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Whither U.S. Capitalism?

(17 January 1949)

From The Militant, Vol. 13 No. 3, 17 January 1949, p. 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

In Truman’s first two reports to Congress, his State of the Union message and his Economic Report, he tried to show that American “free enterprise” – that is, the private profit system of capitalism – is structurally sound and durable.

Since 1929, he emphasized in his opening report, with a 20% increase in population, “our agricultural production has increased by 45%, and our industrial production has increased by 75%. We are turning out far more goods and more wealth per worker than we have ever done before.”

“This progress,” he boasts, “has confounded the gloomy prophets – at home and abroad – who predicted the downfall of American capitalism.” True enough, he admits, “many of our shortcomings stand out in bold relief,” but these – particularly “the evils of ‘boom and bust’ ” – can be overcome by incidental adjustments and reforms.

His Economic Report develops this theme. It notes that the U.S., as yet, has experienced no depression such as followed shortly after the end of World War I. And the reason for this, says Truman, is that “affirmative national policies and greater caution in the business community combined with other developments to make the economy more shock-resistant.” (Our emphasis.)

If by “affirmative national policies” is meant the pre-war New Deal reforms, then it can be pointed out that all these together never pulled American capitalism out of the doldrums. It was “other developments” after 1939 – that is the war – which gave a new lease on life to American economy. By shooting the federal debt up to $279 billion, mortgaging the future wealth of the country to the bankers and bond-holders, providing a government war market and guaranteed profits to the industrialists, Washington was able to prop up the economy once more.

These “other developments” have continued to shore up American capitalism. “While the prosperity of the post-war years has been great,” Truman admits “it has rested considerably on somewhat temporary factors which were the aftermath of war ... The momentum of war-created demand and war-created purchasing power has waned.” (Our emphasis.)

Indeed, without a continuation and an acceleration of government war spending since the end of hostilities, American capitalism would have experienced its “bust” before this. What would happen to American capitalism, for instance, if it did not spend $25 billions a year now for military preparations at home and abroad? Truman does not say.

And what do the American people get out of it? Truman gives the answer away in one brief sentence of his Economic Report: “The proportion of consumer expenditures in the total national product has never been lower in any peacetime year for which statistics are available.” (Our emphasis.)

That is, the American workers are getting a smaller share of what they produce than at any time since the last century. The gap in the division of wealth between the ever-growing working class and the ever-narrowing capitalist class has reached its widest point precisely at this moment of greatest prosperity.

This, then, is the outstanding feature of American capitalism: It cannot sustain production except by the temporary, and ultimately destructive, stimulant of war and war preparations; it cannot sustain war production except by constantly decreasing the relative share of the workers in the national product. Such an economy is headed either for another war or another depression.

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