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From The Militant, Vol. VI No. 37, 5 August 1933, pp. 1 & 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
By the developments toward the much heralded national industrial recovery, which have taken place so far, it appears that the New Deal is getting en the way. Maybe this should give us an opportunity to determine just what this New Deal is. Undoubtedly the general idea behind it, the system of policies represented by that name, are quite clear. But the New Deal itself will be fully estimated only when it is put over and has become a reality. Today the first steps are being taken, it is set into motion, and we must view it in motion to forecast its final results. It is possible to say at the outset, however, that when finally put over, the New Deal will loom up to the working masses as something entirely different from what it appears to be today.
To the same extent the working class judgment will differ. Today there seems to be an attitude, and quite, understandably so, that any change is sure to be for the better; that at least cannot become any worse. Many workers are even captivated by illusions of special benefits from the industrial recovery act and its industrial codes. Tomorrow when its scope is known we will find that the New Deal lends itself well to other more choice and more harsh names. Crisis Creates New Conditions One thing is certain; the system of policies centered around the industrial recovery efforts represents something new, at least to the extent that new conditions press for new methods. The new conditions are at hand. The crisis in its course of development laid the basis for them. It offered the possibility of an immense reorganization of the whole national economic structure in preparation for the next stage of the business cycle. Now the problem is to step into that stage and secure an upward economic conjuncture. And it was precisely at this point that many of the old concepts and formulae of capitalist business were found not to fit the new conditions or the new requirements. They were discarded. At the same time new ideas were sweeping the world, catchy ideas, ideas of planned economy. Why not try to apply some of them on a capitalist basis? And so, it came about that the ideas now identified with the New Deal are combined into a sort of a plan aiming at the "organization" of capitalism. A greater concentration and centralization of capital, a more gigantic monopoly. It is the proponents of "organized capitalism", appearing under the collective name of the brain trust, who are the moving forces behind these ideas.
But before we look further into the question of the industrial recovery policies of the Roosevelt administration and in order to gain a better understanding of them, it is necessary to first examine their background. As already mentioned, a crisis becomes also a period of capitalist readjustments. An immense reorganization of the whole structure of American national economy took place during the crisis. With a view to the future, this reorganization followed strictly along the lines of the motive force of all capitalist production— the realization of surplus values, the realization of profits. To check the heavy tendency of the falling rate of profit by preparing for an increase of the mass of profit and an increase in the aggregate capital was the problem. It was tackled first by raising the intensity of exploitation of the workers. A higher degree of rationalization and standardization within industry, new efficiency methods to increase the output per man, together with direct speed-up and even longer working hours, were the measures applied. In a recovery, industry will thus start from a high level of intensity of exploitation. Secondly, an enormous depression of the wage level below the value of labor power was forced through ruthlessly. In this the drop in commodity prices naturally served as a means of facilitation, the heavy unemployment and its competition for jobs did the rest. The result is that on a whole the disproportion between value added by applied labor power and the actual wage paid is constantly on the increase. But what is especially to be borne in mind is the fact that industry starts today from an extremely low wage level.
These were the measures affecting the working class most directly. But there were others worthy of attention from the point of view of studying the background of the present situation. For example the problem of expansion of credits. Undoubtedly the establishment of the Reconstruction Finance Corporation and its billions made available for the bankers and big industrial corporations served this
purpose admirably. In the main however, the huge sums expended went to buttress the large metropolitan banking institutions to help them in paying in settlement of previously contracted obligations The funds expended did not become transformed into productive capital; for during the course of the crisis there was a generally constant drop in new capital emissions in new financing. Nevertheless finance capital faces the recovery stage with a greater fluidity of credits. Simultaneously there has been a cheapening of the elements of constant capital by the price fall of commodities and raw materials.
Aside from these points mention ed there is also to be taken into consideration the reorganization of industry and banking already accomplished. With hurricane speed the crisis eliminated the weaker and more antiquated sections of the capitalist structure, countless of small independent producers whom they supported. Industrial mergers, rationalization and standardization were given more favorable conditions, subsidies were made ready for the monopoly enterprises, efforts were initiated to adjust the various sections of industry to better correspond with the whole and branch banking by the big metropolitan institutions began to make real headway. All in all these were important steps as a result of which the organic composition of American capital is becoming higher. But it still remains for the Roosevelt administration recovery policies to cap the climax.
Some pressing steps are yet to be taken by American capitalism to complete the adjustments of it structure of national economy These are now in the making and those workers who may credulously believe that the departure of methods of the Roosevelt administration, from that of its predecessor, will in any way at all mean a departure from the capitalist imperialist and monopoly basis, will experience some rude awakening. To the extent that these methods are new, precisely to that extent do they also serve much more effectively to reenforce the imperialist monopoly basis of American capitalism.
What do these methods imply? First of all the completion and further rounding out of the reorganization program already initiated during the crisis. In this, two measures now on the way lend themselves particularly well, and are being utilized to the hilt, for demagogic propaganda fostering illusions of capitalist liberal generosity. We have in mind the questions of a return and a stabilization of the purchasing power of the masses and the reorganization of labor power to the productive forces by reduction of working hours. In regard to the first question what is to be expected? Is it a matter of securing what is abstractly called a decent standard of living for the masses? Not at all as far as the capitalist rulers are concerned. It is simply a matter of securing conditions under which surplus values can be realized, and to that extent to stabilize the purchasing power; but on a level distinctly lower than used to be known as the celebrated American standard.
In regard to the second question, that of working hours, it should be noted that during the crisis with industry running at partial capacity, overproduction still resulted in short order. The relative decrease of employed living labor, compared to the amount of crystallized labor and compared to the amount of capital which it set into motion, became transformed into an absolute decrease of necessary labor power for the productive forces. With a huge unemployed army this embodied prospects of the class struggle to develop at a rapid pace against the owners of private proparty. From this there need be no misunderstanding. It is not the welfare of the working class as expressed in shorter working hours which is the concern of the recovery policies. On the contrary; it is the aim to neutralize the unemployed army by taking off a part of the oversupply and obtain a better working basis in the interests of capitalism.
The third measure in the way, and a keystone in the industrial recovery policies, is the increase of commodity prices. That is so essential for capitalism for its realisation of the profits contemplated for the future. What it will mean to the working class, however, is an entirely different matter. It will form part of the bitter experiences which will be their lot under the New Deal. The rise in commodity prices proceeds both by the way of inflation as well as by setting arbitrary monopoly prices.
In this general program there remains still the one most essential step to be accomplished; that is to increase the ration of American capitalism in world economy. It is not at all let out of sight in the New Deal. Granted the re-establishment of confidence, within capitalism, in the process of reproduction, which is now so valiantly aimed at, the conditions will be fully prepared for a gigantic offensive upon the world market. A dress rehearsal has already taken place in the London economic conference.
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