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From Labor Action, Vol. 6 No. 3, 19 January 1942, p. 3.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
In recent weeks, America has been rocked by a storm about the “battle for production.” Each day has seen new disclosures of extraordinary inefficiency in the production of war goods, often with the result that consumer products made with the same materials have been curtailed.
In this article the problem is thoroughly discussed and the real cause of inefficiency and “business as usual” is probed.
The article shows how the individual capitalists are slowing down their own production needs, essential for their own imperialist war, because of their wild rush for profits.
And here is the sharp challenge which socialism offers – its ability to organize production better, for peace and not for war.
We socialists have always contended that capitalism should be abolished because it mismanaged the means of production so that a very few – those who own the means of production – reaped great profits while the masses of the people were deprived of a secure standard of living. We would often prove this assertion by demonstrating the tremendous capacities which the modern industrial machine has; how it could satisfy the needs of everyone if it were run for that purpose; and how capitalism, instead, ran the industrial machine for profits.
What the capitalists called overproduction when they could not sell their ptoducts at a profit – Was invariably accompanied by the greatest need for these very products on the part of the people. Often large portions of the country’s industrial capacity would lie idle because the capitalists could not sell their products for a sufficiently attractive profit; despite the need for these products. Look, we socialists would say, if only the people could run these industries themselves, they could produce enough to satisfy everyone’s needs.
All that was and remains completely true. It remains the great and tragic paradox of our age – poverty in the midst of plenty. But now it is underlined by the situation which the war has brought about. We do not refer to the general paradox of a social system which cannot satisfy the most elementary needs of the people, while it squanders billions of dollars for war: That is the greatest indictment of world capitalism.
We are, for the moment, interested in the inefficiency in war production which capitalism demonstrates – even in a war conducted for its own interests. This situation has been brought to a climax by some recent dramatic events – notably those in the auto industry.
American capitalism has set itself the task of transforming its peacetime economy into a war economy. It has set itself the task of building the greatest war machine in history.
Yet despite what is for the capitalists such an all-important objective – they have continued in old, inefficient ways, in what is called “Business as Usual.” They continue to resist what is for them the inevitable necessity – the transition to war economy – in order to continue their tremendous intake of profits.
To some “liberals” this has been a great source of dismay and indignation. But no such emotions are warranted. Because they fail to understand that the main objective of capitalists is to make profits; the war itsself is merely a great imperialist foraging expedition to enable the American capitalists to make more profits; and within the framework of the war they are all determined to make as much profit as they can. All this was succinctly put by Pierre du Pont during the First World War: “... We cannot assent to allowing our own patriotism to interfere with our duties as trustees” (of the corporations).
This fact, that for the capitalists patriotism only means a grand opportunity for more profits, is vividly illustrated by certain recent events. Let us summarize a few:
1) THE RUBBER INDUSTRY – As far back as two years ago it was foreseen that in a war in the Far East, rubber supplies might be cut off from America. This eventuality could have been met by building plants for synthetic rubber production, by cultivation of the “guayule” (a Mexican plant which yields rubber) and by building up large reserves of stockpiles of rubber. Not one of these methods was used, in each case because of capitalist greed and incompetence.
Synthetic rubber was not produced because the large rubber companies did not want to risk the higher cost of production involved! This higher cost of production in comparison to raw rubber produced in the Far East is due mainly to the higher labor costs of America.
Fortune magazine of August 1940 estimated that 600,000 tons of synthetic rubber (the amount consumed in America) could be produced within two years. Nothing of the kind was ever done, for it conflicted with the interests of the giant rubber monopolies, which saw the destruction of their private capitalist interests in these projects.
Even when the Reconstruction Finance Corporation offered to build gratis plants capable of producing 100,000 tons, it was turned down by the rubber companies. Today, only 10,000 tons of synthetic rubber are produced in America. A similar situation exists with regard to “guayule.” The rubber bosses said that such production would be uneconomical; what they really meant was that they would have to pay higher wages in America, and thus risk lower profits.
It is only now, when it is far too late, that an attempt is to be made to produce synthetic rubber. And these plants will not be ready till late in 1943.
