Workers World, Vol. 13, No. 16
The Nixon Administration’s wage-price freeze is bound to provoke a general discussion on the efficacy of planning in a capitalist economy. A large body of capitalist economists have long been beating the drums for it and the capitalist media have made sure to plug Nixon’s edict to the point of saturation. It is therefore no surprise if a considerable section of the workers, caught off guard, seem to support Nixon’s move.
Of course, the initial impression of the workers reflects what they have heard on the media or read in the press. It shows that ideologically the workers and the mass of the population generally are at the mercy of the ruling class which owns and controls the means of communication.
Hence, as Marx said, the prevailing ideas at any time are the ideas of the ruling class. The wage-price freeze is a perfect example of this.
Bourgeois liberal economists, such as Galbraith and the economic advisers to the large trade unions, are now moving in the direction of “controls and planning” – not Nixon’s, some say, but a better, more liberal proposal, one that is more pro-labor, one that takes into consideration “the poor and disadvantaged.”
The benefits of a controlled economy are sure to redound to all classes of society, we are told. Isn’t the alternative of galloping inflation worse? we are asked.
This is as good a time as any to at least examine some of the Marxist conceptions, based upon historical experience, as they relate to the Nixon Administration’s economic program.
The wage-price freeze is a form of state intervention to regulate the economic system. As such it is not a new phenomenon, either in the history of the capitalist system or previous social orders. There was state intervention in the economic life of the ancient slave system, in feudal society, and in the early stage of the period of commercial capitalism, not to mention the intervention of the state in the period of monopoly capitalism.
But throughout the history of all the successive forms of exploiting social systems, the state always intervened in times of economic difficulties to salvage, to safeguard and to improve the position of the exploiting class at the expense of the exploited.
In ancient times, this was done to help the slaveowners overcome their difficulties and improve their situation against the slaves. The feudal state did the same in order to perpetuate the exploitation of the serfs in the interest of the lords. And the history of the capitalist system is replete with abundant examples of how the capitalist state intervenes whenever there is an economic crisis to overcome their difficulties, so as to benefit the capitalists.
Because the state is the instrument of the dominant exploiting class in society and has always been that, its intervention is necessarily for the purposes of improving and strengthening the exploiting class at the expense of the exploited. To view the Nixon program in isolation without seeing its connection to previous historical experience of state intervention breeds confusion, and presents Nixon in the role of an “innovator.”
Throughout all class society up to and including the present one, state intervention in economic life as always been class intervention, the intervention of the state as the collective instrument of the ruling class to salvage and improve its deteriorating position as against those whom it rules and exploits.
The above must be very clearly borne in mind precisely because the bourgeois economists and their liberal cheerleaders say that Nixon’s wage-price freeze, which is a specific form of capitalist state intervention, is bound to help all classes in society, and is in fact a supra-class measure on behalf of the people as a whole, regardless of social class or economic status.
They are now telling us that because Nixon is an unscrupulous opportunist (Galbraith’s words) he is doing something good because it is expedient. In reality, Nixon’s plan is a coldly calculated scheme to salvage the capitalist class, and in particular, the biggest, greediest and most predatory monopolies, and it contains nothing good in it for the other classes of society.
While the liberal economists are singing hosannas to the introduction of controls and planning into the capitalist economy, others – the more rightwing, conservative, bourgeois economists – are berating the infringement on the “free economy,” expressing alleged concern for the destiny of the “free market” and “free competition.”
This too must be exposed as either delusion or sheer hypocrisy. The epoch of the free market has long been over. What remains in the main is the freedom of imperialist monopolies to struggle against each other on the world market and to plunder the underdeveloped countries, plot conspiracy and counterrevolution and utilize the capitalist state for just such purposes.
Of course, competition at home and on a world scale has not been abolished. Nixon’s economic program is calculated to improve the advantage of the U.S. monopolies in intense worldwide imperialist competition.
His economic program is not a new departure from the basic trend in the U.S. economy, but merely a logical development of it. First of all it is necessary to point out that the capitalist economy in the U.S. is already “controlled or planned” in a very large measure. It is a falsification to say that this is an entirely new departure.
The giant corporations, in collusion with the Administration, have for many years been in the stage of trying to plan and coordinate. For a long time they have been sharing out markets, cornering sources of raw materials, fixing prices, making secret agreements with foreign monopolies and more secret deals for currency manipulations, while combining all these measures to direct even more investment abroad. They have been utilizing the diplomatic and military power of the Pentagon machine to promote these interests. All this takes planning.
Long and careful deliberations and coordination with a variety of different cliques and class groupings within the monopolist structure of the U.S. is a characteristic of modern capitalism. What the bourgeois economists do not tell us is that all this planning, all this maneuvering and manipulating, comes up against a fundamental contradiction in capitalist society; namely that it is planning within the framework of private property. It is to maintain the private economic interest of a specific class in society as against the mass of the people, the mass of the workers, who produce all the wealth of the capitalists and are exploited by them.
No! Nixon’s economic program is not new. This type of planning and control has long been in the making. But it has reached an impasse. For planning within the framework of capitalist monopolies, where the fundamental driving force is profit rather than the common good of society, also means planning against each other – planning which is underhanded, secret, cut-throat – an utterly destructive form of rivalry and competition. It is planning on the social foundation of a monopoly of the means of production. It is planning that excludes the mass of producers from any participation in formulating the plan.
The diversity of conflicting interests of class groupings within the monopolies makes rational planning an impossibility. Rational planning, planning for the good of all society, can only be accomplished by expropriating the means of production from the capitalist class and returning them to the people, to the producers, to the working class which alone can produce for the good of all.
