From Fourth International, Vol.8 No.1, January 1947, pp.26-31.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Bernard M. Baruch, Wall Street’s master-planner, confidently predicted in April 1945 that during the immediate post-war period American “free enterprise” would enjoy not less than five to seven years of continuous boom.
By September 1946, this widely-heralded prophecy was being washed down the drain of the third longest and deepest stock market slump in American financial history. Only October 1929 and August 1937 saw steeper stock price declines. One year after the end of the war, the exuberant outlook of American Big Business had turned into Wall Street’s vote of no-confidence in the future of its own system.
Most Wall Street spokesmen and financial commentators took a very sober view of the situation. W. Randolph Burgess, vice chairman of the board of the National City Bank of New York, told a gathering of the American Bankers Association on September 25 that American economy was entering the “phase of bitter disillusionment.” He warned:
An immediate economic problem is whether we can avoid a boom and bust. We are set for it, just as after World War I. It did great damage then and set the world back on its heels. It would be still more dangerous today.
By October 5, the Truman administration joined the admonitory chorus. Reconversion Director Steelman admitted in his report, ironically entitled Second Year of the Peace, that the economic system faced “great danger” and “acute threat.”
At the same time, all the mouthpieces of Big Business hastened to assure that we did not face “another 1929.” Analogy was most frequently drawn rather with 1919-20 and the “small depression” of 1921.
No one can positively predict at the present time whether the particular economic decline generally foreseen for 1947 or 1948 will be a “1921” or a “1929” depression. But it can be safely prophesied that regardless of any temporary upturns or downturns, American capitalism is heading toward a titanic economic debacle in the not too distant future.
American capitalism today retains all the basic and malignant contradictions that produced the economic breakdown of the pre-war decade – but with the addition of six years of the most devastating and costly war in all history.
If World War II provided an interruption of the 1929-39 crisis of American capitalism – it was an interruption that prepared the way for a resumption of that crisis on a scale that will dwarf the pre-war catastrophe.
What were the basic factors leading to the chronic economic depression between 1929 and 1939? What were the factors that relieved this depression – if only temporarily? What effect did the latter factors have on the long-term prospects of American economy? And finally – the main content of this analysis – is there any reason to believe that the basic factors that created the pre-war crisis have now so altered that they promise an expansion of the economy, rather than a new and drastic contraction?
The pre-war economic breakdown followed the classic operation of the laws of the development of capitalism as uncovered by Karl Marx. Social production had raised the productivity of American capitalism to unprecedented heights by 1929. But the system of individual appropriation by the capitalist owners of the products of labor had caused a tremendous diminution of the purchasing power of the masses in relation to the output of goods.
This was accompanied by a tremendous accumulation and concentration of capital in the hands of American Big Business. This capital could not be profitably invested. The inevitable tendency was to seek outlets for goods and capital in other lands, at a time when the world-wide crisis of capitalism had intensified the struggle for markets and fields of investment. The resultant competition was the irresistible impulsion toward World War II.
The chief expression of the contradictions of capitalism that produced the 1929 collapse was overproduction in terms of the available market. The productive machine ground almost to a halt, choked with the glut of goods that could not be sold. By 1932 there was an estimated 18,000,000 to 21,000,000 unemployed. No matter how much production was reduced, the mass purchasing power was reduced even more speedily.
This process was slowly altered only with the gradual liquidation of surpluses, involving tremendous losses to the bulk of capitalists, the shrinkage of their capital and the final bolstering of the market on a low level through the expenditures of public monies and the sharp increase of government debt.
Government spending proved to be of decisive importance. The pouring of tremendous funds into the hands of businessmen and farmers through government loan and credit agencies; expenditures for relief and public works; assumption of private debt through mortgage loans, etc., by the federal government – all these served to give a brief upward impetus to production.
But by August 1937, the machine started to creak to a halt again. There was the famous Roosevelt “recession,” when in a brief three months, production fell half way back to the bottom point of 1932. It would have fallen all the way, and further, but for the pouring in of new government funds to prime the pump. And these new funds, expended on an ever more lavish scale, came under the heading of: War preparations. Even so, unemployment in 1939 remained at from 11,500,000 to 13,000,000.
The rate of government pump-priming and the growth of public debt can be seen from the following table:
Between 1942 and 1945, the years of United States direct military participation in the Second World War, annual federal expenditures increased seven times over the 1941 rate, hitting 98.1 billion dollars in 1945. The federal debt increased at almost as fast a pace, reaching 279 billion dollars by March 1946.
