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Is Cap. Worth Saving?

Ernest Erber

An Answer to the President of General Motors

Is Capitalism Worth Saving?

(6 January 1947)

From Labor Action, Vol. 11 No. 1, 6 January 1947, p. 3.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

You’ve Got to Make a Profit is the breezy title of an article that appears under the by-line of C.E. Wilson, president of General Motors Corporation, that first appeared in the November 9, 1946 issue of Colliers and has since been reprinted in various corporation house organs for distribution to their employees. The widespread popularity of the article with corporation heads is well merited. It is one of the slickest pieces of sophistry in defense of capitalism to come down the pike in a long time. Its real author, G. Edward Pendray, reveals exceptional talent as a pen-prostitute of Big Business. But it is slick only on a quick reading. Above all, if you don’t stop to think about a question or two while skimming through it.

It is interesting to note at the outset that this article carries to its peak the seemingly hard-headed, practical, dollars-and-cents argument. Like many other recent apologies for capitalism, it is a far cry from the old days when capitalism was defended solely by allegedly moral arguments about the “rights” of the owner of capital. The new approach, pioneered I believe by Johnston, former head of the United States Chamber of Commerce, takes the line that a private property, profit economy is the only way in which industry can be operated without a tremendous government bureaucracy which causes blunders and waste and suppresses all criticism, thereby stifling all freedom and democracy. Profits, we are told, are all that stand between us and a wasteful, despotic rule by bureaucracy.

Why the New Approach?

It is interesting to analyze what has caused this shift in approach on the part of the hired brains of capitalism. The shift can be traced to these two principle factors: (1) the breakdown of capitalism on a world scale which has placed its defenders on the defensive and (2) the living example of Stalinist Russia as a system where a governmental bureaucracy has taken the place of capitalist exploiters.

The worldwide breakdown of capitalism, beginning with the world crisis of 1929–39 and continuing through the destructiveness of World War II, has changed the argument of Socialism vs. Capitalism from an academic one into a problem of every-day politics. The economic breakdown everywhere brought in its wake varying degrees of governmental intervention to prevent complete paralysis and revolutionary upheavals. Capitalists in the United States were glad to submit to the early New Deal measures to bring stability into the rapidly disintegrating economy. In Germany, the capitalists found it necessary to tolerate the assumption to power of Hitler and bow their necks to his regimentation of finance and industry in order to save the system as a whole.

The Effects of Stalinism

World War II left such economic dislocation in its wake in Europe that the prospects of rehabilitation under private capital were not believed in by anyone, not even the capitalists themselves. Not only in Eastern Europe, under Russian domination, but in Western Europe as well, nationalization of various enterprises has been a feature of political life in nearly every country. This tendency has even effected the colonial and semi-colonial countries of the world such as Indonesia, Indo-China, China, Argentina and Mexico. The result of this world trend, together with the effects of the New Deal and the war economy, have made American capitalists very uneasy about the future of “free enterprise” in this country.

The existence of Stalinist totalitarianism in Russia has permitted the capitalist apologists to take the propaganda line that nationalised economy and despotism go together. (In this they have been supported by many erstwhile Socialists who, like Max Eastman, make the same point or who, like many leaders of the Socialist Party, seek salvation in a “mixed economy,” that is, one with enough capitalism left to save our liberties from a state bureaucracy.) Workers who were unimpressed by the earlier propaganda attacks upon Russia which featured “free love,” “dividing up,” the religious question, etc., are greatly impressed by the growing realization that the dictatorial regime of the Kremlin is not lessening but, rather, perpetuating itself and spreading to the occupied countries. The defenders of capitalism in the U.S., therefore, do not compare their system with Socialism but rather with the bureaucratic collectivist regime of Russia today. Their argument is: “Look at Russia. That’s what comes of tampering with the profit-system.”

The article reveals the consciousness of being on the defensive in its very opening sentence. It begins, “Admittedly this is an article about an unpopular subject. But in my experience Americans will always give attention to a subject, however unpopular, if it effects them deeply.” Today one can speak of capitalist apologists in the most literal sense!

We want to make one more general observation about the general approach now current. The stupendous wartime profits of Big Business have left their mark on public thought despite the efforts of capitalists to conceal them. Profits and profiteering appear in the public mind as unsavory subjects. They are also linked to the question of high prices, and all the propaganda to the effect that wage increases are the impetus to inflation has not absolved profits. This public attitude toward profits is another reason why the defenders of capitalism have dropped the “moral” arguments and shifted to posing, profits as a necessary evil – but a lesser evil than bureaucratic despotism.

In next week’s article we will proceed to a direct refutation of the slick arguments which Wilson-Pendray serve up for the unsuspecting reader.

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Last updated: 25 November 2020