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Fourth International, December 1941


C. Charles

Priorities and Unemployment


From Fourth International, Vol.2 No.10, December 1941, pp.309-311.
Transcription & mark-up: Einde O’Callaghan for ETOL.


With 75% of the war orders in the first year of the “defense”, effort in the hands of 56 corporations, with more than 30% in the hands of six corporations, with these concerns receiving priority in the allocation of raw materials, with non-military establishments being shut down or their operations curtailed due to lack of raw materials, the grim problem of priorities unemployment is facing the workers of the country.

On July 15, 1941, Leon Henderson, Price Control Administrator, painted a dark picture of “factories made idle by lack of raw materials to turn out civilian goods; of men made idle by lack of materials to work with; of single industry towns blighted.”

Causes of Priorities Unemployment

The country is just beginning to enter into the period of priorities unemployment. All industries that use raw materials needed by the war industries are forced to give way before the inexorable demands of armament. The present limited supply of steel is being absorbed for guns, tanks and other military equipment, and less and less remains for cars or refrigerators. The workers occupied in manufacturing cars or refrigerators find themselves jobless until the plants are retooled for defense, or until additional supplies of steel are forthcoming.

Besides steel, among the other industries affected are those that use aluminum, iron, copper, zinc, brass, nickel, rubber, tin, silk, cork and chemicals. Plastics, held out to the manufacturers as a substitute for the deficient raw materials, is itself becoming subject to priorities regulation and allocation.

The fact that ships and trains are carrying the materials for war purposes means that these facilities are unavailable to transport material not judged vital to the war effort, and this acts to aggravate shortages.

Tens of thousands of silk workers were thrown on the streets when the government banned further imports of silk in an attempt to place pressure on Japan.

Priorities unemployment affects not only workers directly involved in production, but also ever broader circles of those workers employed in transporting, selling and warehousing.

Fears of Post-War Crash Hamper Production

The shortages in supplies of various raw materials can be directly traced to the economic crisis of 1929, when no expansion in plant capacity took place in the basic industries which were running at a low percentage of potential capacity.

Even with the beginning of the armament program, and to this day, the various trusts did not and do not want to endanger their monopoly profits by a program of expansion. For example, the Aluminum Company of America at the start of the armaments program insisted that it could produce enough aluminum not only to supply the war needs, but also civilian and British requirements. A few months later aircraft plants engaged in military work were limping along due to a shortage of aluminum. Of course, aluminum workers producing articles for civilian use have been made jobless because of lack of raw materials.

The Fortune Magazine of August 1941, states:

“It is now obvious that expansion of productive facilities for steel, electricity, aluminum and other essentials should have been undertaken as soon as the defense emergency was realized. But the advisers closest to the OPM…reflected the fear of their several industries that the creation of vast new plant capacity would present a threat of post-war competition.” (Our emphasis.)

On July 28, 1941, the New York Times correspondent from Pittsburgh wrote that “certain steel authorities still hold to the view that there really is no practical need for wholesale increases in capacity.”

Mr. Thurman Arnold, Assistant Attorney General, in a speech in Boston on October 7, asserted that there were concerted attempts on the part of basic industries to hamper any expansion which would interfere with their domination of industry after the war.

As Fortune describes it, Washington is divided into several factions: the “expansionists” who want increased plant facilities and the “non-expansionists” who fear “what is to happen when the show is over and the nation faces…a new world with huge capacities and no notion of how to convert or distribute them.” Fears concerning the post-war situation harass the capitalist class.

The course of the government is to tread cautiously between these two schools of capitalist thought; to set up new plants only after assuring the capitalists affected that these new plants would offer no threat to their profits at present or in the future. The new plants are financed either with government aid or completely by the government. In those few cases that it keeps the ownership of the plant that it had financed, the government hands them over to the monopolies to operate at a substantial profit for the latter.

