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New International, October 1938


David Cowles

Mahoney Bill and Revolutionary Politics

From New International, Vol.4 No.10, October 1938, pp.307-310.
Transcribed & marked up by Einde O’Callaghan for ETOL.


RECENTLY, THE LEGISLATIVE committee of the Trades and Labor Assembly of St. Paul indorsed a bill to establish state-owned industries. This bill had been submitted to the Minnesota state legislature by William Mahoney. The bill itself is doubtless a matter of long debate in the unions. The immediate question that comes up is: What constitutes revolutionary tactics towards such a bill?

While this question is the most pressing, nevertheless it may not be answered first. First must be answered the following questions:

  1. What economic and social problems does the bill aim to solve?
  2. Can the bill, by its very nature and provisions, if it is put into practice, solve the problems?
  3. What is the political motivation behind the introduction of the bill?

Then, and only then, can correct tactics be formulated. To leap over the analysis in order the more quickly to decide on the tactics will result in nothing more substantial than hair-brained phrase-mongering. It will result in revolutionary word-intoxication bereft of understanding, but never revolutionary practice.

The bill aims to solve two problems, unemployment and taxation. It aims to abolish unemployment and to reduce taxation. Both aims are stated in the title of the bill. The intention of abolishing unemployment receives almost exclusive prominence in the title. It is almost as if accidentally the words got to make an additional aim of the bill “to reduce taxation by relieving the community of the necessity of supporting the unemployed and dependent citizens on the relief rolls.” We shall see later that the two aims are incompatible; that we cannot reduce taxes and reduce unemployment at the same time. At present it is enough to know that the two aims of the bill are to reduce both unemployment and taxes.


The method it proposes is a system of state-owned industries which “shall strive to establish its separation, self-sufficiency and independence from the private industrial system.”

In the problems it tries to solve and in the method of solution, the Mahoney Bill continues a tradition of Utopian socialism and petty-bourgeois escapism that spans over a century of American labor history. It calls to mind the experiments of Owen and his followers and the cooperative ventures of the trade unions. Like them, the Mahoney Bill aims to solve the economic and social problems – abject poverty, degradation and starvation resulting from unemployment – born of the profit system. Like them, the Mahoney Bill offers a solution which evades and tries to escape the whole cause of unemployment and poverty – the profit system. The differences between the present bill and the previous experiments arise from differences in economic conditions. Owen and his followers, intellectuals predominantly, had the capital needed to open and operate their “communist” communities. The unions who entered upon producers’ cooperatives also had the requisite capital to start their enterprises. Today’s many-millioned unemployed, however, have not enough for self-subsistence much less for investing in factories, machinery, and the raw materials of industrialism. There are no philanthropists to grant them subsidies. If they are to become self-sufficient and independent of the profit system, the capital for achieving this must come from others than themselves. Either individual philanthropy or state aid must supply the funds. But individual philanthropy, which even at best is more showy than substantial, has dried up with the decline of capitalism. The bill provides therefore that the state shall supply the funds and the state shall own and operate the factories created by the funds.

Conflict of Aims

From the very beginning the conflict between the two aims emerges and the desire to reduce taxation makes a sham of reducing unemployment and poverty. True, the bill proposes that the state establish factories but only such “as will require the minimum of capital investment and provide the maximum of employment”. But whether the solution is adequate to the disease depends upon the extent to which the bill provides for the expansion of state-owned industries to provide employment to all unemployed. And the bill is haunted not only by the fear of raising taxes but also by the horror of infringing upon the profits system.

This double fear hems in the bill and nullifies it as a real factor in solving unemployment by state-owned industries. On one hand it limits the type of state-owned industries that can be established, specifying that only those industries be operated “as will require the minimum of capital investment and provide the maximum of employment”. The immediate effect will be to limit the arena within which the bill could function. In addition the industries that would be established would operate as a reactionary throw-back to a period of low capital in proportion to large labor power. This would result in a decreasing productivity of labor, lower total production for unemployed, lower per capita distribution of commodities and lower living standards. The second limitation is a limitation upon funds. The building of state-owned industries depends upon the amount of money spent for capital investment. The bill makes no provision for expenditures outside of an insignificant initial sum of one million dollars. Until provisions for expenditures and revenues are made in the bill, the bill remains merely a promise of action, written upon the statute books, without the money to put it into effect. Expenditures would have to be in the billions, not millions, and the taxation to get the money, if it is not to be a back-breaking burden upon the workers, small farmers and lower middle class, must fall upon the wealthy in the form of very steep income taxes, inheritance taxes, and other taxes that would wipe out almost entirely the profits of the capitalists. It can all be summed up briefly: unless expenditures are specified, the bill is only a written wish. Unless expenditures are in billions, the bill is inconsequential as a solution of unemployment. Unless the revenue is gotten from capital, the unions will be indorsing a solution which will give jobs to the unemployed by oppressing the employed.

