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The New International, July 1942

Lawrence O’Connor

Books in Review

A Liberal and the War


From New International, Vol. VIII No. 6, July 1942, pp. 186–187.
Transcribed & marked up by Einde O’Callaghan for ETOL.


Economic Consequences of the Second World War
by Lewis L. Lorwin
Random House, New York. 510 pages

The title of Dr. Lorwin’s book is somewhat misleading. This volume is far more than an attempt to chart the probable economic consequences of the present war. It is rather an attempt to analyze the whole history and nature of Nazism and of democratic capitalism, and to sketch a program of action for the latter during and after the war.

Dr. Lorwin is well known as a writer of books on economic and social questions, and especially on the labor movement. His books of French Syndicalism, the Ladies Garment Workers Union and the American Federation of Labor have become more or less standard works in their field. All his works, and the present one is by no means an exception, are characterized by a meticulous collection of data, a scholarly, pedestrian style, and an unbending determination to offend as few people as possible. This last trait is not simply an expression of good manners, but is integrally connected with the whole nature of Dr. Lorwin’s thought. He is, above all things, a moderate, a believer in partial programs, in the combining of all kinds of “trends,” both social and ideological, into a pattern of social progress. He is a New Dealer of the old school – in short, the kind of man whose fighting symbol and emblem is the half loaf.

Economic Consequences of the Second World War is an important book for two reasons. Firstly, it contains as good a review of Nazi ideology and socio-economic practice as is now available. Part One, on The Nazi Background, is a description not only of what the Nazis think and intend, but of what they have actually been doing in Germany. Part Three, Consequences of a Nazi Victory, is an attempt to construct a picture of what the world would look like should the Nazis win a full victory, basing itself primarily on what they have actually been doing throughout their conquered territories. These parts of the book are well documented, and though there are some gaps, the exposition is, on the whole, as complete and instructive as any which has come to our attention.

When it comes to putting a label on the Nazi economy, Lorwin rejects both the idea that it is a socialized economy and that it is simply an extension of classical monopoly capitalism. He believes that the term “National State-Directed Capitalism” is most descriptive of what is going on in Germany as “The essential feature of this system is that the state uses the institutions of private ownership to carry out politically determined policies of national expansion. It is the economic system of expanding imperialism under modern technological and economic conditions.” Up till now, Lorwin believes, the conflicting elements inherent in such a system have been held in check by the fact that during its whole history Nazi economy has been an armament and then war economy.

Lorwin’s Analysis of Capitalism

The second reason for the importance of this book is that it attempts to analyze the background of capitalist democracy and to offer a program for the post-war world in the event of a victory by the United Nations. If Lorwin were merely presenting another ready-made scheme after the pattern of Clarence Streit’s Union Now or the other tens of liberals and assorted crackpots whose utopias have burst into print of late, he would not deserve the valuable space given to this review. But he is one of the best informed and equipped (both by experience and mental capacity) representatives which the most advanced section of the American bourgeoisie has at its disposal. If capitalist democracy is indeed able to solve the major problems confronting the world, it is men like Lorwin who should be able to tell us how. This is the problem which Lorwin has set himself, and his failure to solve it indicts not so much himself as the whole system of institutions and ideas which he represents.

In Part Two, The Democratic Background, Lorwin shows the connection between political democracy and early laissez faire capitalism. He points to the increasing challenge to the whole liberal-democratic system of ideas represented by the economic shift to monopoly capitalism which took place in the latter part of the nineteenth century and which still prevails. He points out that democratic progress was possible as long as capitalism was expanding on a world scale – though the impression of progress portrayed is enhanced by confining the field of vision to the advanced, exploiting nations, and ignoring the vast exploited colonial areas. But then came the “Great Depression and the Crisis of Democracy.” The depression shattered traditional confidence in the capitalist system in the minds of millions. In some countries this resulted in popular demand for government intervention in the economic process, à la New Deal; but in others it resulted in the rise of militant, expansionist fascism. To a great degree Lorwin ascribes the latter phenomenon to the inability of social democrats either to adjust their thinking to the introduction of widescale reforms in capitalism, or to really take the path of revolution. Their “do nothing and wait till the system collapses” policy gave the militant Nazis their chance, and they took it.

Tendencies and Reality

Now none of this is very new or very striking. Its importance lies in the fact that it shows that Lorwin really has a grasp of some of the main historical factors which have gone into the making of democratic capitalism – something very rare among men of his kind. But the conclusion drawn from it all is to see in the programs of the New Deal, the theories of Keynes and the “Stockholm School” the road to the future.