This was the titanic burden of public debt foisted on the American people in order to achieve a slightly more than double production by the peak war year of 1944. This increase in production was achieved, moreover, by an increase in the industrial labor force of less than 50 per cent – from 15,639,000 industrial workers in 1939 to 21,325,000 in 1944.
During the period between 1933 and 1939, the government provided a growing market for the capitalists. This market increased more than ten-fold in the next five years. By 1944, two-thirds of the nation’s total production was being diverted to war purposes.
But what the government bought, it bought mainly on credit. And the bulk of what it bought was wasted and destroyed in the war. Only a small fraction of the staggering output of the war years remains to add to the total wealth of the country.
The end of military hostilities also ended the single greatest market and source of profit for American capitalism: Government war purchases. Now, instead of being a market, the government is turning into a drain upon the productive resources. Government expenditures continue at a rate five times as great as in 1939, at more than $41 billion for the fiscal year 1946-47. But this is not providing primarily a market for goods, as it did during the war. It is true that about $18 billion is going for military appropriations. But another $18 billion is going to payment of debt.
Thus, the end of the war has confronted American capitalism once again with its most acute dilemma, the dilemma it could not solve before the war, and could solve only temporarily through the war. Where can it find a profitable outlet for goods that can now be turned out at a rate 100 per cent greater than in 1939?
Somewhere, the American capitalists must find an expanding market which will absorb between $50 billion and $75 billion worth of production above the civilian production of 1941 – a boom year.
The capitalist economists and government “experts” answered – at least before the stock market slump – that the prospects for such an expanded civilian market were extremely bright, based on the following calculations:
As our further analysis of current economic trends and factors will show, this 3-point program of continued capitalist expansion is based on the most imponderable “Ifs – “ and gross distortions of elementary economic facts. In short, it is largely wish-thinking.
How much is the so-called “back-log of savings,” who has it and what proportion of it will be spent for consumers goods to fill that vast void left in the market by the end of swollen government spending for war production?
The most authoritative source of information on this question is the Official Report on the National Distribution and Intended Use of Families’ Liquid Assets, issued in August 1946 by the Board of Governors of the Federal Reserve System. The full report is published in the August 30 United States News.
According to this official report, the total personal holdings of liquid assets by the end of 1945 was $130 billion, truly a stupendous sum of potential purchasing power. This was $90 billion more than at the end of 1939.
But, the report shows, the bulk of these savings, in the form of currency, bank deposits and government securities, is concentrated in the hands of a minority of the population. The top 10 per cent of income receivers, who secured 29 per cent of total national income, held 60 per cent of the national net savings and 60 per cent of liquid assets. The bottom 50 per cent of income receivers, who secured only 22 per cent of the money income, held only three per cent of liquid assets and actually went into the hole 11 per cent – that is, their expenditures in the war boom year 1945 were 11 per cent greater than their incomes.
The bottom 40 per cent of those with any liquid assets had an average of $40; the next 30 per cent had an average of $700; and the next 20 per cent, an average of $2,350. The top 10 per cent had average holdings of $10,500.
What did these holders of assets intend to do with them? The report says:
The survey questioned consumers on their spending intentions. The overwhelming majority reported they had no expectation of using their liquid assets for any purpose in 1946. More than half of those with bank deposits had no intention of using any of them this year (except in an emergency), while only one quarter definitely expected that they would utilize some part of their holdings.
In short, as the report states, “the bulk of the savings and of asset holdings is concentrated in a relatively small proportion of all the spending units,” and these don’t intend to use their “back-log” for consumer spending. They expend from current income. Their savings constitute capital for investment – one of the primary sources of funds used for speculative purposes that have aggravated inflation.
Among those with liquid assets – as of the end of 1945 – who intended to spend some, the report states they expected to buy between $4-$5 billion worth of automobiles; up to $4 billion in other consumer durable goods; and between $13-$15 billion in houses. “On the average,” the report adds, “prospective buyers expected to pay $1,100 for a car ... and $5,020 for a house.”
As we shall see further on, the supply of $1,100 cars and $5,020 houses is virtually nil – and many of those 70 per cent with average savings of under $700 have been forced to liquidate their savings to provide their families with bare necessities – food, clothing, medical care, rent.
