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T.N. Vance

After Korea – What?

An Economic Interpretation of US Perspectives

(November 1950)

T.N. Vance, After Korea – What?, New International, November-December 1950, pp.323-333.
Transcribed by Ted Crawford.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

While the outcome of the Korean war remains obscure at this writing, immediate outbreak of World War III is most unlikely. Even if the major antagonists find it impossible to reach a mutually satisfactory compromise, they are unprepared for global combat. The motives that prompted Stalinist imperialism to launch the attack against South Korea on June 25, as well as the motives that led American imperialism promptly to intervene, are well known and require no further analysis here. Nor need we be particularly concerned with the resolution of the many complex political, social and economic problems arising from the liquidation of the Korean war, as these have no real strategic significance in the titanic struggle now being waged between bureaucratic collectivism (Stalinist imperialism) and capitalism (American imperialism) for control of the entire world.

It is worth noting, in passing, that the political vacuum which existed in Korea and which was in a sense responsible for the war will remain. For the war has graphically revealed that an independent political force in Korea can never be powerful enough to achieve sovereignty. A Third Camp is not and cannot exist on any consequential scale in that unfortunate Land of the Morning Calm. Like other border areas incapable of independent existence, Korea is faced with the unhappy choice of a regime propped up by American bayonets or one controlled by the Stalinist secret police.

What is important, however, for the world as a whole and for the orientation of the independent socialist movement in particular, is the perspectives that flow for the rival imperialisms once hostilities cease in Korea: Is the world to become two armed camps, waiting fearfully for the inexorable outbreak of World War III, or is some type of peace possible? Can the strategic aims of Stalinist and American imperialisms be modified in any significant degree? In a word, will the environment in which the class struggle operates differ in any noteworthy features from that which existed prior to the Korean war? And, if so, what will the consequences be and how can any such new trends be expected to manifest themselves? These are obviously crucial questions for the independent socialist movement and we shall seek to answer them in this and later articles.

The spectacle of grown men mouthing meaningless words about peace is one with which we have become all too familiar in recent years. It has become even less edifying, if that is possible, as a result of the “peace” programs set forth by Acheson and Vishinsky amid the nauseating maneuvers of the rival imperialist blocs within the United Nations. Acheson has made it plain that the only program Washington has is to arm to the hilt. Then, when parity of armed forces is achieved, “we can negotiate with the Russians.” And this is called a policy, expressed by a “responsible statesman” occupying the lofty position of Secretary of State!

To such a policy even a Vishinsky can reply with telling effect (The New York Times, October 14): “Authoritative American spokesmen say that it is only force that can impress the Soviet Union, and that when the United States is so strong as to make the Soviet Union shake in its shoes then, and only then, will it be possible to reach some understanding. What a profound and crude mistake! ... This is the policy of the diktat, the policy of pressure and imposition, the policy of demands and half-demands, repeatedly presented, pressed, bolstered and backed up by force, a proliferation of military measures, and circles of naval, land and air bases ...”

In the course of the same speech, Stalin’s Foreign Minister indicated the equally bankrupt “peace” policy of Stalinist imperialism. After complaining that “The policy (of American imperialism) has been changed ... from the wartime period of cooperation ... to the post-war ... tough policy,” Vishinsky asks, “Why do you not get back to that situation (of wartime cooperation)? If you do, things might change. I am profoundly convinced that things would change. To this thinly disguised offer of a deal; American imperialism has repeatedly given its answer: “The Soviet Government cannot be trusted to keep its word.”

Mutual recriminations about who changed which policy first only serve to conceal the basic dilemma, which explains why neither Stalinist nor American imperialism can “trust the other.” The wartime alliance between Anglo-American and Stalinist imperialisms was brought about solely due to the superior threat posed by an aggressive German imperialism under Hitler. In the absence of any such threat, it is impossible for the imperialist expressions of capitalism and bureaucratic collectivism to arrive at any lasting agreement that would permit a peaceful solution of the world’s problems.