Effects of War Effort and Priorities

Without doubt the long range effect of the war effort will be the concentration of industry in ever fewer hands. There are certain important technical factors that aid the large corporations in securing war orders. Small firms are as a rule technically unable to handle defense work because of lack of machines. These machines can be secured only from machine tool companies which have huge backlogs of unfilled orders. The large corporations operate their own machine making departments. The large corporations, with their own sources of supply of raw materials, their own transportation and their own plants, have no difficulty in continuing operations. The small establishment, dependent on others for raw materials, equipment, etc., often finds itself crippled.

Furthermore, large corporations are able to buy up a large part of the available supply of raw materials and to hoard this material. In the meantime, the small concern cannot place its hands on any raw material.

In England, 40,000 small concerns went under in the first 16 months of the war. In the United States, defense officials have estimated, according to the CIO Economic Outlook, that at least 20,000 businesses may be destroyed by the dislocation of the army program.

If the belated program of expansion even now meets bitter resistance from the capitalist class, the program of sub-contracting and thereby “rescuing” small business faces the same obstacle.

The powerful large corporations do not want to save small business. On the contrary they want to keep all the lucrative war work under their control, and to freeze the independent business man out. According to Mr. Arnold (in his already-cited statement on October 7), this is a deliberate scheme of combinations which seek to dominate the market.

A few crumbs will be tossed to small business, but on the whole, the liberals will be even less successful in their present limited program of subcontracting than they have been in their previous “trust-busting” campaigns.

How the Workers Are Affected

The ranks of the unemployed are swelled by those unable to find jobs. It is estimated that priorities unemployment will add from 1,500,000 to 3,000,000 workers to the ranks of the unemployed, bringing the total unemployed to between 6,500,000 and 8,000,000 according to the most conservative estimates.

On September 5, 1941, the New York Times correspondent in Washington declared:

“Some officials believe the total of idle may go as high as 2,000,000 workers in the next few months as material shortages force drastic curtailments in the production of non-defense durable goods.”

Mr. Walter B. Weisenburger, executive vice-president of the National Association of Manufacturers, asserted on September 23, 1941, that nearly 3,000,000 employees in small non-military manufacturing plants face loss of employment within six months as a result of priorities.

During the year ending June 1, 1941, 3,365,000 workers were re-employed in industry. During these months plants hitherto idle or on part time went into full production.

Now capacity operation has itself become a limiting factor in certain basic industries. Aluminum is running at 100 per cent of capacity; steel at practically 100 per cent; there is a shortage of copper as well as of other basic commodities. Apart from such developments as the subcontracting of war orders to small plants, the rate of future advances in production and re-employment depends primarily on the completion of new plants. This means that increases in operation and employment will be spasmodic; employment will rise only as new plants are completed.

The workers now thrown out of work by priorities unemployment can be reabsorbed into industry slowly. In the case of the big corporations, with their large defense orders, the period of unemployment may be comparatively short depending on the time necessary to change the industry from a peace to a war time basis. In other cases, it will be many seasons before the workers made jobless by priorities unemployment will find work. In the very process of losing jobs in small plants and being rehired in large-scale industry, a certain proportion of the workers will be left out of work, due to greater use of labor-saving devices in the large-scale industry. A WPA research division estimates that not more than 1,500,000 can be expected to be rehired during the year ending June 1, 1942.

In addition to a decline in the income of the working class due to increased unemployment, a further decline of living standards is inevitable because of the soaring of the price of consumers” goods as the supply dwindles.

Union Plans to Solve Priorities Problems

Brought face to face with the acute problem of priorities unemployment, certain labor leaders have been occupying themselves with plans to avoid or alleviate priorities unemployment and step up war production. President Murray has formulated his CIO plan; Walter Reuther of the Auto Workers has issued a plan which was the center of considerable attention about a year ago; the United Electrical Workers has developed a plan for their hard-hit industry as has the Aluminum Workers Union; there are other plans, including the Buffalo and Flint plans. President Green has likewise proposed a plan in the name of the AFL.

These plans have the following features in common:

  1. Government-employer-labor boards to run the industry;
  2. Increase of production by organization of the industry as a unit instead of numerous independent plants;
  3. Maintenance of seniority for workers now on the job when the shift is made over to war work;
  4. No curtailment of civilian work until war work is secured.