Lenin foresaw the development of capitalist planning and took pains to distinguish it from socialist planning. He showed how the development of the giant trusts would necessarily entail a lot of planning (really conspiring) and how this differed fundamentally from a socialist society that is dedicated fundamentally to production of goods and services for the common good rather than for profit.
He even characterized such capitalist intervention by the state as “state monopoly capitalism” which resulted from the huge concentration of capital in the hands of a few people. While production as a whole had become socialized, the socialized character of production was not accompanied by socialized forms of distribution.
Speaking of the capitalist monopolies, Lenin observed almost half a century ago:
“The trusts, of course, never produced, do not now produce, and cannot produce complete planning. But however much they do plan, however much the capitalist magnates calculate in advance the volume of production on a national and even on an international scale, and however much they systematically regulate it, we still remain under CAPITALISM – capitalism in its new stage, it is true, but still, undoubtedly, capitalism.”
However, liberal economists like Galbraith, who are so enthusiastic about Nixon’s wage-price freeze (with small reservations) claim that Lenin was wrong and that those monopolies CAN produce complete planning and eliminate crises. Galbraith devoted an entire book, “The Industrial State,” to advance this thesis.
Aside from the fact that his book is an underhanded embellishment of the monopolies, the experience of the capitalist system after his book was published in 1967 proved his thesis to be false. If ever complete planning in the capitalist establishment had been possible, it should have been proven above all in the sector known as the military-industrial complex.
Lockheed was the jewel of this very system. It was a product of the planning and coordination of the so-called private industrial sector, the government (the so-called public sector) and the banks (26 of the largest banks headed by Morgan Guaranty and the Bank of America).
Here was a perfect example of private industry working with the military and the banks. Their collaboration had the blessing of the entire capitalist government. They jointly undertook the development of huge projects with the U.S. government acting as financial guarantor. Thus there was production planned with the cooperation of the government, industry and the banks on the highest possible level.
Yet one fine morning, the shares of Lockheed on the stock market took one of those big plunges which really shook up the entire “financial community.” Why did Lockheed’s stock suddenly fall – and so steeply? Wasn’t everything planned? Wasn’t there a ready customer? This was the brightest star in the firmament of the military-industrial complex.
The explanation of the bourgeois liberals for the bankruptcy of the Lockheed corporation was that it was cause merely by inefficiency and bad management. Is it really just bad management to have a “cost overrun” of two billion dollars on a single venture of Lockheed – the C5A (figures by Senator Proxmire)? Cost overrun, incidentally, is code in the military-industrial complex for extortionate new price demands on the government.
Lockheed is the government’s prime defense contractor, not just another contractor. And if Lockheed is in crisis, is it not a fair assumption that this is also the case in the entire military-industrial complex?
It is not merely inefficiency and mistakes here and there or poor decision-making, etc., etc. These words are merely a euphemism for the unbridled and unconscionable grab for profits that included enormous graft, padded expenses and fantastic salaries. Mismanagement and inefficiency are excuses by the liberal economists to cover up the real motivating force for production – profit.
What really broke the back of Lockheed, and is a general phenomenon in the “controlled” section of the economy as well as in the so-called “free sector,” was the absolutely insatiable lust for profit.
Thus Lockheed was the signal which showed the Nixon Administration how deep was the malaise in the inner structure of the capitalist economy. From that example, Nixon and his advisors drew the conclusion that he had to move from one form of control to a more drastic one. He had to economically regiment labor to make up for the losses incurred by the robbery, pillage and plunder of the military-industrial complex and the civilian monopolies. He is taking it out of the hides of the workers, disguising his economic program of an assault on the working class with a so-called price freeze which the government will not enforce.
Thus the malaise within the economic system arose not from mismanagement and inefficiency, although of course there is always an abundance of that, but out of the greed and avarice inherent in the fundamental relationship of exploitation by capital of labor. It arose out of the lust for super-profits where they seem easiest to obtain – in the so-called defense industry – where the government is usually the sole purchaser and guarantor, and the purchasing agents for the government are either allies or officials of the corporations.
Galbraith, along with a whole section of other economists, all of whom urge “moderation and humanity” on the monopolies, portray the monopolies as all-powerful, able not only to manage themselves but to constructively plan out the growth and development of the system. According to them, the managers and bureaucrats who control the corporations are so divorced from the stockholders that they are less interested in profit than in planning and fruitful growth.
This scandalously false theory is prevalent in current bourgeois economic thought, and has to one degree or another characterized practically all bourgeois economic theory since Marx.
It doesn’t even take a collapse or crisis of the system like the one at present to show how utterly spurious these doctrines are. That’s really why Galbraith made a flip-flop in the revised edition of his book. The Lockheed bankruptcy completely exposed the fallacy of their doctrine. For all who are watching closely, it demonstrated that not only Lockheed was in trouble but the entire capitalist system.
The wage-price freeze cannot be a basic solution because it deals with surface phenomena rather than with the structure upon which the system is based. The workers will soon learn that the prices of every-day necessities will not be frozen as Nixon promised. They will learn that the same people who so carefully planned the C5A for Lockheed and so conveniently found themselves with a two billion dollar “cost overrun” will find a new multi-billion dollar “cost overrun.”
Just as Nixon vigorously defended the Lockheed “cost overrun” and shoved it down the throat of the people, so will he do it anew when these very same banks, giant corporations, food chains, construction companies and big landlords show Nixon they too have a “cost overrun.” Nixon can be counted on to again be as obliging (assuming, that is, that the monopolies even need his permission!).
Only the workers, Black, Puerto Rican, Chicano, Indian and white – women and men, employed and unemployed – can successfully resist the monopolies and the economic regimentation imposed by them.
Last updated: 11 May 2026