socialism, will join with the Hitlerites in shooting down the revolutionary workers. It is because of the essential unity of Fascism and Social Fascism that Hamilton Fish, one of the most conscious Fascists in this country, could enthusiastically endorse Norman Thomas for office in the 1931 elections.10 The Mussolinis, Pilsudskis, Briands, and MacDonalds are only fully-matured Social Democrats.

The record of the Socialist Party of the United States is altogether in line with that of its brother parties in Europe. It has undergone the same ideological degeneration in the direction of Fascism. It supported the imperialist program of MacDonald and the endorsement of the Bruening government. It advocated the whole capitalist rationalization of industry, and class collaboration, removing from its program all reference to the class struggle. Now, naturally, it comes forward for capitalist “planning.” In Reading and Milwaukee, Socialist strongholds and long notorious for their low wages and open-shop conditions, the same starvation program for the unemployed prevails, the same jailing of unemployed demonstrators as in Mayor Walker’s New York. The Socialist party has cemented its alliance with the A.F. of L. leadership and carries out the same line of wage-cutting and strike-breaking against the revolutionary unions, but with more skillful strategy and demagogy. The Socialist-controlled New York needle trades unions, saturated with corruption and gangsterism, are just as much at the service of the employers as any unions in the whole A.F. of L. Wherever it is to be found, the Socialist party, under its false-face of working class phrases, is a maid-of-all-work for the capitalist class.

The “Left” Social Fascists

THE DEEPENING of the crisis and the growing revolutionization of the masses is accompanied by a strong development of radical phrase-mongering on the part of many groups of open and covert defenders of capitalism. This demagogy is part of the capitalist offensive against the workers. Its aim is to delude the workers with promises of drastic relief, while at the same time holding them tied in practical policy to the basic capitalist program of exploitation. It is a means to prevent the masses from following the leadership of the Communists.

Of such demagogues the Fascists are outstanding examples. Before Mussolini seized power his program was extremely “radical,” containing demands for a republic, suppression of all chambers of commerce and stock companies, confiscation of church properties, nationalization of the war industries, etc., all of which he completely repudiated in practice. At the present time Hitler is trying to carry out the same Mussolini strategy, to deceive the German masses with pretenses of radicalism as a screen for the naked capitalist dictatorship and exploitation he has in store for them. The new-found radicalism of the Roosevelts, Pinchots, LaFollettes, Murphys, Father Coxes, etc., is of essentially the same stripe in this country, so much empty demagogy to win a mass following of the discontented.

The Social Fascists are still more dangerous masters at this demagogic art. As we have seen they have, under pretense of fighting for Socialism, backed up every plan that capitalism has put forward for saving itself and more intensely exploiting the toilers. Under the fig-leaf of Socialism they supported the World War, the Versailles Treaty, the Dawes and Young Plans, the Kellogg Pact, the Chinese butcher, Chang Kai Shek, and the Indian faker, Gandhi. Even as these lines are being written, they are working together with the Spanish coalition government to shoot down the heroic revolt of the Spanish workers, (Daily Worker, Jan. 23, 1932). Nor are the Greens and Wolls anything lacking in demagogic ability, with their blather about the 5-hour day, their vague talk of “revolution if something is not done,” etc.

But the most insidious and dangerous to the workers of all this crop of demagogues are the so-called “left” Social Fascists. The substance of their activities is, while giving practical support to the right Social Fascists, to criticize them in the name of the revolution. They are the radical phrase-mongers par excellence. Their objective task is the confusion of the most advanced elements of the workers and therefore the breaking up of serious movements against the capitalists and their reactionary labor henchmen. Throughout the Second International there are such groupings, including the Maxtonites in Great Britain, the “left” Social Democrats in Germany, the various renegade Communist grouplets, etc. Trotzky belongs to this general category. The harm of such elements is typically illustrated by Trotzky’s present denial of an immediate war danger between Japan and the U.S.S.R., while at the same time he poses as an ultra-revolutionist.