The Reuther plan was among the first proposed. By the plan Reuther hoped to alleviate the seasonal character of the auto industry and also hoped to avoid mass layoffs when the steel for autos would be rationed. His plan was based on the idea that auto workers and the present auto plants could be used in building planes. Reuther proposed to achieve the production of 500 planes daily in the Detroit area.

His plan technically was based on two proposals: 1. That a survey of the automobile industry in and around Detroit be made to show the plant and machine capacity available for airplane work; 2. That the blue print of a plane should be broken down into its component parts and these parts be assigned for mass output to the plant which the survey showed was best able to handle their manufacture. Finally, the various parts would be assembled in a central hangar.

The cynical reception this meek plan met by the capitalist class is extremely symptomatic and revealing. The organ of the machine tool industry, the American Machinist, in its issue of April 2, 1941 said:

“The CIO Reuther (500 planes a day) plan to use Detroit capacity for aircraft has been definitely rejected. It was rejected squarely on its essential features, treatment of the auto industry as one firm with work parcelled out in a semi-compulsory fashion and labor participation in management, rather than on the rather irrelevant arguments as to whether the plan could actually produce 500 planes a day.”

Capitalist concepts of “relevancy” and “irrelevancy” speak clearly and loudly what the war effort means: Planes may or may not be produced, but the only relevant argument is that the rights and profits of the capitalists must be assured.

Fallacies of Union Plans

The fallacies in these timid plans are easily discernible. First fallacy is that they are based on the misconception of the role of the government, which according to those who drew up the plans, represents a neutral group representing the nation “above” both the workers and capitalists. Bitter and long experience has shown that the government, far from being a neutral in the struggle of the classes, is in reality a representative of the ruling class. Labor will find itself a prisoner on these boards, caught between two expressions of the same capitalist class – the capitalists themselves and their government – and would be outvoted on all decisive questions. Recent experiences with the National Defense Mediation Board in connection with the miners’ struggle are most educative.

Second, the big capitalists do not want to and will not organize industry as a whole, they do not want to subcontract work but are coldly planning to insure profits for themselves with big backlogs of orders; they want no interference with their management of industry; they are not interested in production but primarily in maintaining their monopoly position.

Fallacy number three of these plans is that labor would take responsibility for production for the war effort of a war fought in the interest of imperialism, and from which the workers have nothing to gain.

Some of the formulators of these plans imagine that it is possible to have the war effort and also maintain the level of consumers’ goods production. This is still another error of the plans.

They demand that raw materials be made available to the plants now occupied in producing consumers’ good, until these concerns receive military orders. In the meantime, if their idea were adopted the plants at present working on war work would have to curtail expansion. They think that the war effort can stop or slow up at their request or desire. This is an illusion.

The transition from peace-time production to war industry is as irresistible in its character as the transition from handicraft to manufacture and machine industry. The war is as necessary to decaying capitalism as the introduction of ever-improved machinery was to capitalism when it was still progressive. Modern capitalism cannot exist without inflicting hardships on the workers.

To be sure, these plans are in many cases based on a healthy suspicion that capitalist management of industry is inefficient, wasteful and concerned solely and exclusively with profits.

Marxists are very often obliged to pass with the workers through experiences, even though the experience itself is doomed to failure. This may be the situation in many of the unions in regard to the plans. But the workers can only gain from such experience if the Marxists in their ranks constantly explain their criticism and advance their own program. The logical course to pursue is therefore to advocate a program, not of doctoring capitalist management, but of replacing it with workers” control of production. From the sound idea that capitalism is interested only in its profits, flows the program of expropriation of the large-scale industries.

The attitude of Marxists toward the war program including priorities unemployment, the rising cost of living and the union proposals, is based on the fundamental idea that labor is not responsible for the war and its conduct. Labor can defend its living standards not through class collaboration but only by continuing the class struggle. We fight for the slogan of the sliding scale of hours as an effective measure against unemployment; and for the rising scale of wages so that the living standards may be maintained at least at their present level, if not improved, in the face of unemployment and rising costs of living.

At the same time, the problem of priorities unemployment offers an excellent opportunity for explaining to the workers our complete transitional program.

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Last updated on 13.6.2005