The “new tendencies” which Lorwin describes as characteristic of the present era are, summarized in his own words:

“... the industrialization of new countries, the demand for higher living standards and the growth of social protectionism, the decline of the business man and the rise of the managerial state, the increasing; influence of management and labor in the national economy, the effort toward the fuller utilization of the world’s resources and the extension of economic planning, the stimulation of national capital accumulation and the building up of new centers of economic power, the revolt against vested privilege at home and against corporate power exercized from abroad, the efforts toward greater economic security and more equitable division of national income ...” (page 472).

Now the significant thing about this list of “tendencies” is that, along with some items which are, in fact, what has been going on, there are so many which are only “demands for,” “efforts toward,” and “revolts against.” This list, if viewed in the light of the concrete historical realities rather than from the point of view of liberal wish-dreams, is really a remarkable compilation of some of the most crucial contradictions of the world capitalist system.

  1. The industrialization of new countries as a result of the export of capital from the old capitalist lands, or of the “stimulation of national capital accumulation” achieved by means of ruthless internal exploitation, is one of the chief factors in the contraction of the world market for the older industrial nations. Under capitalism, this trend, instead of holding out hope for the industrial development of the backward areas and a concomitant rise in the standard of living of their populations, has led to the devastation of whole industrial areas in the older countries on the one hand (e.g., British textile industry) and to the present Nazi “solution” of forcibly de-industrializing great areas.
  2. True, there has been for a long time a “demand for higher living standards,” but capitalism has been able to meet this demand only by doles and inadequate WPA’s for the millions of unemployed except in those periods when it was “solving” the problem by exterminating them on its battlefields. “Social protectionism” is the parlor phrase for all those measures taken to reduce thee prevailing misery to such proportions as will prevent violent social outbreaks.
  3. As to the “effort toward the fuller utilization of the world’s resources and the extension of economic planning” ... the only efforts along these lines of which we are aware are the brilliantly conceived and executed plans for plowing under wheat and cotton, limiting petroleum production by quota systems, dumping coffee and oranges into the sea, and international cartel agreements for the limitation of rubber and tin production, etc.
  4. The “revolt against vested privilege at home and against corporate power exercized from abroad” are officially limited to Thurman Arnold’s abortive attempts to do something about some of the more ruthless monopolies. Of course, both Hitler and Roosevelt have proclaimed that no millionaires are going to come out of this war, which makes this “trend” universal. Unfortunately for Dr. Lorwin, the capitalists don’t seem to pay very close attention to these gentlemen’s holiday speeches.
  5. “The efforts toward greater economic security and more equitable division of national income.” Yes, efforts there have been. When workingmen organize and make demands on their employers it is exactly for greater economic security and a more equitable division of national income for which they fight. But the whole trend of capitalism has been toward less security and toward a less equitable division of income. Surely Dr. Lorwin has not failed to read the National Resources Planning Board report on the distribution of income in the United States?

Once Again, Liberal Solutions

Finally, there is his mention of trends toward managerial government, increased influence of managers and labor, etc. In a certain sense these trends cannot be denied.. But the real significance of these trends has not been to increase economic security and welfare for the masses, but to coordinate and centralize capitalist economic controls in the hands of the state. In fact, this is what Lorwin does not want to see in all the factors and trends described above. All of them express either the centripetal forces at work within capitalism, or, on the other hand, the growing realization among wide sections of the population of the inadequacies of the whole system. This realization, he hopes, is leading and will lead to a gradual, peaceful, piecemeal change in the system. That this hope fails to be borne out by the whole experience of the New Deal in this country as well as of similar programs abroad, that it is, in fact, extremely unhistorical in general, are considerations which Dr. Lorwin banishes from his mind by stating that the only alternative is revolution, and revolution, as a social process, is too expensive. If history would only develop according to the latest cost-accounting methods!

The post-war measures which Lorwin advocates are feasible only if the trends analyzed above are in fact what he says they are. He proposes the establishment of such agencies as an “International Relief and Social Assistance Commission,” a “World Economic Development Organization,” an “International Colonial Administration,” a “Permanent Peace Conference,” a “World Educational and Recreational Center,” etc. All these mechanisms are to work toward greater international planning of the exploitation of national resources and for the general welfare. That none of these palliatives even touches any of the fundamental contradictions of the world capitalist system seems to be a fact which even Dr. Lorwin vaguely realizes.

On page 483 he states that:

“... the tread toward economic order could be harnessed in the service both of human welfare and of individual self-realization. The precondition is the willingness of individuals and of organized groups to subordinate their personal gain and power to public welfare, to replace conflict by discussion and agreement, and to accept the need for orderly change toward social-economic democracy.”

Everything in Lorwin’s scheme, then, depends neither on the reality of the “trends” which he sketches, nor on the effectiveness of the institutions which he proposes, but rather on the hope that after the war the world will be run by men of good will. For those who seek a solution to the world’s problems along these lines we can recommend a much better book than that written by Dr. Lorwin. It is the New Testament.

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