Ted Grant

Slump this year?

Source: Socialist Fight, vol. 1 no. 1 (January 1958)
Transcription: Francesco 2009
Proofread: Fred 2009
Markup: Manuel 2009

A study of the economic factors indicates that [the] American and world economy is heading for a new disastrous slump. All the evidence indicates that the cycle of capitalism is approaching its inevitable denouement. Increased production of machinery, heavy industry and light industry; the increased investment in the last period; arms production; the extension of credit; the increased extent of hire purchase and of mortgages on houses; all are reaching saturation point.

The inevitable consequences of production for profit and the domination of the market over the productive process, are reaching the limits set by capitalism. For example, nearly a third of productive capacity in America is not being used.

After the horrors of the war and the destruction involved in it, a market was created for capitalism, which stimulated the development of capitalist production. The industrialisation of backward countries and the increase in exports of capital goods and engineering products from all capitalist countries gave a further fillip to the expansion of the market. At the same time, the existence of the market resulted in the expansion of new techniques and productive processes, which in turn reacted to stimulate the boom. Where in the main countries of capitalism ten percent of the national income was devoted to the unproductive expenditure on armaments, this in turn assisted the process of the boom and ensured in these capitalist countries the continuance of “full employment.”

Working in the same direction was the fear of American capitalism of the collapse of the entire system under the indignation of the masses of America and Europe at the miseries inflicted by the system. This caused the Americans to give massive aid in the various schemes associated with the names of Marshall, Truman and their ilk.

Now, however, this period is drawing to a close. The symptoms of economic collapse are very similar to those which preceded the great depression from the end of 1929 to 1933.

There has been a parallel collapse on Wall Street of stock market share prices, a fall in the prices of primary products—raw materials and food—which will mean a steep fall in the income of the undeveloped areas of the world, the production of consumer goods is reaching saturation point and business investment (in new factories and machinery) is dropping in Britain, America and the main capitalist countries. The rate of profit, due to the increased investment in capital goods and the fact that the amount of surplus extracted from the workers has not increased to the same extent, has fallen.

Poverty amid plenty

All these factors show that the limits of the market are being reached under capitalism and that it will not pay the capitalists to invest further, in Britain or America, in new capital equipment—machinery, factories, buildings and so on. This in turn prepares the way for the collapse of the entire market, because the system is based on the need for the capitalist to invest the surplus extracted from the workers in new capital ventures. This means the over-production, from a capitalist point of view, of both consumer and capital goods. Such is the “normal” paradox of capitalism: idle factories and idle workers, unused capacity side by side with the hunger of the working class and the peoples throughout the world.

The precarious prosperity of the last period has been due, so far as the working class is concerned, to over-time, bonuses, and the extra income brought home to the family by working wives. The golden chains of capitalism have been loosened to their utmost extent. Now, after the price of war, comes the cruel reckoning for this temporary alleviation of the pains of capitalism. The chains will crash onto the backs of the workers, and big business will demand its pound of flesh. After the “sacrifices” to restore production will come the frantic appeals of capitalists of all nations to their wage-slaves to make further sacrifices in order to compete in a frenzied scramble for markets.

Gaitskell has blandly prophesised a slump… and that’s all! If the Labour and trade union leadership were to be worthy of their role as leaders of the working class, they would be preparing the working class for the struggles that lie ahead. They would have a plan drawn up by the National Council of Labour to meet the slump. They would explain that all capitalist measures could only be at the expense of the working class and, even if successful, could only prepare the way, at a new stage, for an even worse slump.

Tinkering is useless. We have the warning of the last slump, where the Labour leadership of Macdonald tried to operate on a capitalist basis and headed the labour movement for disaster.

Right now, Labour must prepare a campaign for an election on a platform of measures to meet the slump through an Emergency Powers Act. This would mean a plan of production, and not the anarchy of private ownership and profit. As a first step, the immediate nationalisation of all banks and insurance and of major industry—steel, engineering, chemicals, textiles, shipping, building. The working class must be mobilised to struggle for this programme under the slogan of workers’ control of industry—of the factors that govern their existence.

Only such a programme, together with an international socialist appeal to the workers of Europe, America and the colonial world to follow their example and democratically control their own fate, can save the workers from unemployment, wage cuts, a fall in the standard of living and the other miseries they suffered in the last great crisis.