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James Burnham

Their Government

(1 December 1939)


From Socialist Appeal, Vol. II No. 91, 1 December 1939, p. 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The Federal Reserve Board index figure of industrial production is currently reported as 125. In this simple number is concentrated the agony of American capitalism.

This number means that industrial production in this country is now running at the highest rate in history. We have not merely returned to, but surpassed, the Golden Age of 1929! The average production rate for 1929 was only 119.

But where, then, is the rosy hue that colored the land in 1929? Today, with production at its new height, there are still at least 10,000,000 unemployed, and millions upon millions more sub-humanly housed, half-starved, ill-clothed. 1929 is back, and more than back, and it has the taste of ashes in the mouth.

What Makes the Difference?

What accounts for this great gulf between 1929 and 1939? There seem to be four chief causes:

Each year there is a net increase of approximately 600,000 men in the labor market. All other things being equal, therefore, production, in order to maintain employment stability, would have to expand sufficiently each year to be able to absorb these 600,000.

Under the pressure of crisis, technological advances and new methods of speed-up have during the past decade enormously increased the man-hour output of labor. In such industries as steel, where the changes are especially striking, this means not only that fewer men are required to keep the plants going but that increases in the rate of production do not require corresponding increases in the number of workers employed. To run at 35% or 40% of capacity, the steel mills require far fewer men than in 1929. To run, as at present, at 95% of capacity (which, by the way, is considerably more than 100% of 1929 capacity), requires a still smaller fraction of workers than at 40%, so that the proportionate dislocation is even greater.

A third factor is the ever-rising debt load, both public and private, which weighs down upon the whole economy, and helps prevent expanding wages and profits from being fruitfully reflected in the consumer market. This effect was exaggerated in this past decade because of the devices which were employed to forestall wide-scale bankruptcies and reorganizations which, in previous crises, though they smashed up individual enterprises, acted as health-giving surgery for the economic structure as a whole.

Finally, the disproportions among the various sectors of the economy have become deepened and more awkward during this decade. The general health of the economy depends not merely on the vigor of this or that sector or even upon the average level of the economy as a whole, but also upon a proper balance between industry and agriculture, capital goods and consumer goods, internal trade and foreign trade, etc. Monopoly control, far from being able to maintain such a balance, introduces its own kind of planning into some sectors of industry only at the cost of a more violent anarchy in the economy taken in its entirety.

What of the War Boom?

Only a comparatively small part of the present rise in production is directly traceable to war business. Much of the increase has been due, to domestic orders given in anticipation of a coming boom and as a guarantee that future war orders will not interfere with the fulfillment of domestic requirements. Within the past few months the curve of production has risen considerably above the curve of consumption, which, interpreted, means that inventories are piling up.

War orders, not merely from Britain and France, but also from the home government, will undoubtedly increase in the days to come. But it is clear that they will not be sufficient to bring about a general prosperity even of the 1929 variety, and in particular that they will not, by many millions, be able to absorb the unemployed. Indeed, with the increased inventories and the lagging behind of consumer purchasing power, it is not unlikely that after the first of the year, even with increased war orders, production will decline.

I am, in fact, convinced that much of the talk we have been hearing about a “war boom” has its source in deliberate propaganda designed to win the masses of the people over to the Roosevelt war measures. I believe, for instance, that many workers were led to an acceptance of the lifting of the arms embargo by at least the half-formed thought that, at any rate, there would be plenty of jobs available.

The business men do not spread these illusions among themselves. In their own committees and publications they are very skeptical about the extent of the war boom, and make clear its probably limited character. They have noticed, among other things, that in England unemployment has increased since the start of the war, in spite of the entry of hundreds of thousands of young men into the army.

There Is No Cure

A general conclusion that forces itself upon us is that capitalist economy is even sicker than we think. The New Deal, as a set of primarily internal measures, was unable to cure U.S. capitalism. But even the drastic, present and projected, “external measures” of the War Deal cannot bring health back.

From a moral point of view, it has been a terrible enough comment on capitalism always that it could keep going only by periodic wars, that war was an integral phase of its life cycle. But capitalism has now reached a point where even war cannot repair the ravaged organism. Peace or war: the choice is now only of alternate roads to death.

This is known, we may assume, to the rulers of the capitalist world, and is not the least of those causes which make this “the strangest of all wars.”

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