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The New International, April 1938


Dave Cowles

Strike of Capital?


From New International, Vol.4 No.4, April 1938, pp.107-109.
Transcribed & marked up by Einde O’Callaghan for ETOL.


A NEW SLOGAN, “strike of capital”, has cropped up in recent months. It has been repeated in the Stalinist press, it has been taken up by the Roosevelt aides, and it has spread increasingly among liberals and in the labor movement.

The occasion which called forth the strike of capital theory was the precipitate stock market crash of August, 1937. Within a little more than two months (August 14–October 18) the Dow-Jones average of industrial shares dropped 35%, a percentage drop that compared only with the crash of 1929, and was about equal to it. The usual interpretation of such a debacle is either that the current profit records of the corporations have fallen sharply, causing proportionate declines in the value of shares, or that a sharp fall in profits was generally anticipated for the near future. In either case, the crash aroused fears of another depression.

On this occasion the Communist Party reported on the meaning of the stock market crash. Stock market speculators were claiming that Roosevelt’s stock exchange regulations were the cause of the crash. But the Communist Party asks and answers [1]:

“Is the present fall of stock values merely or largely the result of such clumsy handling of or interference with its inner mechanics, whether by the Security Exchange Commission or by its Wall St. opponents? To this question we must answer no.”

Others feared that this was the sign of a new depression. But the Communist Party insisted:

“The second idea which we should reject is that the decline on the stock exchange reflects the entry of business into a new cyclical depression, that business has already entered a crisis phase.”

The reasons why they reject this idea are that “We are still in the recovery phase ...” and “There are still present possibilities for the maintenance of the recovery trends”. [2]

This only said what the cause was not. The crash still remained to be explained. The question still remained “What is the cause of the stock market crash?”

The Stalinists’ answer slides out rather shamefacedly at first but warms up as it proceeds. It starts off with

“A very important contributing factor to the decline of the stock market, and the uneven recession in various branches of industry is this: that big capital, the reactionary monopolists, may be considered as being on a sort of political strike.”

What could be the purpose of the strike? The answer is:

“It is not excluded that in expectation of this Congress [the special session of Congress called by Roosevelt] and what it may do, the monopolists seek to produce or hasten the aggravation of economic conditions, in order to terrorize Congress and keep it from adopting progressive political measures.”

On the theory that anything that “is not excluded” is thereby proved – which works well in frame-up trials but not among sane people – they charge that “The underlying motive of this sabotage of the monopolies is political: it is a struggle against the people, against progress and against the administration of President Roosevelt.”

Briefly stated, the cause of the stock market crash was a strike of capital. We need not go into any analysis of the purpose. The existence of the strike itself must first be proven. If there was no strike, it could have no purpose. Was there a strike of capital?

To strike, according to Funk and Wagnall’s dictionary, is “To quit or cease, as work, in order to compel compliance with a demand, redress, or grievance.” A strike of capital, if it took place, would mean that at a specific time monopoly capitalists got together, organized themselves, and all together “quit” trying to enrich themselves. They would do this either by preventing the unity of the elements of production, capital and labor, and in this way “cease” expropriating surplus value from the workers; or, failing in this, by preventing the realization of surplus value in exchange, and in this way “cease” making profits. Or when they are in a period of recovery and have every opportunity to increase their profitable exploitation of workers by means of greater capital accumulation, they would refuse to convert profits into capital and, in this way, “quit” enriching themselves. In short, a strike of capital would mean that monopoly capitalists organize themselves to destroy profits and capital accumulation, organize themselves for suicide.

Merely to define it is enough to show how fantastic it is. However, the Stalinists insist the strike of capital caused the stock market crash – and for that matter, although we are still supposedly “in the recovery phase”, it is also responsible now for the depression – and they even submit “proof.” The proof consists, as usual, only of accusations, such as that the monopoly capitalists “have refused to expand, to make new investments, they sabotage recovery, thereby threatening the nation’s economy.” And in another place:

“But most particularly, big capital sabotages the further development of recovery by failure to do the traditional thing, that is, to come to the support of a weakening market and weakening spots in industry during a period of recovery, by failure to energetically exploit the basis of still existing recovery for further expansion.”