With regard to providing a reserve stock pile, the capitalist hindrances are just as clear. It was mainly through the machinations of the British capitalists who control raw rubber production in the Far East that American stock piles were kept low. “It is no secret that British interests did what they could to discourage the stock pile program,” writes Prince M. Carlisle in the New York Times of December 21, 1941, because of fear that American capitalists might be left with post-war surpluses of strategic items and thus “enjoy an economic advantage over Britain in the fight for domination of the post-war foreign trade structure.”
Here, then, is clear evidence that the only reason that the American people are today deprived of the use of rubber is because of the lack of foresight, the selfish profiteering interests and the competitive machinations of capitalism.
2) THE COPPER INDUSTRY – Numerous copper companies, such as the Anaconda, the Bunker Hill and the Douglas, have in recent months deliberately withheld production of products essential to the war machine because they wanted to dodge the excess profits tax. After a certain point, the RATE of profit of the copper companies declined if they continued maximum production, although the TOTAL AMOUNT of their profit increased.
As a result, these companies produced merely enough to guarantee a maximum rate of profit, even though their capacity for production was greater. This decision deprived thousands of workers of jobs, and will deprive the people as a whole of many necessary civilian products which are made of copper.
Senator Harry S. Truman described this situation:
“I believe there is an organized effort on the part of the producers to bring things to a crisis so the government will have to offer a bonus or higher prices: The same situation prevails in copper as in aluminum – a monopoly wants to stay in control after the war.”
The real low-down was given just the other day when the copper companies agreed to increase production – but at prices increased by 40 per cent!
3) AUTOMOBILE INDUSTRY – This is the most dramatic instance of the profit-grabbing and inefficiency of the capitalists. Here hundreds of thousands of workers face unemployment because of the policy of the auto magnates.
The attitude of the auto manufacturers has been chaacteristic of all of the capitalists. They had the attitude that they were making sufficiently tremendous profits on the production of autos: the profits of the 11 largest auto corporations increased 278 per cent from the third quarter of 1940 to a similar period of 1941. As C.B. Wilson, president of General Motors and spokesman of the auto magnates declared, they could make 32 per cent profit on the manufacture of autos and only a mere 9 per cent on war production. It is clear from this that the auto magnates prefer to continue producing autos; unless, of course, the ante is jacked up a bit on war production! As a result; the auto magnates have continually stalled off the government order for conversion to war production, have refused to engage in the industry-wide pooling and planning and sub-contracting to smaller producers which is necessary for the success of such conversion. Today, after a year and a half of the war program, the quota for the production of autos has been doubled for the month of January from 102,000 to 204,000 autos, although that is supposed to be the last month of auto production.
The excuse which the auto magnates give for this is that the parts for these autos have already been produced, and only assembly work is necessary. But this is only another way of saying that they have been building parts for more cars than were allowed by past production quotas in their reckless surge for profits.
What are the conclusions to be drawn from these facts? Many of the “liberals” have said that this means that the capitalists were not really interested in winning the war, that this proved that the war was a “people’s” war and not a capitalist war. Such an approach completely misunderstands the nature of capitalism.
The primary interest of the capitalist, we have said, is profit. As a result, the given group of capitalists – say, the auto manufacturers – are primarily interested in the profits for their group and, within their group, for their company. The capitalists cannot conceive of a war without profiteering, because war profiteering is merely an intensified form of their peacetime activities and because they understand that the acquisition of profits for the capitalist class is the main purpose of the war.
However, if the requirements of victory for the capitalist class as a whole dictate the subordination of the interests of a group or an industry within capitalism, it may be expected that sooner or later such subordination will take place. The present conflict within the OPM between the dollar a year men and the “liberals” is mainly as to the pace with which that subordination should be effected.
What can, however, be proved by demonstrating the facts of capitalist greed and inefficiency in the transformation from a peacetime to a war economy are the following:
And even more important, in a socialist world, that crowning and most damnable instance of capitalist greed and inefficiency – imperialist war – would be a thing of the past. Socialism could take the vast resources which are available and use them for constructive purposes.
The inefficiency due to capitalist competition; the shortages and high prices due to capitalist monopoly; the wars due to imperialist rivalry; the inefficiency and economic inequality due to the impossibility of constructive economic planning under capitalism – all would be things of the past. In their place could arise the new society of peace and plenty.
That is why socialism is the burning need of the hour.
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