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Jack Weber

The Depth of the Post-War
Crisis Is Already Clear

(May 1941)

From The Militant, Vol. V No. 22, 31 May 1941, p. 5.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Data keeps accumulating to lend complete certainty to the fact that there will be a tremendous economic crack-up at the end of the war. The bankers and the economists know full well how artificial is the American war prosperity. They see one contradiction piling on the other to make impossible the gradual and controlled readjustment of national economy after peace comes.

Glance first of all at the war trade which has created the “boom” period. The figures are in for 1940. The volume of exports for last year was the highest since 1929. It amounted to over four billion dollars (in 1929 the total was over five billions). Of this sum 64% was in trade with the British Empire. And the principal export, the first time in all history, consisted of airplanes and airplane parts. In addition there was machinery, tanks and munitions. In other words the bulk of the export trade was due to the heavy industries.

Farmers Still Take a Beating

But while the heavy industries have been building up, what is happening to United States agriculture? Exports of farm products declined one hundred forty million dollars from 1939 to 1940, and the decline is continuing. Normally this country exports more than half its cotton, 40% of its tobacco, a quarter of its wheat. But the foreign markets for these commodities are gone. The government is paying to have the tobacco growers cut their crop right in half for the next three years. Japan normally imports about a million and a half bales of cotton and this provides employment for 350,000 Southerners who support through this work another million and a half dependents. But Japan no longer buys from this country or at least is cutting its share down all the time. The story is the same for wheat. No wonder it is remarked that the war means the ruin of the farmers! To prevent that the government is merely increasing the warehouse surpluses in this ever abnormal granary.

Naturally the durable goods export will drop like a shot if hostilities should cease soon. True enough, the United States will continue to absorb much of the material for its own armament program, but that also merely postpones the day of reckoning. The arms program itself involves the amassing of a tremendous amount of fixed capital for expanding production. And it was precisely to the different rhythm in which fixed capital is realized in the process of capitalist circulation, as against the other forms of capital, that Marx traced the cyclical crises with the result of bringing starvation in the midst of plenty. The greater the weight of this type of production in the national economy, the more deep-going the later crisis will be.

The Paradox of Foreign Trade

But the most ironic contradiction is shown in the balance of foreign trade. In 1940 the United States, with the greatest hoard of gold the world has ever seen, imported only a little more than two and a half billion dollars worth of goods. Thus the rest of the world owes America money, and keeps owing more all the time. Unless the other countries can pay either in goods or in gold, they must borrow. The United States can sell its products abroad only so long as it lends others the money with which to buy. And this is precisely what it is doing with Latin America. But this serves at long last to disrupt international trade.

Meantime the flow of gold into this country from the rest of the world piles up extra reserves in the Federal Reserve Banks. These reserves are a great potential danger for bringing on inflation. With the rapid expansion of business, they tend to spill over into the stream of circulation and credit and form a veritable flood. The government would like to take measures to cut down these reserves, but such measures might slow up the arms program, slow up the expansion of production and thus prevent any further absorption of the unemployed.

Thus the government is forced to pursue a policy of gamble in regard to inflation. It hopes to control the process and have only a mild inflation by trying to fix prices and wages. This requires the most drastic measures if it is even partially to become effective. Even in Germany where such measures could be taken far more readily than here, the control was not as effective as the Nazis would have us believe.

Naturally it is, not only the United States that is faced with all these capitalist contradictions. The entire system of capitalist world economy is faced with deficit spending which can never possibly be repaid. The war is leading all the nations to economic bankruptcy at high speed.

Either Socialism or Chaos

There are those who think that fascism is building a new kind of society, that it is learning to control the entire economic process and to avoid inflation by drastic control of the entire price structure. These people do not understand that no single country, nor group of countries, can control world economy which alone is decisive in the end, even were we to assume that any national economy could actually be “planned” while private property still existed. Planning cannot be done completely even where private property has been abolished, as in Russia, where, planning is circumscribed by the capitalist world. Unless the working class learns that only its abolition of private property can stave off ruin and steer civilization to a new plane of development, then the class struggle will end in common ruin. As the Communist Manifesto puts it: “a warfare that invariably ended, either in a revolutionary change in the whole structure of society, or else in the common ruin of the contending classes.”

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