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James Burnham

Their Government

(24 March 1939)

 


From Socialist Appeal, Vol. III No. 18, 24 March 1939, p. 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).


In the March 13th issue of the magazine, Time, there is a long article on Hearst. It is an excellent piece of journalism, summarizing the career of Hearst and his enterprises. It sketches the great expansive days that reached their zenith in 1922. It shows how, during the ’20’s Hearst kept up what had become the illusion of expansion through huge borrowings; how even in 1930 he was able to sell $50,000,000 of preferred stock to the public.

But Hearst’s gross extravagances, the top-heavy financial structure, the complexity and internal instability of his empire, were sapping the foundations. A definite crisis of the entire Hearst system came to a head in 1937. Application to issue $35,500,000 in debentures was filed before the S.E.C. Objections were made to the issue, and it became clear that it would not get approval.
 

Enters the New Regime

In this crisis, Hearst, like hundreds of other capitalists in hundreds of similar crises, was faced with a choice between two alternatives only: to continue along the old lines and in a few months to lose everything – ownership, control, income, everything; or to institute a drastic, savage reorganization which would also mean giving up a good deal but which would have a chance of saving something – some income, privileges, rights – for the present and the future.

Hearst chose, not unnaturally, the lesser evil. On June 27, 1937, he turned management of his affairs over to a regent, Clarence John Shearn, a hardened New York attorney closely associated with the Chase Bank.

The regent got ruthlessly to work. Unprofitable units of the empire were sold. Many luxuries, such as the grotesque Hearst art collection, were dumped. Hundreds of individuals, from workers to high executives, were fired. Wages and salaries, including Hearst’s own salary, were sharply cut. Rigorous financial control was instituted. A drive (though this is left delicately unnoticed by the Time article) against the wages and working conditions of employees was conducted by all necessary means – including the thugs and gangsters used in the strikes at Milwaukee, Chicago and on the Pacific Coast.

The fat, rich old days are gone. But the empire, desperate, stripped and shaken, still stands; still, at any rate, today.
 

The Scale Drawing

The story of Hearst is interesting in itself. But what struck me particularly, once again reading it, is the astonishing fullness of the analogy which it, and the so frequent business situations comparable to it, bear to that more generalized “drastic, savage reorganization” of capitalist enterprise – to fascism.

What happens in fascism? Not Hearst, or any individual capitalist, but the capitalist class as a whole comes face to face with Hearst’s choice between two alternatives only: to continue along the old lines and in a few months to lose everything – ownership, control, income, everything; or to institute a drastic, savage reorganization which would mean giving up a good deal, but which would have a chance of saving something – some income, privileges, rights – for the present and the future.

Like Hearst, the class chooses the lesser evil. A stewart, a “regent” – the fascist party and its führer – is brought in. He gets ruthlessly to work. Many luxuries are stripped away; financial control and coordination is instituted; unprofitable units dropped or absorbed. Above all, the thugs and gangsters, now with the legal sanction of state power, smash the organization of the masses, and drive down wages and working conditions.

But the analogy is even more illuminating. For it shows how and why the capitalists themselves have to pay a heavy cost for fascism. Their own income, privileges, freedom are decreased. It shows why capitalists, most of them, “do not like” fascism – any more than a business man “likes” those measures necessary to save his business from immediately threatened bankruptcy. Observing the limitations which capitalists in Italy and Germany have accepted, our liberal nincompoops try to tell us that the capitalists there were “mistaken” as to their own interests When they put fascism in governmental power, or even that capitalism has disappeared in Germany and Italy. It has no more disappeared, they were no more mistaken, than in the case of the individual enterprise, like Hearst’s, striving to keep alive through frantic, totalitarian reorganization. Fascism is the politics of bourgeois desperation. The fat, old rich days are gone. But the empire, desperate, stripped and shaken, still stands.
 

The Analogy Strikes Home

And for the United States? The great expansive days reach their zenith in 1929 (Hearst’s 1922). The illusion of expansion is then sustained through huge borrowings. The gross extravagances, the top-heavy financial structure, the complexity and the internal instability of the empire, sap the foundations. The definitive crisis of the entire system comes to a head. The United States approaches swiftly Hearst’s 1937.


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