During the post-war revolutionary upheavals in Germany and other countries such pseudo-left elements sprang up, forming a separate world organization, the so-called 2½ International. These “lefts,” despite many radical phrases, always supported the right Social Democrats against the Communists, thereby doing much to break up the revolutionary attacks of the workers upon capitalism. After the workers were defeated the “lefts” amalgamated with the Second International, of which, at all times, they were essentially a specialized part. Now, in this great crisis, they are attempting to come forth and repeat their treacherous role of 1918-23.

In the United States the principal representative of this insidious pseudo-revolutionary tendency is the Conference for Progressive Labor Action, or the so-called Muste group. This is made up of miscellaneous “progressive” petty trade union bureaucrats, remnants of the old Labor party movements, liberals and Brookwood intellectuals, dilettante churchmen, social workers, etc. Its chief political expression is the “left” Stanley group in the Socialist party and its principal activities are on the trade union field. Such Socialists as Thomas and Maurer flirt with the movement. On the fringes of the Muste group are the renegade Communist groups of Lore, Lovestone, Cannon and Weisbord. They serve to give the whole tendency a more “red” tinge with their pretense at Communism; but their practice dovetails with the Muste group. The “left” Social Fascists are in reality specialized troops of the reactionary bureaucrats for struggle against the revolutionary sections of the working class.

The line of the Muste group is typical of such tendencies the world over. While criticising the betrayals of the A.F. of L. leaders and the Socialist party, they nevertheless give them practical support. They are bitter enemies of the Communist party and the Trade Union Unity League. They are special opponents of the policy of independent revolutionary unions, seeking to draw the unorganized workers under the control of the American Federation of Labor. They are the loyal “opposition” within the A.F. of L. They talk of starting a more radical Socialist party as a rival to the Communist party.

In its short life of about three years the Muste group has clearly shown the unity of its basic policy with that of the A.F. of L. How this “radical” group makes a division of labor with the A.F. of L. leaders is typically illustrated by the campaign of the A.F. of L. to “organize” the Southern textile workers recently. On the one hand, Mr. Green, accompanied by an efficiency engineer, Jeffrey Browne, proposed to “organize” the textile workers by offering to speed them still more and to kill off radicalism among them. Along this line he spoke to many Southern Chambers of Commerce and employers’ associations. “The policies he advocated,” says the Memphis Commercial Appeal, “might have come with propriety from the President of the American Banking Association.” On the other hand, the Muste group got into action to help Green control the workers within his reactionary scheme. Muste grew enthusiastic over the campaign, called upon the workers to give the A.F. of L. misleaders an organizing fund of $1,000,000, sent his speakers to talk radical to the workers at the mill gates, and his organizers to play a shameful role in the final strike sell-outs. Thus this “progressive” wing of the A.F. of L. cooperated perfectly with the top bureaucracy to defeat the militant movement of the Southern workers and to keep them away from the revolutionary National Textile Workers Union.

The recent Lawrence strike was another typical example of the Musteites as auxiliaries of the A.F. of L. leadership. With the A.F. of L. accepting wage-cuts all over the country on principle, manifestly it could not afford to have these 23,000 unorganized textile workers win their strike against the wage-cut. The A.F. of L. organizers went into Lawrence to bring about the acceptance of the cut, that is, to sell-out the strike. The Musteites helped them. They viciously attacked the revolutionary union and aided the reactionary A.F. of L. leadership to secure prestige among the masses by the Muste show of radicalism. In the 1931 Paterson strike of silk workers there was a complete united front of capitalist politicians, A.F. of L., Socialist Party, Muste group, Lovestoneites, etc., against the National Textile Workers Union.

Every “left” maneuver of the A.F. of L. bureaucrats to deceive the masses has the enthusiastic support of the Muste group and their renegade Communist allies. The putting over of the recent general wage-cut of the railroad workers provided a good example of Musteism in practice. From the outset of the negotiations between the companies and the union leaders it was evident that the latter intended to accept the cut after making a few maneuvers to create the impression among the rank and file that they were fighting the companies’ proposition. Manifestly, the task of every militant was to expose this plot and to organize the workers against it. But no sooner did the latter begin their sham battle against the cut than Muste’s paper, The Labor Age, Dec., 1931, declared: “The fact that the twenty-one railroad labor unions in this country have informed a committee of railroad presidents that they will not accept a ‘voluntary’ cut in wages of 10% is a hopeful sign. It may mean a turning point in American trade union history.” This was plain aid and comfort to the enemy, deceiving the workers and making it easy for the leaders to betray them.

