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From New Militant, Vol. II No. 6, 8 February 1936, p. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Business is picking up again ... where it left off when last heard from just before the nosedive into the misery and privations of the last six years.
With millions unemployed, factories shut down, bankruptcy abroad, the farmers pauperized, etc. Great Truths remained unspoken. It was forgotten that this was the best of all possible worlds; that the rich begot profits as a reward for their initiative, honesty and diligence while the poor got all that was coming to them for being lazy, for cultivating vices instead of virtues, and their incapacity to seize an opportunity to rise in the world. Business’ great service to Humanity was forgotten. All of its self-sacrifice and nobility. All of its toil and tribulations. All forgotten!
Demagogues sang a different tune to the millions out of work, and the millions being pauperized. Fallacy after fallacy was propagated. A New Deal was dangled before those who thought they suffered from the Old Deal. A lot of unkind things were said about Business. But that was long, long ago.
The demagogues have done their work, kept the people amused with promises to make them forget how they were being squeezed until profits could start rolling in again. Now it seems that profits are actually rolling in. Business, so long in the background, is raising its voice again to tell all the Bill Joneses, Smiths and you and me who have been deluded by demagogues just where we are, and where we get off.
By way of inaugurating the new year and the “new era,” the New York Sun lets loose the Voice of Business in a monster Special Issue. On page 2 of this issue we are reminded of the Supreme Truth of Business:
“You and I know from actual experience that nine out of ten of the poor ... remained so because of their refusal to accept their opportunities and because of their own vices. We know that nine out of every ten, rich, middle class or poor, who have made ago of things have done so because of their initiative and honesty.”
During the depression a fallacy became widespread that an insignificant minority of the rich owned the world, keeping the millions of Bill Joneses to starve and slave in it. A most dangerous fallacy. So the very first article is entitled:
“Two Percent Control the Wealth! What of It – If They Do?”
This article reminds and teaches Bill Jones not only about the moral abyss between the rich and the poor, but also about “the wide distinction between, control and ownership” or, as the subtitle reads: “He Learns, Too, Where Billions Grow and Who Gets Them.”
There is a “great difference” between control and ownership. Yes, indeed. Two percent only “control” the wealth of this country. What could be more democratic than such control? One “controller” for every fifty “recipients”! That’s better than in the army, to say nothing about jails. This two percent makes billions sprout and passes them out to the Bill Joneses (that’s anonymous for you and me). On page 2, Business supplies a chart which proves it, and on page 3, Mr. P.S. Arkwright blurts it out in so many words:
“Another oft repeated fallacy is that ‘the workers’ share of the national income has been steadily decreasing? This, too, is untrue. The workers’ share in the national income moved from 38% in1850 to 65% in 1929. In 1931 and 1932, it equalled 75% to 80% of the income actually produced, and was even more in the case of manufacturing and related industries ...”
There you have it in black and white. Business makes billions grow only in order to distribute them to the poor, lazy, vicious and otherwise immoral working men. Well, indeed, can the spokesmen for business fling back in the teeth of its maligners the charge that Business, a two percent minority, runs the country as it suits its purposes and interests. There are charts and speeches and articles by the score to prove the virtue of Business. And to top it all, Business gets less and less for its remark.ble “control” of the country’s wealth:
“Another oft repeated fallacy is that corporation profits increase faster than workers’ wages. This is likewise untrue ...” (p. 3)
It is untrue that the poor are getting poorer and the rich richer. Mr. Arkwright has statistics to prove that it is the rich who are getting poorer, while the poor get all (or almost all) the billions.
During the depression a great ado was made about profits. You’d think there was nothing but profit for capitalists. As a matter of fact the “nominal ownership of capital” hardly pays at all. Profits are largely a myth. Bill Jones does not know this. Of course not. Bill is not only immoral and lazy but ignorant to boot. But Prof. Allyn Young, a great man and scholar, knows all about profit and loss. And Business agrees with Prof. Young, and vice versa:
“Prof. Allyn Young, one of our greatest economists, used to say that he doubted whether, taking all enterprise together, there was such a thing as profit; that losses equaled profit over a reasonable rate of interest” (page 5).
Thus, business makes billions grow where only grass grew previously; Business passes the billions on to the Joneses, and gets nothing in the end for it ... Hard to believe, harder to understand, but there it is. The New York Sun has a whole issue that proves it. There are charts testifying to it. Professor Young says so. Experience verifies it. Take the case of the Chrysler Corporation. On page 40, this great corporation submits a public account of how it grew billions for a period of ten years, and what happened to these billions. Labor got billions in wages, Business got millions in profits, and in the end Chrysler’s losses just about equalled the profit.
Statistics are very complicated and boring, but statistics prove this to the hilt.
In ten years the Chrysler Corporation grew two and a half billion dollars; and today it hasn’t a penny of it left. It was all distributed. And here is how:
Add these four items, and what do you get? $2,462,000,000. Out of an income of some $2,500,000,000, only $38,000,000, or just about 1½ percent remained for the corporation. Chrysler grew billions, Jones gathered the harvest.
Assuredly Mr. Arkwright (who writes in general on page 3 about the activities that Chrysler reports in particular on page 40) knew what he was saying when he delivered his address at the University of Georgia. If anything, Mr. Arkwright was too mild in his estimate of the workers’ share in the income actually produced in the manufacturing and related industries. The workers’ share in the Chrysler Corporation income is so close to 99.9 percent that it hurts the corporation even to talk about it. The corporation merely gritted its teeth and shut up and proceeded to pay profits. With the $38,000,000 it had left, the corporation proceeded to pay out to the “bondholders $84,000,000,” and the stockholders “approximately $79,000,000.” In other words, the corporation paid out a cool $125,000,000 out of its own pocket. It paid profits at a loss,paying out, according to its own balance sheet (p. 40) some 163 million in profits, thus losing $125,000,000 in the process. To paraphrase Prof. Allyn, “taking the Chrysler enterprise over a period of ten years, there is no such thing as profit: losses just about equal profit.”
This just about makes Chrysler a prospective bankrupt. But Chrysler does not complain. No. The corporation proudly points out that these dividends are “paid out of earnings which, through prudent management, the corporation has been able to set aside, after paying the cost of operating the business.” (p. 40)
Moreover, according to its own statement, “few corporations in the United States have been able to maintain such consistent returns to investors throughout the last ten years” (p. 40). Obviously, the other corporations in this country are traveling even faster on the road of making profits equal losses than Chrysler. They operate their enterprises, it seems, only to keep pumping billions into the hands of the shiftless Joneses.
“Sound finance today obviously calls for the lowering of rates of taxation in the higher brackets and a real stiffening of the rates in the lower brackets accompanied by a reduction of the exemptions. But a combination more unattractive politically can scarcely be conceived. There is danger (hear! hear!) that if the task is faced at all some device which throws the added burden of taxation less obviously on those with small means will he preferred ...” (p. 5).
Justice, to say nothing of sound finance demands that the poor (or as Mr. May mildly calls them “those with small means”) who receive the bulk of the billions should pay the bulk of the taxation. But as Mr. May admits, the rantings of demagogues to say nothing of the greed, selfishness and immorality of the Joneses make it impossible to approach the question openly and on a sound basis. Dangerous subterfuges must be resorted to instead.
Such are the dangers and miseries and hypocrisies of American Big Business.
We are no humanitarians, but even from that standpoint it would be the height of humanitarianism to put Business out of its misery, and silence its Voice once and for all. It is a big but necessary job. And there is only one way to do it: overthrow capitalism, voice and all; and establish the workers’ state. The sooner the workers get down to their own business the better.
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