G.F. Eckstein

UN Economic Report Shows
Decay of World Capitalism

(29 March 1948)

Source: The Militant, Vol. XII No. 13, 29 March 1948, p. 3.
Source: PDF supplied by the Riazanov Library Project.
Transcription/Mark-up: Einde O’Callaghan for the Marxists’ Internet Archive.

The Department of Economic Affairs of the United Nations has just completed its survey of world economy for the period, 1945–47. (The USSR is not included as it submitted no figures to the UN.) So bleak a story did the statistics tell that the very first paragraph of the report concludes that “the year 1947 must be regarded as one of frustrated hopes.”

The world is now producing less than it did a decade earlier while population has increased by one-tenth. The exact extent of how much less it is producing is made clear when we exclude from world production the United States, upon whose high production and dollars the whole world now depends.

U.S. Growth

The United States, with its resources undamaged by the war, experienced a phenomenal growth of both industrial and agricultural production, which stands out against a background of European and world ruin.

Average production of the world, excluding the U.S. is 20% below pre-war. Industrial production in the United States, rose 70% above 1939.

In specific commodities the real devastation is seen even more precisely. World steel production, excluding the U.S. is 61% of the pre-war level. Steel production in the United States is 147% above pre-war.

World production of coal, excluding the U.S. is 81% of pre-war. Production in the U.S. is 135% above pre-war.

Bleak Outlook

What are the prospects? Steel, coal and timber are key commodities for economic reconstruction. The report states that planned increase in steel, even if realized, would not meet needs. It continues: “The great possibilities of expansion in the iron industry are limited by shortage of good coking coal ... lack of mine equipment impedes expansion of coal production and of steel; lack of equipment impedes further expansion in the generation of electric power; and lack of sawmills and logging equipment hampers lumber production.”

The same picture prevails in agriculture. World agricultural production, excluding the U.S., is 10% below pre-war. Per capita food consumption in many countries is fully 30% below pre-war and in Germany it is below starvation level.

Agricultural output in the U.S. is one-third above pre-war level. This 33% increase was accomplished with an agricultural population which declined from 9.5 million in 1939 to 8.3 million in 1946. The higher productivity is the result of doubling the consumption of fertilizer and increasing farm machinery, both of which are lacking in Europe.

So deteriorated is Europe’s soil and so lacking in fertilizer and agricultural machinery, that even existing low levels could not have been reached without the billions poured in through UNRRA, Lend-Lease, etc.

No less than 17.1 billion dollars has been contributed by the U.S. for the period July 1, 1945 to the end of 1947. Against this background the fraud of the Marshall Plan becomes patent (17 billion dollars for four years) as a basis for European reconstruction.

Effects of Depression

The United Nations report realizes that if U.S. economy collapses, the world economy collapses with it. The report is therefore nervous about the “shaky foundations” of American capitalism. A possible depression, it warns, would have “devastating deflationary effects on the economies of other parts of the world.” It is necessary, it continues, “to reduce the tension in international economic relations in the future.” Soil fertility must be restored. Deteriorated machinery must be replaced. The individual worker, through exhaustion and hunger, has lost his “technical skill.” He, too, must be somehow restored to productive health. This immense task rests upon the U.S. and its “shaky foundations.”

Conscious of the terrible crisis of their system, the United Nations economic spokesmen have stated the case in guarded but unmistakable language. What is the solution? “The key factor in the situation appears to be the net level of exports.”

These experts had to say something and this was the best they could do. This “solution” is just a lot of nonsense. Exports are a small part of the American economy. Last year, despite the huge loans and handouts, exports were no more than 6–7% of the gross national product. How can this factor prevent “a deflationary tendency” from appearing?

Nothing for Masses

The report concerns itself not only with the U.S. and Europe but the whole world. It shows that Canada is the only other country where industry and agriculture expanded during the war. There was also a slight increase in production in the Middle East and Turkey, especially in oil. But the masses have not benefitted from this increased production. In Iran the cost of living increased no less than 779% over 1937, in Turkey 354%. Similarly in Latin America.

As for Asia and the Far East, “millions of people are living under threat of starvation because of floods, droughts, plagues and difficulties of transportation.” These troubles, says the United Nations, are heightened by “political disturbances.” The same is true of French North Africa, including Algeria and Morocco. In these grain-producing, countries, the people are suffering from such low agricultural production that they must import grain.

Thus the picture emerges sharp and clear: the production mechanism of capitalism is a wreck. Despite the tremendous technological advances made during the war, the economic system is horribly dislocated and unbalanced. Capitalism cannot bring it back to a harmonious development, cannot feed, clothe or shelter the people.

Last updated on 4 February 2022