The conflict between bureaucratic collectivism and capitalism is irrepressible. No matter what pious statements about peaceful coexistence of the two systems are issued by Moscow and Washington, they cannot disguise the fundamental antagonisms that make inevitable a clash for world supremacy. We are long accustomed to the periodic quotations from Stalin, as the occasion demands, about the “peaceful intentions of the USSR,” and (buttressed by falsified quotations from Lenin) the “possibility of peace between socialism and capitalism.”

Now we are treated to a similar disingenuous spectacle by the State Department, over which the same Acheson presides. A popular pamphlet entitled Our Foreign Policy has recently been issued. According to The New York Times of September 30, the volume constitutes a bitter indictment of Soviet policy, but it also sets out to disprove the “view that the East-West split is one between communism and capitalism.” In other words, The State Department also set out to correct what it regarded as an incorrect impression of the present tension of the world. It is not a question of differing economic systems, said the booklet, but of the threat of a new imperialist power.

“The deepening division between the Soviet-dominated bloc and the free world is not, as some people wrongly think, a conflict between capitalism and communism”, it said. “Among the nations of the free world, in fact, you will find some that are not capitalist at all, but have freely chosen a socialist system.

“The conflict is really between a power-hungry government that is bent on spreading its power by force, terror and every other means and the community of free nations which refuses to be conquered or dominated, or to stand by and see its members swallowed up.” (Italics mine – T.N.V.)

Thus, the State Department, like Vishinsky, would have us believe that all that is involved is a question of methods. That is to say, if Stalinism would relinquish its tactics of force, subversion and violence then we could have a peaceful world. It is axiomatic that methods flow from the socio-economic structure of a given state, but even if Stalinism employed “democratic” methods acceptable to Washington, American imperialism would still refuse “to stand by and see its members swallowed up.” Moreover, by this time it should be ABC, even to the State Department, that what really makes “the threat of a new imperialist power” is the existence of a new ruling class exploiting society in a new manner; namely, the social system known as bureaucratic collectivism. To be sure, this system is the antithesis of socialism and was actually brought to power by a counter-revolution that destroyed the workers state established by the Bolshevik Revolution.

Nevertheless, it is the irreconcilable antagonisms between two economic systems that have given rise to the “East-West conflict” and which threaten to lead us to World War III within the next decade. Both Moscow and Washington, at bottom, know this, although from time to time each has politically expedient reasons for issuing propaganda, designed to convey a different impression. And each has its own reasons for preparing in its own way for the inevitable showdown.

Stalinist imperialism, to which bureaucratic collectivism has given rise, is a system of slavery and peonage based on nationalized property. It is essentially an “import” imperialism whose aggressive policy is based on the economic necessity of acquiring constantly new sources of labor power; both skilled and slave, and of adding to its stock of producer and consumers goods, and which can feel safe politically only when it has integrated the major centers of world population and production into the system of bureaucratic collectivism. The Stalinist empire, as the same booklet of the State Department points out, has already enhanced its domain since the end of World War II by some 7,500,000 square miles of territory and by some 500,000,000 more people.

American imperialism, on the other hand is by far the most powerful imperialism to which finance capitalism has given birth. It is an “export” imperialism, inexorably driven by the most rapid accumulation of capital in the history of capitalism to export capital in all its forms in ever-increasing quantities. It is easy-going and bloated but it cannot be indifferent to the huge bites that Stalinism has taken out of the world market. It must first contain Stalinist imperialism and then destroy it.

In retrospect it is clear to American imperialism that it made many mistakes during the war, although the menace of German and Japanese imperialisms was immediate and real, while the danger of Stalinist imperialism was remote and at best imperfectly understood. To some extent these “mistakes” were unavoidable, for history rarely permits capitalism to function in terms of the long-run interests of the international bourgeoisie. What disturbs Washington, however, is the postwar mistake of permitting Stalin such an overwhelming head-start in the armaments race, for the curve of munitions production requires years before it generates real momentum. Indeed, it was not until 1944, despite the destruction wrought by Allied bombing, that American war production exceeded that of Nazi Germany. This lesson is well known in Washington and amounts for the unanimity that greeted the launching of the “national defense” program.

