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Arne Swabeck

The Economic Crisis, the Unemployment
Situation and the American Working Class

(July 1932)

From The Militant, Vol. V No. 27 (Whole No. 123), 2 July 1932, p. 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).


The enormous accumulation of capital in the United States, the gigantic growth of industry and of the process of concentration of production and of intensity of production, has pushed it ever more onto the world market. The credit system, so highly developed here, vastly accelerated the material development of the forces of production. In the early stages of the capitalist mode of production the expansion of foreign trade became a great aid to its development. Now, however, it has become an integral part of this mode of production through its need for an ever expanding market. This is particularly aptly illustrated by the position of American capitalism in the world market

The crisis broke first here, and its acuteness was undoubtedly to an extent due to the fact that this country gives the most credit to the world market and takes the least of it. The balance of payments, which had to be squared, was against it, even though the general balance of trade favored it.

It is estimated that the United States – today holds approximately $28,000,000,000 worth of foreign paper – that cannot now be paid. These vast credits granted and the mass of capital loaned to and invested in foreign countries, of course, demand their continuous returns. But the returns, generally speaking, as far as American capitalism is concerned, are not desirable in the form of commodities: that much the adopted tariff regulation alone shows sufficiently. So the problem of the returns still remains a rather vexing one. We mention this only as a reminder of the fact that the very question of American capitalism issuing out of the crisis is quite closely bound up with the world market problems.

At this point, however, there enter such questions as: reparations, inter-allied debts, retaliating tariffs etc. But above all there are the questions of the political stability of the various capitalist nations, the increased antagonisms – national antagonisms and class antagonisms – and the growing danger of war. Politics and economics are here quite inseparably interwoven. Their texture forms the basis of the crafty diplomatic maneuvering at the numerous world conferences which are being held right along. Each imperialist power struggles to increase or at least to maintain its share in world economy. The sum and substance of these conflicts presents a problem not at all easy to solve, not even for American capitalism.

A considerable portion, an estimated seven to eight billion dollars, of the American capital sent abroad represents direct investments in enterprises of production. It was exported in order to be employed in other countries at a higher rate of profit. In that sense it was the surplus capital although it may appear paradoxical to speak of surplus capital in the face of industries operating at a low percentage of production capacity and millions of workers unemployed – an excess population. But it will soon be found that surplus capital and such surplus population, exist side by side, and that the existence of one is the condition for the other.

Exportation of surplus capital becomes a means of promotion of the exportation of goods and of the acquisition of super profits. The effort is made, of course, to thereby monopolize both the sale of goods in foreign trade and the supply of raw materials. The foreign trade, by virtue of the fact that it makes possible an expansion in the scale of production, in general, thereby tends to cheapen the elements of constant capital. By simultaneously raising the rate of surplus value it then also tends to raise the rate of profit. This is, of course, at the bottom of the very intense struggle among the imperialist powers for control of the world market. But the expansion of production, due to foreign trade, at the same time hastens the process of accumulation and hastens the growing disproportion of constant capital (means of production), increasing more rapidly than variable capital (labor power) and therefore again promotes its own contradiction, the fall in the rate of profit.

American foreign trade, however, has today hit the lowest record in twenty years. But just about so, or worse, is the condition of world trade in general. At present 41 percent of the 1929 level constitutes that record of the combined 25 leading capitalist countries doing a total of 80 percent of the world’s trade. There is powerful testimony in this to the ravages of the world economic crisis. This, of course, is the picture of the capitalist countries only, and not at all of the Soviet Union.

According to the Department of Commerce the unit value of American exports for the first quarter of 1932 fell 37 percent when compared to the same months of 1928. The decline In imports was 56 percent. The comparative figures for exports and imports taking only the first quarter of each year were as follows in millions of dollars):

Year (Jan.–March)



















The favorable balance of trade for this quarter (excess of exports over imports) was $61,000,000, compared with $111,000,000 in the preceding quarter and $142,000,000 in the same period of 1931.

We can easily comprehend the immense obstacles in seriously contracted home market which meets the American government’s “reconstruction” program to “break the backbone of the crisis”; but these obstacles become so much more strongly accentuated on the world market. While the sources of power of American imperialism are spread all over the world its contradictions accumulate ever more rapidly. Yet as far as the present situation is concerned it has been able not only to maintain the gold standard but even to strengthen the position of the dollar.

Since 1929 about $2,250,000,000 in short term funds lodged in this country by foreign central banks have been repaid by gold withdrawals from this country. At the early period of these withdrawals the gold holdings here, due to the favorable trade balance, nevertheless continued to increase to a record high, on September 16, 1931 of $5,015,000. But these foreign banks continued to convert their dollar holdings into gold, and since then up to the present time, the gold holdings here have decreased to about $3,900,000,000. The Wall Street bankers call these withdrawals which they estimate as about having come to a close a disturbing element now removed from the financial situation. In their view the lack of confidence is being removed, the dollar is emerging stronger.

It has been correctly asserted in these columns before that a new ascendancy for the capitalist system as a whole is not possible. We have already entered the epoch of capitalist decline and proletarian revolutions. The existence of the Soviet Union, growing constantly stronger despite its difficulties, testifies eloquently to this fact. It is being further reinforced by the growing revolutionary movements within the capitalist countries. But it is just as important to also remember that in the imperialist stage of the unequal development of capitalism has become more pronounced. And the question of the ability of American capitalism to issue out of the crisis on the backs of its own working class and at the cost of the status of other capitalist powers in world economy still remains. It is being confirmed by the powerful role it plays in the constantly recurring conflicts on questions of the war reparations, international debts and moratorium. Each of the international conferences held on these questions increases the importance of participation by the United States – whether or not the participation takes the form of presence or absence of official delegates. These conferences, however, also increasingly show the ominous signs of sharpening imperialist conflicts and of imperialist maneuvers against the Soviet Union. This reflects the fact that the world economic crisis is becoming ever more bound up with the question of war. In that perspective we cannot fail to notice the increasingly aggressive role of American imperialism.

While we take due notice of the enormous contradictions developing and of the future furious conflicts implied in the efforts being made to “break the backbone of the crisis”, it would not be correct to consider this crisis as a bottomless one. It would be wrong for us to assume that American capitalism, as a distinct national imperialist power, cannot issue out of it, or even that the present contracted mass of surplus value realized by it, by its exploitation of workers at home and abroad, will be the basis for “normalcy” in the future. It would still be too early to point to any such definite limitations to its future process of accumulation. What can be said definitely, however, is that in the next stage the conflict of the development of the forces of production with the existing property relations and the conditions of wage labor will sharpen manifold.

For the American working class, on the other hand, one part of the question of its perspective is already settled. That is the part which has relation to its future standard of living. The capitalist efforts to issue out of the crisis are entirely conditioned upon the saddling of its burden entirely onto the working class. In other words it will be at the price of a lower level for the working class. In the final analysis, therefore, the very question of American capitalism overcoming its crisis depends decisively upon the proletariat. And, on a world scale this is so much more the case.

Everywhere, within the capitalist nations, the crisis has unleashed tremendous forces. There is an army of permanently unemployed workers comprising many millions. The struggle to further reduce the working class standard of living will go on. The growth of the revolutionary movement is unmistakable. The future direction depends decisively upon the Communist forces.

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