But assuming the impossible – assuming that enough money will be spent to give jobs to all unemployed, assuming that the money is taken from the very rich only – what will be the position of the unemployed under the conditions provided for in the bill?

Determining Wages

The amount of wages is not specified. All that is specified is the method for determining the amount. The bill states that “payment to the workers of the full value of their collective product shall be the principle to be observed”. It also says that the product of the public industries shall be distributed to the unemployed who are working there “in proportion to the productiveness of each one’s labor”. However, the productiveness of each worker in a system so complex as capitalism is impossible. Wages cannot be determined for individual workers on the basis of productivity. They will be set arbitrarily by the Public Industries Commission, which will decide what percentage of the product was contributed by what category of workers. And in what medium will the wages be paid? The bill says in the “current medium”. That may mean anything, i.e., special scrip for the unemployed. This is not the same as “legal tender” which is the medium of exchange that is considered lawful money for the settlement of debts and the making of purchases. But even if the productivity of each worker can be correctly estimated as a basis for determining wages and even if the wages are paid in legal tender, the unemployed will still be oppressed under the bill. For while wages depend upon productivity, the productivity per worker itself will be low, resulting in lower wages than prevail among workers in private industry.

The level of wages in public industries would be lower than the general wage level because the productivity per hour on public industries would be lower and the number of hours of work during a working week would also be lower. We need not take too seriously the provision calling for the installation of “the most efficient machinery and improved processes to achieve the highest degree of labor productiveness in order that its employees may obtain the highest possible compensation”. This provision comes into head-on conflict with the other provision asking for a low ratio of capital to labor in industries established by the state. Efficient machinery would result in “highest possible compensation” for those employed in public industries, would result in high productivity, high standard of living – and high taxes and low profits for the capitalists. Low capital ratio would require less investment outlay by the state, less taxes – and lower standard of living for the unemployed. The clash between profits and plenty will be settled by the whole weight of the state machine in the interests of profit.

The alternative that will face the unemployed with jobs in the public industries will be: either accept the lower living standards or increase wages by increasing their hours of work. The public industries are excluded as a source of increased employment since the bill makes specific provision that no one may work more than 30 hours a week. The unemployed will therefore compete with workers in private industry, either by getting part-time employment or taking away jobs from regularly employed workers by under-bidding them.

Avoids Collective Bargaining

Another method that workers in private industry get higher wages is through union struggles and collective bargaining. This bill, although indorsed by unions, contains no provision for union recognition or collective bargaining. Lacking these instruments for self-improvement, the unemployed will be helpless. Sole power for determining wages remains with the Public Industries Commission, which is an integral part of the state capitalist machine. The section requiring that “The Public Industries Commission shall operate all industrial projects on the basis of industrial democracy through worker councils through which the workers employed in the Public Industries shall be encouraged to manage the projects under the supervision of the Commission,” will not change the situation appreciably. First, it avoids the central issue of collective bargaining and union recognition. Second, in the wider realm of managing the industry, it gives no specific powers to the workers’ councils which they can exercise. Third, all it expresses is a pious resolve that the workers’ councils “shall be encouraged” to manage the projects. What constitutes encouragement will be for the Commission to decide and the unemployed to deride. And it is certain that the same bill which does not even encourage the more limited demands for collective bargaining and union recognition will not be too great a source of encouragement to workers’ management of the industries.

Even after he has finished with his work, the unemployed has not finished with the commission. The bill provides that “The Public Industries Commission is hereby empowered to require of workers employed in the Public Industries to spend such portion of their earnings in the Public Industries Commissaries as may be determined by the Commission in accordance with the ability of Public Industries to supply all the material needs of the workers therein”. The effect of this provision is to result in a double deprivation of the freedom of the unemployed. It would deprive them of the freedom to spend their wages wherever they want, thus making their private life subject to the whims and caprices of a commission. While this is oppressive under the best of circumstances, it is worse when the commission is part of the capitalist state trying to reduce taxes at the expense of the unemployed. It would also deprive the unemployed of the power to buy what they want. First they will have to spend the proper share of their earnings in the state stores, where there is certain to be real limitations on the variety of goods, since production is to be limited only to the “material needs”. This will result in a lower living standard for the unemployed.