That American monopoly capitalists, who give lessons to the world in the art of efficient exploitation, should need lessons from the Stalinists on how to “energetically exploit” anything or anybody, and how to make greater profits anywhere – this will surprise most people and most of all the monopolists. However, “it is not excluded”. Let us consider the charges.

Stock exchange speculators did not come to the support of the weakening market. This is undeniable. It is also understandable. They purchase stocks because of their current profits or because there is expectation of future profits from them. Stock prices and bond prices had been declining gradually since March, 1937, indicating the general judgment of stock speculators concerning current or future profits. When the market broke in August, the immediate reaction was either caution or suspicion that it was the beginning of a crash. For instance, as stocks fell and no support came into the market, one of the outstanding financial weeklies asked “Then why aren’t stocks a buy?” Its answer was,

“Maybe earnings will fall so stocks will become relatively less attractive ... Barron’s business index declined again last week.” (Barron’s, Oct. 18, 1937.)

The Stalinists can deceive untutored workers into believing that when “Barren’s business index declined again last week,” this is more proof of the Stalinist thesis that “We are still in the recovery phase”. The monopolists have their own advisers who get paid to advise and not deceive. Their facts showed that business was falling, that “earnings will fall”, that there was nothing in the market which any monopolist could “energetically exploit”. Anyone who bought stocks was certain of nothing – except losses. It was not that the monopolists “refused” to function. They were unable to function profitably. This proves not that “we are still in the recovery phase” but that capitalism is in a crisis phase.

The accusation that “They have refused to expand, to make new investments” etc. has a grain of truth. That there has been a great dearth of capital expansion is undeniable. Consider the total of private new capital flotations for domestic purposes, which is the best current measure of capital expansion [3]:



Amount in Dollars



















The figures show unmistakeably that there has been not nearly the capital expansion since 1929 that took place then. The two latest years, which were years of “prosperity”, had little more than one-eighth the capital expansion in each year that 1929 had. The years 1932-1935 showed insignificant amounts of new capital flotations. And yet capital expansion is the very backbone of capitalist prosperity, permitting capital accumulation and the enrichment of the capitalists while at the same time affording widespread employment and great purchasing power to the workers.

The fact of diminishing capital expansion is undeniable. What is the reason for it? One explanation is that the contradictions of capital accumulation are responsible for a condition where capitalism cannot expand profitably any further. When that condition becomes permanent, the decline of capitalism has begun. Since 1929, American capitalism has been declining, and this decline is due to its inability to expand today and its even greater inability to expand in the future. The effect of this decline is depressed prosperity, increasingly sharp crises, increasing unemployment, and wholesale decline in the standards of living of the American masses. The fault is with the system. The solution is to overthrow it. This is the explanation of Marxian economists.

The other explanation is that despite the crises resulting from the contradictions of capital accumulation there is still room today in which American capitalism can expand profitably. The reason why it does not is attributed to the personal faults of the capitalists. The kind of faults varies with the idiosyncrasies and the political axes of the individual economists. This is the basic position of capitalist economists and reforming liberals. Regardless of attempts to hide the issue in weazel words, this is also the basic position of the Stalinists. For their statement of the case is that there is a strike of capital, a sit-down of big business, in which the monopolists “have refused to expand” and their “underlying motive ... is political.” In short, the fault is with persons, not with the system.

Here is involved not merely the strike of capital but the whole question of Marxism versus reformism. The Stalinists choose reformism. Which is right? Let us consider the evidence.

A strike, whether of labor or capital, begins at some specific time. The Stalinists claim that the strike of capital caused the stock market crash. The time when the capitalists “refused to expand” must have taken place before the crash. When did the crash take place? When did the capitalists begin to refuse to expand?