The Bankruptcy of Social Fascism

NOW LET us see whether or not capitalism is developing in Social Fascism a means with which it can quench the class struggle and beat down the surging proletarian revolution. Even a cursory glance shows that with the narrowing of the economic base of Social Fascism, caused by the inability of capitalism to so widely corrupt the labor aristocracy, goes a narrowing of its mass base among the working class. Social Fascism is bankrupt in theory and practice and, despite (and because of) the support it gets from the employers and the State, it is entering into a period of disintegration.

By its daily role in the class struggle Social Fascism shows itself to be the road, not to Socialism but to the still deeper enslavement of the workers. The Social Democratic theory that the capitalist “democracy” would gradually evolve into a Socialist government leads in hard reality to Socialist support of growing Fascist dictatorships all over the capitalist world; its conception of a steadily rising standard of living for the workers under an organized capitalism leads, in the decaying capitalist system, to the acceptance of wholesale wagecuts, starvation of the unemployed, preparations for war against the Soviet Union, etc.

Inevitably the meaning of all this is seeping into the minds of the masses of workers who have hitherto followed the lead of the Social Democrats. Although they still have many stubborn illusions, they are learning that the Social Democracy is their enemy, and they are starting to turn against it. Hence, there is beginning a world-wide decline in the mass influence and organizational strength of the Social Democracy and a growth of the Communist movement. In Germany, where the capitalist crisis is farthest advanced and the process of fasciszation of the Social Democracy most complete, the above trends are best illustrated. Thus, while the vote of the Social Democratic party steadily falls off, that of the Communist party, 4,982,000 in the recent election, as rapidly increases.

Nor is the United States an exception to this general tendency. Since the war the A.F. of L. has lost about 2,000,000 members. The United Mine Workers, once the backbone of the A.F. of L., has been reduced to one-fourth of its former membership and, because of its reactionary policies, it has become a stench in the nostrils of the miners. During the past two years the building trades unions have lost at least one-third of their members and other unions accordingly. Moreover, throughout the A.F. of L., there is brewing an explosive rank and file opposition to the reactionary policies of the leaders. Never was the prestige of the A.F. of L. so low among its members and the broad masses of workers. As against all this, there is the spreading mass influence of the Communist party and the Trade Union Unity League. The capitalists, naturally, do not passively observe the disintegration of Social Fascism, but try to save it. Thus American employers are definitely cultivating the reactionary unions more and more. This amounts, in substance, to a modification of their historic open-shop policy. This tendency manifests itself in many ways, such as the “re-build the U.M.W. of A.” movement; the “granting” of the check-off to the anthracite miners; the close collaboration of the bosses, the government and the union leaders in the fake needle trades strikes; the recognition accorded the shop unions by the railroad companies in the recent wage negotiations for many roads where they had no members, the close cooperation of the A.F. of L. and the Federal government, etc.

One of the most recent and striking manifestations of this tendency was the practically unanimous passage of the Norris-La Guardia Anti-Injunction bill. This bill, which presumably abolishes the “yellow dog” contract and limits the power of federal courts to issue injunctions, in reality does not do away with injunctions at all, but lays the basis for their application primarily against the revolutionary unions. It is a definite move to facilitate the organization of the A.F. of L. unions, and to give their reactionary leaders a “paper victory” to support the paralyzing non-partisan A.F. of L. political policy. It does not originate in a sudden burst of liberalism on the part of the government, but in a realization of the necessity to develop the A.F. of L. leadership still further as a strike-breaking organization.

The capitalist policy to strengthen Social Fascism as a barrier against the Communist party and the Trade Union Unity League is further expressed in the distinct cultivation of the Socialist party that is now to be seen all over the country. The S.P. has become a thoroughly respectable party of “opposition.” The capitalists realize that the lack of a strong social reformist movement is a great disadvantage for them, hence, they are consciously building the Socialist party as a weapon against the Communist party. Its candidates and activities are given access to every avenue of publicity. The endorsement of Norman Thomas by most of the capitalist press in New York in the recent elections shows the way the wind is blowing. The capitalists know their own.