Institutionalizing the Unemployed

The destruction of the freedom of consumption for the unemployed, which is what this bill contemplates, is planned in order to guarantee a market for the output of the public industries and to separate the public industries from private industry, making each independent of the other. To further aid the separation, the bill provides for exchange centers “in order that Public Industries employees may obtain the products of their labor at the cost of production. These distributing centers or store houses must be stocked with goods and merchandise made by or procured for the Public Industries, to meet the material requirements of all persons employed in the Public Industries to the fullest possible extent.” Having previously deprived the unemployed of freedom to buy where they want, the bill would now deprive them of power to buy what they want. That, in practice, is the meaning of the bill. For under the best of circumstances, the variety of goods produced will be strictly limited, as provided in the bill, to “material needs”. Result: the already low standard of living of the unemployed may go still lower.

The threat to the living standards of the unemployed is not much alleviated by the further proviso that “The Public Industries Commission may exchange the products of the Public Industries system for the products of private industry when necessary and advantageous.” This provision is admission that the separation from the world of private industry, which the bill envisages, is impossible. But just as its dream of withdrawing from private industry is impractical, so is its hasty attempt to keep connections. Private industry is not interested in bartering with the Private Industries commission, product for product. It is interested in cash, not barter. The commission will be able to buy goods for the exchanges either with funds raised by the government through taxation or with funds from the public sale of goods produced by the public industries. The second alternative is forbidden. The bill specifically says that the Commission “shall not sell on the open market in competition with the products of private industry”. The only alternative is increased taxation to obtain funds for purchasing commodities. But increased taxation is exactly what the bill aims to abolish. Result will be that little if any new goods will be bought for the exchanges. Savings in taxes will be accompanied by limited quantity and variety of goods. The separation between private and public industries would be at the expense of the living standards of the unemployed.

And despite all precautions, it will be impossible to separate public from private industry. The capital requirements of public industries will be met by private industry. However, since the capital requirements will be comparatively small, the stimulus to the capital goods industries will also be small. Even more important, the market to take the output of these capital goods will be the unemployed, who will get the goods in exchange centers. Private consumption goods industries will be deprived of the sustaining force of government subsidized consumption.

The removal of this subsidized consumption will have dire effects upon private industry. It will cut down the demand for consumption goods from private industry, resulting in increasing unemployment there. The contracting market will result in a contracting demand for capital goods by the consumption goods industries, bringing on greater unemployment in the capital goods industries. Depressions will increase in severity due to falling profits. Unemployment will grow, and require further expansion of public industries at the expense of private industry. The alternatives will again become glaringly evident: Either private industry must be destroyed – through expropriation of industries or confiscatory taxation – in order to save the unemployed from starvation and poverty; or the living standards of the unemployed must be destroyed and the unemployed themselves repressed – in order to save private industry and profits. The bill is additional proof that no one can bridge the gulf between profits and plenty. Because it wants to leave private industry untouched, the bill avoids the pressing need for immediate action to solve the question of unemployment by methods that are immediately applicable – such as opening up the idle factories, expropriating them – and instead escapes into plans for the future. Because it wants to keep profits untouched it would reduce taxes and prohibit public sale of commodities made in the public industries. The result is that the present plan to solve the problem of unemployment would never be put into practice to any appreciable extent. And if it were put into practice, it would institutionalize the unemployed into a pariah sect, cut off from the ordinary economic relations of the labor movement, with wages lower, productivity lower, status lower, standards of living lower, with freedom of the market and consumption destroyed.

Anti-Labor Boomerang

The passage of the bill, in its present form, would be a boomerang against the labor movement. The unions have fought for decades for the right to buy whatever and wherever they wanted with their wages. The bill they indorse would take that right from the unemployed. The unions fight daily for better wages for themselves. The bill they indorse does not even state the wages, and would certainly destroy the real wages of the unemployed. The unions fight for union recognition for themselves. The bill they indorse provides neither for union recognition nor for collective bargaining for the unemployed. The unions fight for control of jobs and conditions of work. The bill they indorse makes no specific provision for similar powers to the unemployed. The labor movement which indorsed and advocated the bill would bear responsibility for its evil fruits. The unemployed will curse the unions for the law they advocated. And the gap between the organized labor movement and the unorganized unemployed will grow wider and more dangerous.

Some positive stand must be taken on the bill. And it must be a stand that will use the bill as a means of linking the unemployed to the labor movement by indissoluble ties. It must be a stand that will turn the need for abolishing unemployment into another lever for the overthrow of capitalism. What stand must that be?