The time when the market crashed is easy to give – it crashed on August 14. When did the monopoly capitalists begin to strike and to “refuse” to invest? Was it just a few months before the crash? But the government statistics show that as late as June, 1937, only a month and a half before the crash, new capital flotations for business expansion were $268,946,000, the largest in any month of over seven years. [4]

Perhaps the strike began the night before the crash – an unusual instance of a lightning-fast strike? In which case it would have continued at least into September. However, government figures show that private new capital flotations were $112,757,000 in September, 1937, twice as much as in August and not much less than the capital expansion in the full year of 1933 or 1934. Even in October, when all monopoly capitalists should have learned from the Stalinists that they were on strike and should have obeyed orders, new capital flotations for business expansion were $66,647,000, which amount was exceeded by only two of the forty-eight months of 1932-1935 inclusive.

In short, the monopoly capitalists either planned a strike and then scabbed on each other; or, they did not call a strike but merely told the Stalinists they would, leaving them holding the bag with their “scoop”; or the strike of capital is just another Stalinist fiction. For among the many sentences about strike of capital and sit-down of big business, there is not one that tells when it all began.

Another characteristic of a strike is that it has persons who take part. Who participated in the strike of capital? Of course, not all participants could be identified in any strike, least of all in a strike of capital whose motive is to “terrorize Congress”. However, at least some would be known. The Stalinists as usual name no names and give no proof. [5] Nevertheless, let us hunt out the proof for them.

Beginning with February, 1937, the number of commercial failures began to mount, rising to threatening figures. In February, 1937, it was higher than in the same months of 1935. Was it to “terrorize Congress” in August that these businesses started to commit suicide as far back as February?

It may be argued that these commercial failures took place among small business and represent part of the strike of capital, part of the efforts of monopoly capitalists to destroy economic expansion. The answer is that this started as far back as February. Our previous figures showed that the capital flotations in June were the highest in seven years. Had there been a strike of capital causing commercial failures in order to undermine business expansion, would the same strike at the same time have increased economic expansion through new and greater capital flotations?

As far back as March, the general level of wholesale prices was declining. Farm prices fell precipitately. Was it to prepare them-selves for a strike in August that these wholesalers slashed their prices in March?

Here we had an orgy of capitalist suicides whose one purpose was political, to “terrorize Congress”, and the Stalinists cannot prove who planned it, when it was organized, or who participated. Either the strike of capital is fiction, cannot be proved and the Stalinists know it – in which case they stand indicted for conscious deception of the workers. Or the strike of capital is fact – and they take their responsibility to the workers so lightly that they do not concern themselves with evidence. Here both are true. They hold the workers lightly and the strike of capital is fiction.

Then why do the Stalinists repeat it? Not because it explains the stock market crash, certainly. Here the strike of capital is worthless. They repeat it because it has political worth, because it serves a political function. Their very efforts to meet anticipated criticism of its political function gives the hint at what function they expect it to serve.

The criticism that they try to ward off is that the strike of capital is a cloak for opportunism in politics. They insist that to say there is a strike of capital

“... is not to say that the monopolists can at will and in an organized way bring about either recovery or depression. Nothing of the sort. To assume that would mean to assume something which is closely akin to the opportunist theory of ‘an organized capitalism’, something that does not exist.”

Upon this much there is agreement: The theory of “an organized capitalism” is a product of opportunist politics which seeks to justify itself by falsifying economics. Does the strike of capital assume an organized capitalism? If it does, it brands the Stalinists as being “closely akin” to opportunists by their own confession. Let us consider the matter further.

