W.E.G.

American Capacity

From New International, Vol. I No. 2, August 1934, p. 64.
Transcribed & marked up by Einde O’Callaghan for ETOL.

America’s Capacity To Produce
by Edwin G. Nourse and Associates
xiii+608 pp. Washington, D.C. The Brookings Institution. $3.50.

America’s Capacity to Produce – a really stupendous undertaking. The book still has to be written.

The Brookings Institute, in bringing forth this volume, states that it is to be the first of a series. It is – the first of a series of apologies for capitalism.

Attempting to analyze America’s capacity to produce commodities, the authors approach the entire problem from the viewpoint of a second-rate economics professor. Rather than distinguish between useful products of society (food, radios, automobiles, shelter) and the useless (warships, traveling salesmen, stock markets, etc.), the members of the Institute close their eyes and butt blindly into the entire mess. This book is the result. Not “America’s capacity to produce”, but “capitalism’s capacity to produce” was the horizon of the authors.

The major shortcomings of the book could be listed as follows:

Far from attempting to analyze what American industry could produce in useful and needed articles, the authors have confined themselves to the attempt to analyze what American capitalism could produce under capitalist market conditions.
The analysis is carried up to the year 1930. This, of course, immediately, chops off the depression years, four years that would give to the capitalist picture a far blacker framework than the authors desire. (Even W.C. Mitchell, long before the present crisis, was forced to admit that “normal” capitalism included both years of “prosperity” as well as those of depression.)
By ending with 1929, the Institute economists do not have to bother with the intense rationalization of the past four years, a rationalization so extreme that despite the shrinking market, or rather because of it, productivity has increased over 20% for the manufacturing industries.

The above factors would properly be classified as the major shortcomings of the book as a whole.

In addition to the above the book is so afflicted with “minor shortcomings” that one is forced to arrive at the conclusion that Brookings’ Incapacity to Produce far exceeds that of American industry.

After finishing the first chapter, Agriculture, one begins to realize the type of “analysis” one is about to encounter. A whole series of statistics is brought forth (including appendices) to show how many cows, fences, farmers, barns, etc., existed in the US, and how they have increased since 1900. Not a word about capacity to produce (which we must admit is far from a simple subject). Suddenly, the reader is told that because of all the above (how? why?) “the writer is convinced that American agriculture could produce 20% more than it turned out in 1929.” The author apologizes for his conclusion, admits it is but “an individual opinion” – and there you have it – “incapacity to produce”.

Accompanying the above type of wild guess we have a wild pruning of figures in the attempt to whitewash capitalism. Taking cement as an example, the Bureau of Census, on the basis of a questionnaire sent to the different producers, estimates a total capacity of 269 million barrels. The estimate was based on the replies to the questionnaire calling for “total quantity of finished cement your plant could have produced during the year allowing for ordinary and usual interruptions”. The authors immediately proceed to slice this figure by 17% “for seasonal effect” (i.e., the capitalist market variations). On this “seasonal capacity” the authors find that production (170,500,000) was 82% of capacity. Using the figure of the US Bureau of Mines before the 17% had been chopped off, we observe that production was only 66%. In 1933 production was 63,000,000 barrels, or 24% of capacity. In other words, Nourse has given capitalism a whitewash of 58%, or of merely 16% if we consider only 1929.

This same toning down of production capacity is employed for every industry. In “steel”, for example, the figures of the American Iron and Steel Institute are given the title of “theoretical capacity”. And being against “theory”, a damper is immediately applied, reducing capacity to what is termed “practical capacity”. This leads to the ridiculous result of actual production for the entire year 1929 being higher than “practical capacity”, whereas for the peak months actual production is much above the authors’ “practical capacity”.

This type of analysis comprises the entire book. Wild guesses, juggling of figures, anything to paint a rosy picture. However, despite all the manipulations, the authors cannot increase the figure of American production as compared to capacity to more than 80%. On this basis they assert that were industry running at full capacity an increase of 19% over 1929 production would be possible. This by itself is a damning indictment of our present system.

Far more damning, however, would be the results of a true analysis. Without much fear of being wrong, it could be shown that on the basis of useful articles, figures of production are only 50% or 60% of capacity. It would hardly be more than a conservative estimate to say that American industry could today easily double its 1929 output of useful articles, even if some useful labor power were diverted to the production of machine guns and bullets to defend a Soviet America.

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Last updated on 25 February 2016