Among the report’s major conclusions, are: 1. “current buying will be paid for primarily out of current income”; 2. the use of instalment credit and borrowing “will be substantial during the year”; 3. savings will decline for most consumers as prices go up. And finally:
The liquid assets held by the majority of people cannot be considered to constitute a reserve fund large enough for carrying on regular expenditures in the event of drastic changes in income. Total asset holdings of three-fourths of the people amounted to less than one-fifth of their annual income.
All it would take to wipe out the “backlog of savings” of 75 per cent of those having any savings in 1945 would be two-three months of unemployment or a 20-25 per cent cut in their regular money incomes or a similar degree of rising prices.
There are ample signs to show that the “backlog of savings” of the 75 per cent of savers in the lowest brackets is being rapidly dissipated. The First National Bank of Boston reported on September 25 that “borrowings are on the increase and savings on the decrease.”
Another straw in the wind is the fact that between January 1 and October 1946, the number of participants in war savings bond payroll withholding plans declined from 27 million to 7½ million and that redemptions have exceeded sales of the $18.50 E bonds by more than $800 million.
This situation, according to Secretary of the Treasury Snyder, worries the government because the primary objective of selling bonds to workers is “to maintain a widespread distribution of the public debt and to aid in our fight against inflation ... by making possible the retirement of additional amounts of bank-held debt.”
In reality, the reverse process to saving is taking place: Consumer debt is rising rapidly.
J. Gordon Dakins, manager of the credit management division of the National Retail Drygoods Association, on September 19 stated that outstanding consumer credit had increased between October 1945 and April 1946, at a rate of more than $2¾ billion a year – more than for any similar seven-month period in 16 years. He warned retailers to beware of “overloading the customer with credit.”
Federal Reserve Board figures show that consumer credit increased in the 11 months between August 1945 and July 1946, by more than $2 billion from the low point of $5.3 billion. At the present rate, it will pass the 1941 peak of $9.9 billion dollars by the end of 1947. Personal debt is piling up 13 times as fast as during 1945 and 1944. And these debts are being accumulated not for automobiles, houses or jewelry, but for living necessities. Automobile loans account for only 4 per cent of the total; jewelry store installment purchases only 1 per cent.
The point will be reached in the not too distant future when those with mounting debts will have to pay off. Their current purchasing will decline and this will mean a drop in consumption – and production.
The decline in savings and rapid rise in consumer debt is but one aspect of the shrinkage in mass purchasing power that is setting the stage for a new depression.
Far more serious is the decline in real current income from which comes the bulk of consumer spending and which is the main prop of the domestic market for goods. This decline is shown in the total money wages paid out and the drastic increase in the cost of living.
The total of individual incomes, according to the Steelman report in October, are the “highest they have ever been,” running at a rate of $167 billion a year. This seems enormous in terms of the 1941 total of $96.9 billion. But much of this difference is illusory; and it does not show the current trend.
First of all, the dollar is not worth the same as in 1941. The extremely conservative figures of the US Bureau of Labor Statistics, on October 23, placed the decline of the purchasing power of the dollar between January 1, 1941, and September 15, 1946, at 31 cents. The wage earner can buy with each dollar what 69 cents bought in 1941. This does not take into account the tremendous spurt in prices of necessities since September 15.
The cost of living for the majority of the population has more than doubled since August 1939. The purchasing power of their dollar has been cut in half. This can be easily proved.
A survey of actual food prices – not OPA fictional ceilings – reported by the September 13 United States News, revealed that a standard market basket loaded with 15 basic foods that cost $3.96 in August 1939, cost on the average throughout the country the sum of $7.95 by mid-August 1946. That is double the pre-war cost.
Clothing, house furnishings and other main essentials of living have more than doubled in price. Average rents have increased since the pre-war year anywhere from 15 to 30 per cent. Add to that taxes that absorb between 10 and 20 per cent of the total income – such as payroll withholding taxes and sales taxes – and it can be seen that the estimation of a 50 per cent cut in the buying power of the average consumer’s dollar is no exaggeration. This is what has happened to prices. But what has happened to money wages? To get the main picture, we need study no more than the official report of the government, Steelman’s Second Year of the Peace.
“The money which the average family has to spend per week has decreased since V-E Day,” says the report. Although some workers won hourly gains of as much as 18½ cents an hour last spring, the popular belief that this set the general pattern, admits the report, has “served to obscure essential facts.”