Can there be a strike of capital if we do not assume an organized capitalism? Certainly not. If there is no organized capitalism and only some of the monopoly capitalists struck, the others would scab on them and soon smash them into bankruptcy. These possible scabs must be organized. Organization cannot stop there. It must include also all capitalism. If not, when the monopoly capitalists struck the small capitalists would scab, get the market away from monopoly capitalists, become monopoly capitalists themselves and bankrupt the striking capitalists. The strike of capital assumes – and must assume – “an organized capitalism”. And by their own admission, this is “closely akin to opportunism.”

Anyone that requires more concrete evidence that the strike of capital is a cloak for opportunism need but consider the measure which the Stalinists propose against the strike. Taking off on one of Roosevelt’s speeches, they propose:

“It is possible to combat more effectively the sabotage of the monopolies by strengthening and democratizing the Federal Reserve System. This is what we have been saying right along ourselves.” [6]

Finance capital dominates modern industry. If industry struck, surely finance capital through its control of the Federal Reserve System, would also strike. To strengthen the Federal Reserve System would be to strengthen the “sabotage of the monopolies”. So the Stalinists include “democratizing” as part of the solution. The Federal Reserve System must be democratized in order to lend money to good capitalists and break the strike of bad capitalists.

Should the democratized Federal Reserve System refuse to break the strike of capital, the workers will have to do it themselves. One way would be to take over the factories and run them. This would break the strike quickly. For Stalinists this is excluded. It is against capitalism and capitalist democracy. It might antagonize the petty bourgeoisie, whose friendship must be kept at all costs. It smacks of revolution and Trotskyism.

The Stalinists will solve the problem in their own peculiar way. How do capitalists break a workers’ strike? By calling in scabs, “good” workers. Then how should the workers break a strike of capital? By following the same tactics – by calling in “good” capitalists. We have visions of the Daily Worker running want ads: “Some good capitalists wanted to run a struck steel plant”; or “The Communist Party faction of the auto workers has cooperatively paid for this ad – ONE SINCERE HONEST BOSS WANTED! WILLINGNESS TO MAKE PROFITS ESSENTIAL!”

The strike of capital is not only a cloak for opportunist politics but, like opportunism itself, it is a weapon of capitalism in its struggle against the workers. This fact slipped out in the syndicated column of a capitalist correspondent writing from Washington:

“The charge that there has been a deliberate strike of business against the administration is encouraged here to establish a popular excuse and to offer the public an easily visualized villain. But, in private, when considering what ought to be done, the administration does not take that talk seriously.” (Raymond Clapper in the World-Telegram, Jan. 5, 1938.)

When the Stalinists spread among the masses the idea of a “strike of capital”, they perpetuate a threefold deception.

Their first deception is to give the workers an “easily visualized villain” for the stock market crash and the economic decline. They cover up the bankruptcy of capitalism by blaming them both, not on the capitalist system but on some bad capitalists. But in doing so they deny the obvious fact of widespread economic decline heading toward depression. They ridicule the obvious fears of the capitalists themselves, as does the report when it says

“We do not subscribe to the naive view of the National City Bank which wonders whether we are going to have a miracle of a new depression setting in before we are fully out of the old one.”

They ridicule the evidence of their own economic service whose verdict, given weeks before the strike of capital became official dogma, was:

“Developments of the last few months have strengthened the belief that the country is facing another depression.” (Economic Notes, October 1937)

Above all, they ridicule whatever faith the masses still have in their competency and integrity. In spreading the propaganda of strike of capital, the Stalinists act as the agents of capitalism.

Its second deception is to spread the illusion that the New Deal is in the interests of the workers and not the capitalists, that the Roosevelt administration represents the people and is not the “executive committee” of the ruling class. It hides the fact that the New Deal has not been able to solve the crisis of capitalism, that the present crisis occurs under the New Deal. In all this the Stalinists show themselves the agents, among the workers, of the capitalist government.

These deceptions are great enough in themselves. However, they are only parts of a third, and colossal, deception: the People’s Front, the politics of opportunism pursued on an international scale.