In this connection, the series of articles in The New York Times by its Moscow correspondent, Harrison E. Salisbury, is most interesting. Having just returned from a vacation in the United States, Salisbury has found Stalinland to be one of peace and growing prosperity. “The atmosphere of Moscow, and of the part of Russia that I crossed in traveling here from Poland,” he says, “is not one of war nor of preparation for war.” He concludes his dispatch of October 13 by stating: “What is interesting about the Soviet situation is that as of today, so far as research can determine, there has been no substantial changeover of the economy from its predominantly peacetime aspect to one of preparation for, or anticipation of, war.”

We do not wish to impugn Mr. Salisbury’s research abilities, or even the facilities made available to him in conducting his research, but the timing of the articles invites the suspicion that they were inspired by more than reportorial zeal and the conclusion is demonstrably false. The facts have nothing to do with atmosphere, which may well be as reported, but if Moscow today has a “predominantly peacetime aspect” it can only be because the normal face of Stalinism is one of a Permanent War Economy. The maintenance of 300 divisions, even it all are not at full wartime strength, the arming of the satellites, the military-technological development of strategic roads, canals, railroads, airports and other means of communication and transportation within the satellite countries, the expansion of the Soviet Navy, especially the submarine fleet, the feverish development of uranium mines, etc., etc., are an indisputable evidence of a war economy.

Since statistics are a “class science” in Stalinland, we cannot say what the precise percentage of the national product spent for war purposes is, but at a guess we would place it in the neighborhood of 25 per cent. Since during the last war only about 50 per cent of the national product was devoted by the Soviet Government to direct war outlays, such a reduction coupled with the fruits of imperialist acquisition and increasing production could well result in some improvement in civilian standards of living. The important point is that for Stalinism the shift from “peace” to “war” is only quantitative, not qualitative, and can be accomplished without upsetting normal routines, either politically or economically.

Moreover, while the ultimate aim of Stalinist imperialist strategy is conquest of the entire world, the immediate aims are clearly more limited. Time, the Kremlin feels, is on its side. It must complete the process of integrating the economics of existing satellites into its own. It needs another five-year plan or perhaps two, to increase its production and military potential to the desired level of overwhelming superiority, not to mention atomic equality. It must overthrow Tito and eliminate Titoism, in which objective it may have been mightily aided by the recent drought in Yugoslavia that, at last report, has destroyed some 4,000,000 tons of foodstuffs. Then must come the closing of the pincers on India and, choicest morsel of all, acquisition of all of Germany.

The air of confidence and tranquillity with which Stalinist spokesmen face the future is therefore much more than a mere propaganda “trick,” a so-called “peace offensive” to lull the decadent democracies into lowering their armed guard so that they will be an easy prey for a sudden onslaught. Stalin would welcome a deal with American imperialism, provided that it did not materially weaken his chances of obtaining control of the entire vast Eurasian heartland, for this is the realistic strategic objective of Stalinist imperialism in the next decade. The Stalinist ruling class has everything to gain by postponing the final battle with American imperialism, or so it reasons.

Two aspects of current American imperialist policy are most noteworthy. Internally, there is minimal unanimity within the American bourgeoisie regarding the fundamentals of imperialist strategy. The Truman policy of containment of Stalinist imperialism, which is the essential meaning of all major steps in foreign policy in recent years, may be criticized as to the manner in which it has been carried out but it is rare indeed that anyone seeks to change the objective or, the major strategy adopted to achieve this basic purpose. This is reflected in domestic politics by the extreme weakness of the isolationist fringe, an obvious but nonetheless significant difference from the post-World War I situation. It is apparent that all major tendencies within American imperialism are clearly aware that it would be fatal to permit Stalinist imperialism to control all of Europe and Asia, from the Atlantic to the Pacific and Indian oceans, for if Stalinist imperialism controlled three-fourths of the world’s population an insoluble political problem is presented even if in the long run a military victory under such adverse conditions may still be possible.