Such methods of galvanizing Social Fascism into life must fail. The masses of workers can never be dragooned into organizations that are so manifestly carrying out policies hostile to their interest. But this is not to minimize the danger. The Social Fascist method of obscuring the capitalist policy under the guise of Socialism is an insidious menace. It is now and will remain until the revolution the most dangerous capitalist influence among the working class, the most serious brake upon the class struggle. The progress of the revolutionary movement is to be measured by the breaking of the Social Democracy’s grip upon the workers, ideologically and organizationally.

That there is such a breaking-down process now going on is self-evident, and this disintegration will increase with the sharpening of the general crisis of capitalism. The Social Democratic illusions of the masses are weakening, despite the frantic efforts of the “left” phrase-mongers to keep them alive. Less and less able are the employers to put into effect their traditional policy of corrupting the strategically situated labor aristocracy and thus to play them off against the rest of the working class. The differences between the skilled and unskilled are diminishing, the working class is becoming unified. More and more skillful become the newlyorganized Communist parties in mobilizing the rebellious masses. Consequently, the employers are compelled to make ever greater use of open force against the workers, to resort to a policy of naked Fascism.

The Futility of Fascism

ABOVE, we have pointed out the tendency towards the development of Fascism in all capitalist countries. Italy is the classical example of this tendency carried to its logical conclusion. Defenders of capitalism the world over have looked hopefully towards Italy for a solution of the capitalist crisis. Mussolini, as well as Ford, seemed to have the answer for capitalism’s woes. But we shall see that this is not so.

Fascism is not an alternative to capitalism; it is capitalism, the most extreme expression of the capitalistic dictatorship. As Manuilsky says: “The Fascist regime is not a new type of State; it is one of the forms of the bourgeois dictatorship in the epoch of imperialism.”11 Fascism does not amend capitalist economics. The economic policy of Fascism is the familiar capitalist program of the exploitation of the workers and poor farmers. The difference between Fascism and a bourgeois democratic regime is that the former is more extreme and brutal in its exploitation of the toilers. As Manuilsky says further: “The main factor in Fascism is its open offensive against the working class with the employment of every form of violence and coercion.” Thus, inevitably, Fascism deepens the contradictions of capitalist society. It must result in intensifying the economic crisis and in stimulating the revolutionization of the toilers.

The wide development of Fascism in various forms in the several capitalist countries is not a sign of capitalism growing stronger, but weaker. Fascism arises with the deepening of the capitalist crisis. It is the desperate means by which capitalism in its extremity of crisis vainly tries to save itself. It is significant that Fascism is most developed in exactly those countries that are the weakest links in the capitalist world chain. In some instances, to crush the workers, it incorporates the Social Fascist parties and unions into its machinery; in others, it destroys not only the Social Fascist organizations but also Liberal groupings.

Fascism is the instrument of finance capital. It speeds the development of State capitalism, linking the employers’ organizations, “trade unions,” etc. directly to the government. Here, indeed, is a heaven for capitalist “planners.” Hence, all over the world, the advocates of an “organized capitalism” have looked hopefully towards Italy. We even find people who falsely dub themselves Communists asserting that Fascism can liquidate the economic crisis and do away with the class struggle. Thus V. F. Calverton says in The Modern Quarterly, (Jan.-Mar., 1931): “In either case (Communism or Fascism, WZF) industry can be organized into a scientific unit, the present dissipation of energy be saved, and the friction of democratic struggle be destroyed.”

But capitalism’s hope in Fascist Italy has been no less futile than its enthusiasm for the “new capitalism” in the United States. Italy is just as deep in the mud of the capitalist crisis as other countries are in its mire. During the past year Italian industrial production has rapidly declined, examples of this decrease being steel 16%, cotton 30%, automobiles 50%, etc., the general average of decline being about 40%. Exports, notwithstanding government forced-draft methods of dumping, have dropped seriously. The crisis also manifests itself heavily in the realm of finance; the stocks of the largest and most important industrial undertakings having fallen off 50% to 75% since 1929; in November the Banca Commerciale Italiana, the largest bank in Italy, was saved from bankruptcy only by drastic government aid; in 1931 the government faced a deficit of 896,000,000 lire as against a surplus of 150,000,000 lire in 1930.