The essential facts are that only 4,000,000 workers received wage increases by formal approval of the Wage Stabilization Board between February and June 30, 1946, and the average increase was 14.7 cents per hour. Many more millions received no increases at all. Hourly wage gains did not compensate for reduced total income due to shorter hours, loss of overtime, downgrading, shifts to lower paid industries, etc.
The net result, the report points out, was a decline between April 1945 and July 1946 of 8.5 per cent in the gross weekly earnings of manufacturing workers – the best organized section of labor. Real weekly earnings, the report adds, suffered a much more severe decline “with the rise of 11 per cent in the prices of consumers goods” in the period surveyed. It adds: “Greatly increased personal income taxes paid by workers constitute another significant factor.”
The CIO Economic Outlook, basing itself on figures up to July 1946, finds an “over-all reduction of over 19 per cent in the real earnings of American workers” from the previous year. By the end of this year, it is estimated that the real purchasing power of the American workers will have declined on the average 30 per cent. That represents a 30 per cent cut in the share of the workers in the goods they produce. That is the basic factor in the shrinkage of the domestic market.
Whose relative share is increasing? Primarily those whose income largely goes into capital accumulation – those who do not spend a great portion of their current income.
The Steelman report states that corporation profits after taxes this year reached the “highest point in history,” more than $11 billion annually, or about 20 per cent above the gigantic wartime average profits. The latest findings of the CIO Research Department, reported in the October 14 CIO News, show that “the best estimates available indicate that corporate profits, after taxes, will be at the fantastic level of almost $14 billion by the fourth quarter of 1946.”
Another section of the population that has enlarged its relative share of national income is the farmers. Farm income, says the Steelman report, has reached “an all-time high and farmers have never been in so liquid a position.” This favorable situation of the farmers, however, as we shall show later in this analysis, will not continue for any very long period in the future.
More and more of the income that is available for spending for durable goods – autos, homes, etc. – is being concentrated in the hands of a very small portion of the population in the top income brackets. This is shown in the record of dividend payments to stockholders. Dividend payments for the three months ending August 31, 1946, were up 6.6 per cent from the corresponding three months of 1945, according to the Department of Commerce.
The effects of the sharp decline in real wages combined with the extraordinary increase in the incomes of the capitalists may be seen in the trend of consumer spending.
The Steelman report noted that consumer spending, during August, had hit a peak of $126 billion annually, 20 per cent above the wartime high and 60 per cent above the pre-war record. However, the report warned that it was “the big question” whether this rate of spending would continue. It observed that since April the purchases of nondurable goods (food, clothing, etc.) “have been comparatively level” and, considering price rises, “may actually have declined slightly.”
Lewis L. Schellback, economist of Standard & Poor’s Corp., reported on October 12, that there was a “current excess of production over consumption” and that the index of retail sales “has been declining since February.”
The Federal Reserve Board reported on October 28 that “department store sales have shown no further rise from the high level reached at the end of August, although there is usually a considerable increase at this season.” And the Office of Business Economics, Department of Commerce, while reporting a gain for August in retail sales over the previous year, emphasized that the “major factor in the rise since the middle of this year has been higher prices rather than increased quantities of goods.”
Much of consumer spending, on the part of the war wealthy and inflation speculators, has been for conspicuous waste and luxuries. This has heightened the inflation that has reduced the amount of goods absorbed by the mass consumer.
Thus, the September 6 Wall Street Journal pointed out:
“Consumer spending is heavy but unbalanced ... Individual resources counted on to buy durable goods – such as scarce automobiles and refrigerators – are being dissipated in expensive foods, clothing, amusements and luxuries ... a full development of these trends could produce what the economists call a recession next year.”
On October 31, the Wall Street Journal calls attention to “consumer resistance to high prices” and “a tremendous increase in supplies.”
The so-called “buyers resistance” – more correctly the dwindling ability to buy – is beginning to have its effect in the sphere of durable goods – in particular automobiles and houses, two of the principal anticipated sources of the expanding market on which the capitalists have banked their hopes.
The October 17 issue of Wall Street Journal observes in bold-face type that, “First faint signs that auto demand is being nicked appear here and there.” It quotes spot reports from dealers all over the country that are summed up in the statement of a San Francisco salesman: “The easy money auto buyers are about gone.”
A United Press dispatch from Kansas City on October 25 reports the pessimistic views voiced by the general sales manager of the Pontiac division of General Motors to a meeting of 450 dealers from 13 states. He warned that the public’s buying “enthusiasm” is on the wane. He spoke of those who think the “buyers’ market is a long way off, but I say we are approaching it right now.”