Externally, despite the establishment of the so-called Stettin-Trieste line and the attempts to establish a comparable demarcation line in Asia, American imperialism has clearly been on the defensive. It is Stalinist imperialism that selects the area and methods of struggle and American imperialism that replies with a thoroughly improvised policy. Because these tactical methods are either generally unsuccessful or incapable of achieving any lasting victory, which is more or less inevitable in view of American imperialism’s inability to solve any conflict on other than military terms, there is dissatisfaction with and criticism of specific tactics. This tactical opposition has combined with mounting economic pressures to establish the policy of containing Stalinist imperialism through the mobilization of superior armed force. From parity, which will be impossible to measure, to superiority of armed forces, which may not be easy to achieve, to World War III, which may be difficult to win, is the road on which American imperialism has definitely embarked.

Korea exploded the fallacy that American imperialism could contain Stalinist imperialism through speeches and a business-as-usual (i.e., a defensive) policy. For a brief flurry it almost gave rise to its diametric opposite, the policy of the direct offensive which meant seeking immediately a purely military victory over Stalinist imperialism. This, in essence, is the position of the advocates of a “preventive” war and all variations thereof. We do not for one moment exclude the possibility that American imperialism can defeat Stalinist imperialism in an all-out war, featured especially by use of the atomic bomb, but such a military victory would be politically disastrous. It is most unlikely, moreover, that the struggle would be short or easy. On the contrary, all available evidence points to a protracted war between two fairly evenly matched antagonists. The consequent economic destruction and totalitarianization of American political life, without even considering the impact on the rest of the world, would make any military victor; absolutely worthless. Such a policy then can be only a last resort, to be embraced only if there is no other hope for survival of the American capitalist class.

Faced with the failure of the previous “defensive” policy and the impossibility of adopting an overwhelmingly “aggressive” policy, the American bourgeoisie has finally reached a policy that in political terms can best be described as “Neither Peace nor War”. And is literally true that they do not want peace and cannot afford war with Stalinism! To be sure, American imperialism cannot mobilize the support of the international proletariat, as Trotsky hoped to do when he advanced the identical slogan on the occasion of the Brest Litovsk discussions, but it can hope to mobilise what is left of the international bourgeoisie.

The policy of “Neither Peace Nor War” will gain time, unless of course Stalinist imperialism reacts by casting the die for immediate war. This is most unlikely for reasons cited earlier. Naturally, if war does take place within the next few years, then the present breathing spell will have been utilized to overcome the Stalinist headstart in armaments production, or at least to reduce the present disparity, thereby enhancing the prospects of American imperialism for military victory. Above all, allies will be sought and armed in all areas of the world not under the control of Stalinist imperialism. This is, of course, the real meaning of the Atlantic Pact and related policies. The process of reducing British, French and other Western European imperialisms to the position of satellites dependent upon military and economic aid from the United States is a complicated one and takes time. It takes even more time to revive and harness the military power of defeated German and Japanese imperialisms. American imperialism would also like to have the time to conquer the markets of the disintegrating British Empire and to solve a series of other economic problems arising out of the pressure of the most rapid accumulation of capital in the history of the world.

This ambivalent policy is not without its dangers, but there is no alternative for American imperialism. It even contains the hope that the death of Stalin may precipitate a struggle for succession that will greatly weaken or even destroy Stalinist imperialism. Mr Hoffman of ECA fame is fond of speculating on such a turn of events, and it is said that this is one of the reasons he opposed the militarization of the Marshall Plan which presumably led to his resignation.