People’s Front opportunism must spread the illusion among the workers that there is room for recovery and progress under capitalism. Unless they do this the workers will realize that capitalism is in decline, that there is no place in it for liberal labor politics and reforms, and that their only solution is the overthrow of capitalism – revolution. The opportunists will speak, but to no audience. That is why the Stalinists insist that “We are still in the recovery phase” although their own economic service proves they lie.

People’s Front opportunism must spread the illusion that the capitalist democracy symbolized by the existing government is good capitalism, that it is progressive, and fights for the people and progress against the “bad” capitalists who represent fascism. It must spread this among the workers in order to get them to support the government. In this way they prepare the workers to support the capitalists in the coming imperialist war. And People’s Front opportunism must deliver up the workers in advance in order to convince the capitalist government that a military alliance with the Soviet Union means mass support of the imperialist war.

But daily events rise up to challenge these deceptions. In order to continue this false politics, the Stalinists must falsify all economics. They must deny the reality of capitalist decline, when it becomes vivid in crashing stock markets. They must invent the “strike of capital” to hide the real function of the New Deal, to absolve the Roosevelt administration from any blame for the depression, and to tie the workers more completely to the government which “represents” them and progress.

This strike of capital is false economics to hide anti-working-class politics. It is only the American version of Stalinist fraud. And it is only part of the giant fraud being perpetrated upon the international working-class by the Stalinist International.



1. Economic Trends Today, Monopoly Sabotage, and Tasks of Our Party – A Report to the Political Bureau of the Communist Party on the Present Economic Situation, by Alex Bittelman. Daily Worker, October 28, 1937. All subsequent quotations, unless otherwise noted, are from this report.

2. This propaganda is identical with that spread by the Roosevelt administration and the capitalist press to hide the truth of capitalist decline. The fact is, all basic economic indexes at the time this was written were plainly downward. For instance, the New York Times index of business activity, which is based on industrial production and wholesale distribution, fell from a peak of 111.2 on August 14 to 100.2 on October 16, a far sharper drop than occurred in the same period following the crash of 1929. The more inclusive index of business activity of Business Week really began to drop September 4, more than two weeks after the crash began, and fell from 79.6 to 69.4 on October 16, showing that in less than six weeks one-eighth of American business activity had been destroyed. The seasonally adjusted index of manufactures and minerals, published by the Federal Reserve Board, began falling as far back as December 1936. Even more damning, the Stalinists’ own economic service; Labor Research Association, warned in its October issue of Economic Notes that “Developments of the last few months have strengthened the belief that the country is facing another depression.”

3. Survey of Current Business, Feb. 1938, pp.18-20.

4. Survey of Current Business, Feb. 1938, pp.18-20. All other statistics of capital flotation are from same source.

5. To point to a abut-down of General Motors or US Steel as proof of participation in a strike of capital avoids the whole question: Are those plants shut became they have no market for their products, because of depression; or do they have customers who can give them a profit and nevertheless the plants “strike”, refuse to produce, to make profits, because of a secret agreement to “terrorize Congress” by aggravating economic conditions and causing a depression?

6. There is a striking similarity in approach between this and the approach of petty-bourgeois demagogues and Fascists. The Stalinists, in their strike of capital, insist that the cause of the present depression is not capitalism but some bad monopoly capitalists. The Fascists agree with this, only they an even more specific – the bad capitalists are Jews. The Stalinists propose to democratize the Federal Reserve System and in this way break the strike of capital that is causing the depression. The Coughlinites, etc., propose the identical measure to break the control of international “Jew” finance. Both are demagogic appeals to petty-bourgeois prejudices in order to win over the middle classes. Bat in this conflict of demagogies, the Stalinists must lose. The Fascists can play upon anti-Semitism and other base emotions. The Stalinists will have to compete more effectively. And in France, according to Max Nomad, who recently returned from visiting it on a Guggenheim fellowship, the Stalinists are resorting to anti-Semitism and burlesque shows to get members among the backward districts of Paris.

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