The same fears are now being expressed regarding the demand for new housing. The need for over 12,000,000 new housing units, plus the “backlog of savings,” was supposed to provide a capacity limit to the housing market for years to come.
But average building costs, due mainly to the inflated prices of materials, are now 94 per cent higher than in 1939. Those savers in the Federal Reserve Board report who expected to spend $5,200 for a home, are faced with average prices now of between $6,500 and $10,200.
The situation in housing-demand is summed up by the October 21 Christian Science Monitor: New construction in August declined from the post-war high point in July. By September, only 708,100 units had been started of the government’s program to start 1,200,000 homes this year.
The Steelman report observes as a fact of “great promise” – judiciously tempered by other facts of “great danger” – that industrial production by August had hit an all-time peacetime peak of $172,000,000,000. In terms of volume of goods, and not inflated currency, the output on the whole was slightly higher than in 1941.
Standard & Poor’s weekly index of industrial production, as of October 12, shows that “the trend has been flat since the end of July.”
Moreover, a tremendous volume of this production has been withheld from the market. These hoards, reflected in gigantic inventories, amounted by August to the phenomenal all-time sum of $31 billion, according to the official figures of the Department of Commerce. Manufacturers’ inventories alone amounted to $18,430,000,000, and the Commerce Department noted the “real danger” that will arise “when a part of output is no longer channeled into stocks.”
What all this adds up to in the minds of Washington officials, according to a report of Standard & Poor’s is that “by next September some items will be piling up. Production will have to shrink to the size of the market.”
A similar shrinkage of the market is facing the agricultural industry, which has enjoyed extraordinary prosperity since the war began on the basis of world-wide scarcity. The precipitate break in cotton market prices in October, necessitating the closing of the cotton exchanges for the first time in 76 years, revealed the underlying instability of the high agricultural commodity prices.
On this score, the Wall Street Journal, warned editorially on October 31 that
“... commodity price declines have begun a wholesome correction ... We say it has begun a correction. We must confess our inability to predict whether or when the correcting process will be completed.”
The position of the small family farms, which comprise the overwhelming majority of agricultural production units, is far from secure. Between 1940 and 1945, according to the U. S. Bureau of Census, the number of farms declined by 219,799, to a low point of 5,877,000 total. Despite the fact that the number of tractors on farms increased 55 per cent in the same period, the number of farms with tractors increased only 42 per cent. Two-thirds of all farms still have no tractors, and one-third don’t even have horses or mules.
It is the “factory farm” of more than 1,000 acres, which now number more than 110,000, that is rapidly displacing the small farmer. The inevitable break in farm commodity prices, coupled with the competition of the more productive “factories in the field,” will spell ruin for tens of thousands of small farmers.
The prospect of the shrinking domestic market is coupled with prospects of reduced foreign markets, that other great outlet for goods that the American capitalist had been banking on and had, in fact, gone to war to ensure.
We know that American capitalism has dreams of a $30 billion annual export trade. But this year, including $1½ billion in lend-lease accounts, the total of exports is expected to reach only $9 billion, according to the October American Exporter. At the same time, imports from other countries are expected to total around $5¾ billion a year by mid-1947.
With exports nearly double imports, countries which buy from the US are buying “on the cuff.” They are merely piling up debt to American capitalism – debt which in the ruined state of European and Asiatic economy must in the end only aggravate the economic chaos prevailing in these bankrupt sections of the world.
On the export side, World Report, September 5, observes that “uncertainty is a large element in the future of world trade” and adds that “odds are against continuance of the present export boom beyond another two or three years.”
The effect of the decontrol of prices in the US has had immediate repercussions in the reports from a score of countries that they will not be able to buy from this country at the present level of inflated prices. Australia has officially announced that the rise in US prices has forced it to curtail purchases.
The decline in the domestic market and the gloomy outlook for further expansion of its foreign market has seriously affected the plans of American capitalism to maintain a boom on the basis of an extraordinary outlay of capital for expansion. This year’s original plans for such outlay called for about $12 billion – little more than half of the anticipated $22 billion.
The trend is to retrenchment from expansion plans. The NY World-Telegram, September 21, noting the effect of the stock market slump, reported that “business people have begun to restrict their operations” and that “expansion plans in many sections have been discontinued for the time being, and workers have been laid off in consequence.”