No better illustration of the significance of the new policy can be found than in what has happened to the Marshall Plan. Although in the interests of American imperialism, and part of the policy of Stalinist containment, it did nevertheless eschew military policies and it had make some progress toward improving standards of living in Western Europe and achieving a more rational and integrated economy. Now all this has been abandoned under the impact of the mobilization program. As The New York Times correspondent, Michael L. Hoffman, expresses it in his dispatch published on October 13 “Time and again in the past few weeks this correspondent has heard. European economic officials of various nationalities say with an actual or figurative shrug of the shoulders that as the United States seemed to have lost interest in everything except rearmament each country had better start looking out after itself in economic matters.” (My italics – T.N.V.) In fact, the article was headlined “Europe’s economy edges to autarchy.”

The political reception that the new American policy has received in Europe and Asia, especially Asia, is anything but favorable. But it is its economic causes and effects that are the key to the shape of the world after the end of the Korean war.

The immediate origin of the economic pressures that have pushed American imperialism into its new course, which is without historical precedent for a democratic capitalist nation, lies in the phenomenal expansion of the productive forces during World War II and the virtual maintenance of this level of production during the last five years. This development has not only been contrary to the expectations of the bourgeoisie but also, let us admit, unexpected by most Marxists. Here our analysis will be helped by making reference to some statistical measures, even if they are considered as but crude approximations.

We start with the fact that production increased about 12 per cent a year during World War II, from 1939 to 1945. In other words, total output was some 72 per cent higher when the war ended than when it began. This can be seen by examining the figures for national income and national product of the Department of Commerce as published in the Survey of Current Business (the latest revisions are contained in the issue of July 1950).

(Millions of Dollars)




% Increase

% Increase

National Income





Net National Product





Gross National Product





* Calculated by deflating the 1945 current dollar figures by the rise in the BLS
wholesale price index, which rose from 77.1 in 1939 to 106.3 In 1945 – a rise of
37.2 per cent yielding a deflator of 27.1 per cent.

National income and product figures are, of course, estimates, but they are the only dollar figures that attempt to portray the productive performance of the economy. Without entering into current controversies among the national income specialists, and, granting that important conceptual and statistical problems are involved, we are concerned only with basic trends which are not altered even if the margin of error in the figures is sizable. Fundamentally, gross national product is larger than net national product by the inclusion of capital depreciation and depletion. That is, the net value of current production ought not to include the consumption of capital as this is already reflected in the final prices of commodities on the market. Net national product is larger than national income chiefly due to the inclusion of indirect business taxes and liabilities, i.e., sales and excise taxes, etc., thus affecting the evaluation of government services.

We have based our conclusion about the Wartime growth of output on gross national product because, while the BLS wholesale price index is the best single indicator of price changes throughout the economy, it undoubtedly understates to some extent the degree of wartime inflation. A sounder procedure would have been to deflate separately each component of gross national product, but the work involved would not be justified by appreciably greater accuracy in the results. And for our purposes it is of relatively minor importance whether real output increased by 60 per cent, 70 per cent or 80 per cent during the war.

As a matter of fact, the federal reserve index of industrial production, which is based on physical volume, tends to confirm our analysis. This index, by for the most comprehensive of all industrial production indexes, rose from 109 in 1939 to 203 in 1945, a rise of 86 per cent. The Federal Reserve index, however, definitely overstates as a measure of total output in wartime because of weight assigned to war industries in its composition.

We are therefore content to rest with the figure of 72 per cent as the wartime increase in total output. How was this huge increase in production achieved? Initial impetus, of course, was provided by the availability of significant quantities of idle resources, including over nine million unemployed. There then occurred a surprising increase in the total employed labor force which, including both the civilian and armed force sectors, rose from over 45 million in 1939 to about 64 million in 1915, a rise of roughly 40 per cent. Even without the armed forces of almost 12 million, the employed civilian labor force still rose by about seven million workers, who worked for longer hours and whose productivity was increased by a huge expansion in productive capacity largely as a result of the enormous government expenditures for plant and equipment. In other words, the wartime expansion in real output was made possible essentially by an increase in capital accumulation and in the supply of labor power, in roughly equal proportions.