The living standards of the Italian workers and peasants have also catastrophically declined. An Associated Press dispatch of Mar. 15, 1932, says: “Italy’s unemployed at the end of February totalled 1,147,000, a new high and an increase of 96,000 in a month.” Only one-fourth receive the beggarly unemployment benefits. Wages have been slashed as much as 40% in the past four years. The prices paid to the peasants for their products have been similarly cut. So greatly have the masses been impoverished that Mussolini could cynically remark: “It is fortunate for Italy that the Italian workers and peasants are not in the habit of eating more than once a day.” The inevitable result of such conditions is a rising revolutionary movement in Italy also, despite the ferocious terror. The Chicago Tribune, (Feb. 20, 1932), says: “A wave of unrest is sweeping Italy from North to South and in many places disturbances have taken on the character of mass risings of the countryside against the authorities . . . the ordinary police forces are helpless and only the arrival of reserves prevented the rioters from lynching the authorities.”

Fascism, the weapon of big capitalists, bankers and land-owners, finds its chief mass base among the petty bourgeoisie until these eventually become revolutionized by the intolerable conditions. The mass of the workers cannot be won over to Fascism. They see in Fascism a murderous enemy of the working class. The most that the Mussolinis and Hitlers can do is to temporarily win the support of sections of office employees and agricultural workers and others of the more backward and politically inexperienced toilers. As the workers free themselves from Social Democratic illusions they go to Communism, not to Fascism.

In his new book, As I See It, Norman Thomas develops the theory that the revolt of the workers cannot succeed in the face of the highly-destructive arms possessed by the capitalists, that the airplane can defeat the barricade. But this is only a call to the workers to surrender. The ruling class, also under Fascism, must have a mass base. It can not maintain power without one, notwithstanding all its airplanes and artillery. Fascism, as we have seen, has such a base in the petty bourgeoisie, and Fascism will disintegrate as this base collapses. In Italy, Poland and other Fascist countries this disintegration is clearly proceeding with the development of the capitalist crisis. The revolution attacks Fascism not only from without but from within.

The proletarian revolution cannot be crushed by force, even with the assistance of the most tricky Social Fascist and Fascist demagogy. Chang Kai Shek slaughtered 200,000 militant workers and peasants in the greatest reign of terror of modern history, but the wave of revolution in China mounts higher and higher. Poland, in spite of its extreme Fascist terrorism, goes rapidly to the revolutionary crisis. De Rivera in Spain learned something about trying to rule by violence, and the Russian Czar likewise. Hitler, if he comes to power in Germany, will eventually learn the same bitter lesson. And in Italy there is a revolutionary storm brewing that will blow Fascism to bits.

Mussolini was able to seize the power in Italy because of the Socialist betrayal of the great metal strike of 1920, which demoralized the workers who had hoped to make the revolution. Fascism is not an inevitable stage of the capitalist dictatorship; the revolution may forestall it. But it is possible that Fascism will secure the power in Germany, England, Japan, the United States and other countries through similar Socialist betrayals. In any event, however, Fascism will not be able to solve the capitalist crisis, and to save the present decaying social system. It cannot liquidate the class struggle; it cannot permanently hold down the workers and poor farmers by force. Faced by constantly worsening conditions and mass starvation, these masses will, under the leadership of the Communist party, eventually break through every system of Fascist terrorism and establish a Soviet regime.



1. Press dispatches announce that the Brazilian government has decided to burn 12,000,000 sacks of coffee and to cut down 400,000,000 coffee trees in the State of Sao Paulo.

2. Economic Resources and Industries of the World, p. 55.

3. Science at the Crossroads, p. 21.

4. International Press Correspondence, Nov. 5, 1931.

5. Preface to Bukharin’s Imperialism and World Economy, p. 14.

6. Vorwearts, official organ of the German Social Democratic Party.

7. Morris Hillquit, American Socialist leader, New Leader, Feb. 4, 1928.

8. Norman Thomas, As I See It, p. 93.

9. America’s Way Out, p. 181.

10. New York Herald-Tribune, Nov. 2, 1931.

11. The Communist Parties and the Crisis of Capitalism, p. 36.


Next: 4. The Revolutionary Way out of the Crisis