The automobile industry, says the NY Times, September 29, has been compelled “to cut back and slow down a large part of its program to spend something like $1 billion for reconversion and expansion.” The steel industry, says the NY Times, October 13, is a “bone of contention” with government officials because industry heads, contrary to claims of government officials, insist that present production capacity “will be more than ample to feed all demands that are presented.” And officials of the aircraft industry have announced that their plans for a $750,000,000 expansion program have been reduced to $400,000,000 “at most.”
What has brought the dilemma of American monopoly capitalism to an especially acute pitch is the enormous increase of productive capacity during the war and the tremendous accumulation of capital crying for profitable investment.
American industry, in five war years, expanded to the point where it could turn out 100 per cent more goods than in 1940. The total industrial facilities in 1939 was worth $40 billion. The wartime government added $26 billion worth of plants, of which an estimated $20 billion worth are usable for civilian production.
In its survey, Economic Concentration in World War II, the Senate Small Business Committee has shown that most of this 50 per cent addition to productive facilities has fallen into the hands of the small group of gigantic monopoly corporations that control American economy. Today, just 250 corporations own two-thirds of all manufacturing facilities having assets of $40 billion dollars – or as much as the entire total of manufacturing assets in 1939.
On top of this, the man-hour productivity of labor increased phenomenally during the war. The average worker today can turn out 25 to 30 per cent more in an hour than in 1939. An important example of the increase in per capita productivity was given by CIO President Philip Murray when he stated on October 15 that it took 460,000 steel workers during the war an average of 46.6 hours of work per week to produce 89,000,000 tons of steel; but now 462,000 workers produce 84,000,000 tons in a work week of 36.5 hours.
At peak operations, American industry can turn out goods far faster than the limited market can absorb them. But American corporations must expand inexorably. They have accumulated $54 billion of working capital – triple the amount in 1941. This must be invested because it cries out for profit.
But with shrinking domestic and world markets, with productive capacity at heights never remotely reached before, where can American capitalism invest its huge idle capital profitably? Indeed, every investment in further plant expansion, either at home or abroad, merely paves the way for an aggravation of the glut of goods that have begun to flood the available market.
At the present time, American Big Business is shouting for “more production.” But it doesn’t want more total production. It is scared to death that more goods will eliminate scarcities and undermine the price structure. Indeed, as Leo M. Cherne, executive secretary of the Research Institute of America, told a meeting of 600 business men in New York City on September 25,
“In far too many cases, management’s left hand has been accumulating inventories while its right hand has been advocating productivity.”
The program of Big Business to meet the coming crisis was stated very succinctly on October 17 by Mariner S. Eccles, chairman of the Federal Reserve Board. He said that a depression can be staved off if 1. “productivity per worker can be raised – this is most important” and 2. “if large-scale industrial disputes and further general wage increases can be avoided.” He added as an afterthought “and if business groups are willing to refrain from further price increases.”
In essence, what Wall Street has in mind is to maintain its present volume of profits by forcing the workers to turn out more production in less time – the speed-up – and blocking wage raises or even slashing wages. It wants to stabilize the economy on a lower level. In other words, it will try to solve the crisis on the backs of the working masses.
But this is indeed not 1920, as some financial commentators concede. Casting a heavy shadow over these plans of Big Business is the organized labor movement, 15,000,000 strong, that wrested wage concessions from the American plutocracy last spring and is preparing to fight for new concessions in the immediate period ahead.
No doubt, American capitalism will try to maintain its unstable profits position at the expense of the living standards of American labor. But Wall Street is sure to meet savage resistance.
Where will it turn next for a solution, if the mass resistance proves too strong? It will turn once more to the public treasury and try again to prime the pump from that source. But these measures, as the “New Deal” era proved between 1933 and 1937, will not suffice to permanently quicken the blood stream of American capitalism. It will be found necessary to heap government spending upon government spending, pile up debt upon debt. And finally, to the present colossal sum of $263 billion of federal debt built up mainly in World War II, will be added at an ever faster pace vast debts for military expenditures in preparation for World War III.
Inflation would be intensified and add intolerable burdens to the working class. And this inflation in turn would only lay the basis for an even more terrible crash of the economy. For one thing is certain, even if the depression that lies immediately ahead is temporarily overcome, American capitalism is heading for an inevitable economic explosion, a crisis of such dimensions that the whole system will be torn apart. That crisis – as Wall Street well knows – will bear with it profound revolutionary implications.
Last updated: 21.12.2005