Had the wartime increase in the total labor force largely evaporated with the cessation of hostilities and had the wartime increase in capital been totally unsuited for peacetime use or, to the extent that it was unadaptable, had it not been substantially replenished by new, peacetime accumulations of capital, the level of activity of the economy would have reverted to prewar output, with consequent depressing effects. This did not occur, contrary to many expectations, because government expenditures were maintained at high levels, partly for war purposes, and American imperialism decided to support the recovery of the economics of Western Europe as part of the policy of containment of Stalinist imperialism and as a means of increasing the market for products of American capitalism. The entire process, of course, was nourished by the backlog accumulated backlog of consumer demands in the domestic market which, in turn, were supported by the tremendous level of private savings.

The same procedure that was used to calculate the wartime increase in output shows that postwar output is currently almost the levels achieved at the end of the war. It is true that our calculations yield an 18 per cent decline in real output in last five years, but the decline in the last four years is only 5 per cent. In other words, more than two-thirds the relatively small decline that has occurred took place in 1946, in the first postwar year before the menace of Stalinist imperialism became apparent to the leaders of the American bourgeoisie. Perhaps a planned reconversion would have averted the decline of 1946 best it must be remembered that the dominant elements within American capitalism at that time were bating all their plans and policies on a return to the status quo ante bellum.

It must be emphasized that the achievement of these extremely high levels of production occurred prior to the outbreak of the Korean war. For example, the Federal Reserve index was at 201 in July 1950 compared with 203 in 1945. Since then it has risen sharply, but at that level it is 14 per cent above 1949 and 5 per cent above 1948, the previous postwar peak. The labor force data show that the war-time peaks have been equaled. For June 1950 the employed civilian labor force was estimated (September 1950 issue of Monthly Labor Review) at 61,482,000. When the derived armed forces figure of 1,311,000 is added to this figure, the total employed labor force becomes 62,793,000 or close to the 64 minion figure reached in war time. There is, of course, the vast difference that the wartime figure included 12 million in the armed forces whereas the current pre-Korean armed forces figure is only slightly over 1,300,000. In other words, more than 9 million have been added to the employed civilian labor force since the end of World War II. These figures help to explain why Washington is so concerned about manpower shortages as the mobilization program unfolds, but they also reveal, in spite of the shorter work week, a goodly portion of the reason why postwar output has been maintained at almost wartime levels.

The other part of the postwar story of high level production and employment is to be found in the extremely rapid rate of private capital accumulation, the figures for which are even more pregnant with meaning for the future than the manpower data. The tabulation, based on the Department of Commerce data, graphically reveals the picture:

(billions of Dollars)



Gross Private


Total Private
Gross Capital

















1950 est.*








*Based on estimates for first and second quarters of 1950
as contained in August 1950 Survey of Current Business.

Thus, in the five postwar years American capitalists have accumulated on gross basis about 195 billion dollars, or an average of 39 billion dollars annually. This represents about 16 per cent of the postwar annual gross national product, a truly staggering percentage, especially when we remember that this growth in capital accumulation occurred with the economy already operating at peak levels due to the war.

If we wish to measure the net addition to private capital formation (i.e., the net additions to plant, equipment, construction, and business inventories, or constant capital as Marx would have put it), we have to subtract the postwar consumption of capital from gross private domestic investment. This is a field in which the experts always disagree as it involves depreciation, treatment of business reserves and accounting practices. It is clear that the maximum it can be, using the Department of Commerce figures, is the difference between what is termed “net national product” and “gross national product,” or about $83 billion. This would mean an average postwar annual capital consumption of over $16 billion, which appears to be excessive, and is accounted for not only by the rapid amortisation that was permitted of wartime plants but by the inclusion of “statistical discrepancies” and other uncertain quantities in the figures. It is noteworthy, however, that even on a net basis without any adjustment the annual rate of capital investment in the postwar period is 10 per cent, a rate that has not taken place in peacetime since the 1920’s. With proper adjustments, the percentage of net capital formation to net national product would appear to be about 12 per cent annually, which even exceeds the period 1919-1923, the five years following World War I.

