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Harry Allen

The Black Market

A Disease of the Profit System

(September 1942)

From Labor Action, Vol. 6 No. 37, 14 September 1942, pp. 1 & 3.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The “Black Market” – the bootlegging of rationed and price-ceilinged goods – has steadily increased. Its development has already reached a stage where, according to District Attorney Frank S. Hogan of New York, there is a danger of a return to the “lush days of prohibition – a period of hi-jacking, open corruption and gang murders.”

The Black Market has invaded big fields (for example, steel), where the producing capitalist is involved. But it is the growing Black Market in articles of consumption – foodstuffs, furniture, gasoline, wearing apparel, and so forth – that is of immediate concern to the masses. It is the daily lives of working people – men and women and children – that are immediately and directly involved by the cruder and greedy merchant capitalists of varying sizes and importance.

What are the causes of the development of the Black Market?

1. A small section of the population (bourgeoisie, upper middle class, etc.) have high or substantial incomes.

  1. They are able to obtain or commandeer a larger part of the supply of rationed and price-ceilinged goods because of their ability and readiness to pay high prices.
  2. For the masses there results a decrease (1) in the quantity and (2) the quality of goods available.
  3. There results, despite government price ceilings on numerous items of consumption, an increase in prices of mass consumption goods.

These results are achieved in various devious and circuitous ways by unblushing merchant capitalists – manufacturers, wholesalers and retailers:

  1. Standards or quality or size, of articles are cut – but the original prices remain.
  2. A slight change in the size or form of the product – the regulations then permit a change in pricing as if for new items on the market.
  3. ”Upgrading” quality of goods – for example, the selling of “good” meat as “choice,” etc., recently exposed in the meat packing industry.
  4. The lower or lowest prided products are discontinued and new, higher-priced items are introduced.

These things happen daily. Why?

“All the Traffic Will Bear”

The aspect of the Black Market under consideration here is that related to the merchant capitalist. The attitude or philosophy of this section of the bourgeoisie is to “charge all that the traffic will bear.” As a group they obtain their margins or profits on the pennies or nickels side, depending on volume circulation or sale of goods. But if opportunity is provided to turn an extra penny by sacrificing volume, why not?

So, especially when goods are so scarce, this element of the bourgeoisie decides to slough off the “lower class” customers and cater only to the “higher class” ones. The expedience of charging considerably higher prices serves this purpose.

The social outlook or philosophy of this capitalist group is that of the big bourgeoisie, who already have the ownership and control of the major resources of the means of life, guaranteeing them huge profits and income at all times. The merchant capitalist thinks – and tries to act – like the landlords and the bankers (who, because they own his property, really determine his destiny and daily life) – and not like the butcher, the baker and candlestick maker, upon whom he really depends for his better sales.

Fundamentally, therefore, the Black Market’s source, actually is in:

  1. The disparity of incomes between the bourgeoisie, the middle class and the mass of workers and poor people.
  2. The profit system (capitalism), of which profiteering is only an exaggeration of what it already is.

Above all, the real Black Market is the system of capitalism itself – which exploits the masses; and then adds to their exploitation and misery by monopoly prices. The real Black Market thieves and bootleggers are first of all the great monopolies, which are in a position to set the prices. Moreover, as the patent controllers of new techniques, inventions, etc., they prevent such improvements from being used in production, where they would bring better goods for the masses at lower prices.

The other Black Market, the scavenger Black Market, is an outgrowth of the imperialist war which brings an opportunity for the cruder vultures of capitalism to operate. In the desire for extra profits, they will defy such laws as hinder their profits; and will risk such penalties as are involved – at present light and comparatively inconsequential.

The legal procedure for prosecution at the same time is so involved, cumbersome and long-drawn-out as not to phase these obvious profit-hunters.

Government Won’t Stop Black Market

The cold truth is that the capitalist class and the government – the latter with its many agencies and thousands of government bureaucrat investigators of Black Market practices – will not seriously stamp out the Black Market – any more than the government of capitalism can be expected to stamp out capitalism itself. So far as any remedies are possible, and there are some, it is the masses who will have to endeavor to invoke the proposals and fight for their adoption.

The control of food supplies particularly (and consumption articles generally) must be taken out of the hands of the food (and other) monopolies and the middlemen brokers – out of the hands of boss control. Their concern is never with giving the masses full value for their money or labor.

The masses obviously cannot afford to pay Black Market prices, even with wage increases – since the latter are more than lost today through various taxes and higher prices. The burdens of the imperialist war (abroad – in the blood shed on the battlefields; at home – in every way which concerns their pocketbooks) are being foisted on the masses. The lack of consumer goods today in several fields only makes it more imperative to devise and adopt protective measures for the working people. Government “investigating committees” – of which there are already an overflow, developing a tremendous and costly bureaucracy – are not the answer.

For Committees from Masses

But committees of the masses – these are possible. Committees made up from the trade unions, women’s auxiliaries of labor unions, from groups of housewives, consumer cooperatives and also representation from the employees of the large food and related consumption corporations, and even from the small retail shopkeepers. Such broad, active committees are most concerned and in the best position seriously to investigate the problem of prices in consumer goods.

Such committees would really be interested to seek out and find food and other consumer goods lying idle (i.e., unsold, awaiting an even more profitable market) in warehouses, granaries, etc.

Such broad committees – once they achieve certain strength – would not tolerate food rotting away for lack of picking or harvesting, or insufficient profits for the big farmers or middlemen, who face labor shortages because they refuse to. pay agricultural laborers a living wage. Such committees would DEMAND that all goods be made available for mass use.

Such committees would seriously aim to LOWER PRICES and, equally important, assure EQUAL RATIONING.

Such committees can also be formed on a broader mass basis – BLOCK COMMITTEES of housewives, small storekeepers, etc. – cooperating with the major committees. Incorporating larger numbers into the consideration of immediate and elementary problems, such block committees could meet virtually overnight and work out their proposals and demands on the government authorities and employers.

Such broad committees would have sufficient authority and strength, considering their wide representation from labor organizations, etc., to hold large mass meetings and demonstrations where the masses of workers and their families – especially those workers engaged in producing the consumer goods in question – could be made intimately acquainted with the price and rationing problems, and measures for common action and remedy worked out.

In addition, such committees would endeavor to work out ways and means for an alliance with the poor farmers to ensure that agricultural products get to the cities; and are sold or distributed to the masses at prices and on terms agreed upon between representatives of the farmers’ groups and organizations of the workers.

In the First World War, especially in the smaller cities, the farmers came in at announced intervals to sell directly to the consumers. Today fears are being voiced by the large chain merchandisers that such direct marketing may again interfere with their ability to set prices at obviously higher levels.

But all the foregoing is just another way of stating that only the mass control and direction of their needs by the people can assure to the working people the receipt of the minimum necessities of life. The means outlined – these broad committees, the organization of the exploited peoples – can help to put a dent in Black Market prices and practices; and, more important, can expose and curb to some extent the big profit aims of big business.

In the efforts of these working sections of society to achieve some of their immediate needs and aims, they will come better to realize that Black Markets and profiteering and exploitation – and the imperialist war itself – are rooted in the economic order of capitalism; and that only the abolition of the latter by the action of the masses can solve their problems in a fundamental manner.

For it must be understood that distribution is always ultimately controlled by those who own and control production. Today the bosses own. Tomorrow, in the Workers State, the workers would own production and would therefore be in a position to control and direct distribution in the interests of the working masses.

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