There will be some to say that we should go along with the bill. The reasoning will be somewhat like this: The bill is indorsed by the labor movement and represents the demands of the labor movement. True, it is imperfect, etc., etc. Nevertheless, it is a sign of awakening political consciousness within the labor movement. This consciousness is progressive even if its product is not quite satisfactory. Therefore, we must advocate the product – the bill – lest we appear as crack-pots and ultra-radicals; lest we isolate ourselves from the movement of the masses. While this is the easiest stand, it is the stand of opportunism and it has nothing to do with either revolutionary theory or revolutionary practice. No union militant who understood the bill would do this, much less a revolutionist.

Others will propose a new bill altogether. Doubtless a new bill would have a more formal perfection, but to pose it as a real alternative is evidence of sheer sectarianism. Our introducing a new bill would put us into motion against the labor movement as it gropes for a solution for unemployment. It would put us outside, and against, the movement at the very time when we should be within the movement of the masses, helping direct their gropings toward revolutionary solutions.

Practical revolutionary politics would consist, in this case, in changing the entire meaning of the bill by amendment. To do this successfully we must 1) grasp the fundamental objective of the workers – in this case it is the abolition of poverty and unemployment; 2) understand fully the steps necessary to solve it; 3) appraise accurately the level of development of the workers whom we would move to action in order to know what type of appeals could move them. On the basis of this knowledge, we can counterpose a series of amendments. The order in which they are introduced and the time of introduction is a test of political insight. Generally, the order should be as follows: 1) Amendments whose obvious effects would be to destroy provisions of the bill that would nullify the fundamental objective of the workers. 2) Amendments which would make the bill more effective an instrument in solving unemployment. These amendments should be introduced in the most effective order – beginning with those changes which would find an immediate response and approval among the majority of the rank and file workers and connect them with transitional demands which lead to the overthrow of capitalism.

Necessary Amendments

The following three amendments every class conscious unionist would agree to: 1) That wages to workers in state-owned factories be equal to wages paid to union men for similar work in private industry. This would free the unemployed from dependence for their wage scale on the reactionary method of production that may be set up under the state-owned factories. It would also bind the workers there to the labor movement with ties of economic interest. 2) That wages in state-owned factories be definitely specified as to be paid with “legal tender”. The payment by forms of scrip money which characterized the semi-serfdom of the American labor movement should not be permitted to come to life under vague legal enactment. 3) That all restrictions on how or where workers employed in state-owned industries shall spend their money be stricken from the bill. Such restrictions, also, characterize the enslavement of the workers. Whatever the actual extent of the state-owned factories, these amendments will serve to keep the unemployed from being degraded and will forge ties of solidarity between unemployed and workers.

The next amendments would insure the employment in state-owned factories of all unemployed – by methods that would involve wholesale confiscation of capitalist profits or general expropriation of idle factories. If the bill is not to be a fraud, it requires expenditures large enough to establish state-owned factories sufficient to employ all unemployed. The approximate expenditures needed could be figured out by getting the average amount of capital per worker used in private industry and multiplying this average by the number of unemployed in Minnesota. In addition, there would have to be money for wages. The sum would run into the billions. But no worker genuinely interested in abolishing unemployment would hesitate at this. Moreover, he would not hesitate at all if another amendment were introduced to require that the revenue for the state-owned factories should all be gotten by taxes on the capitalists. A further amendment could specify that if, in a given period, the state-owned factories did not give employment to all or an appreciable portion of the unemployed, the state should take over and operate as many of the closed down factories as would be required to give employment to all unemployed. The Mahoney Bill, when handled in this way, becomes a vehicle of propaganda for solving unemployment by means of revolutionary demands of a transitional character.

Workers’ control of the state-owned industries – “industrial democracy” – can be agitated among the unionists by 1) proposing an amendment making specific provision for collective bargaining and union recognition; and 2) keeping the present section on encouraging workers management pretty much as it is. Neither provision, if enacted into law, will organize workers or hand over to them management of the state-owned factories. But they will supply concrete issues about which to raise the class consciousness of the unionists during the process of union discussions and parliamentary struggles.

A further amendment could challenge the whole capitalist domination of the market. This could be done simply by striking out the provision which prohibits the sale in the open market of products made in state-owned factories. Such an amendment would raise the whole issue of the superiority of government owned factories over private industries in terms of efficiency of production, of low price to workers tormented by monopoly prices of private industry. The opposition of the capitalists to such a provision could be used as open admission of their inability to compete with government-owned products on the open market. It would be a means of putting across two telling arguments: 1) socialism is far superior to capitalism for the masses. 2) The only way to keep the wrecking activities of the capitalists and their politicians from interfering with the state-owned industries and the effective solution of unemployment is by smashing them permanently – by revolution.

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