All current reports testify to this accumulation of capital, the material base for American imperialism. For example, a report of the Securities and Exchange Commission for the second quarter of 1956, which is summarized in The New York Times of October 12, states “that the net working capital of United States corporations reached $73,800,000,000 at the end of June.” No wonder, then, that a National Association of Manufacturers analysis of the postwar financing of business, the findings of which are summarized in The New York Times of October 16, is able to state: “Retained earnings were an important source of new capital,” although this admission is then qualified, “but this resulted from a relatively low level of dividends rather than from high profits.” We would not expect the NAM ever to admit that business is making “high profits,” but without passing judgment on current arguments between management and stockholders as to the proper distribution of profits, the fact of the matter is that American business has never accumulated such profits as it has in the postwar period.

It is precisely the record accumulation of capital that makes so interesting the figures for the “net foreign investment” component of national product. Net foreign investment represents the net changes in claims against foreign countries and is affected principally by the net private balance of foreign trade and the net flow of long-term capital abroad. Thus, in the words of the August 1950 Survey of Current Business, “The negative balance of net foreign investment – arising from the substantial excess of Government grants over the current export surplus – remained for the second quarter of the year at approximately $2 billion, at an annual rate.”

While perhaps too much significance should not be attributed to the absolute figures, the trend – rapidly accelerating after the end of the war through 1947 and rapidly reversing itself from 1943 to the present – portrays the entire tragedy of modern capitalism in the constriction of the market and a paucity of opportunities for profitable foreign investment of surplus capital. The most recent figures on the net outflow of private long-term capital show the pathetically low levels to which American imperialism has sunk (from the September 1950 issue of the Survey of Current Business):

(Millions of Dollars)




Quarter 1949





Quarter 1949



Quarter 1950



Quarter 1950




In other words, a mere 14 million dollars represents the total net export of capital by American imperialism during the past year. For the same period, the net outflow of Government long-term capital amounted to $162 million, or 25 per cent of the private total. Even on a gross basis, discounting the total inflow of capital into America from abroad, the private total for the past year is only $1,434,000,000.

With capital accumulation proceeding at the all-time record rates described above, it is clear that the point where the American economy would be choked by surplus capital was rapidly being approached. The Point Four program, in particular, has been designed to establish a climate favorable to the investment of American capital abroad, but Truman has turned out to be just as fortunate as Roosevelt in the matter of having an aggressive foreign imperialism turn up at just the right time to make all sections of the American bourgeoisie unite in supporting an expanding program.

War outlays will more than substitute for the inadequacies of the Point Four program. They will relieve a number of economic and political pressures, although in turn creating others. Just how high they will go remains to be seen, but Secretary of the Navy Matthews is reported in The New York Times of October 13 as saying, “The cost of operating the national military establishment alone next year might exceed this year’s entire national budget: That would be more $42,000,000,000.” There will, of course, be differences of opinion within the ruling class as to the degree of preparation that is required. And it makes quite a difference to many industries and many sections of the capitalist class whether, say, 10 per cent or 25 per cent of the national product is devoted to direct war outlays.

An interesting statement of the perspective involved was made recently by Francis Adams Truslow, president of the New York Curb Exchange, as reported in The New York Times of September 23: “This war, or time of preparation, is not a specific all-out effort, but is perhaps almost a new way of living which we must endure indefinitely.” (My italics – T.N.V.) It should not escape our attention that this “new way of living” will operate on a world scale and that it is only another name for what we have called the Permanent War Economy. Its nature and impact are of the greatest importance, but will require a separate article or articles to analyze in any meaningful form.

T.N. Vance

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