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Albert Gates

Why the CIO-Nathan Report
Threw the NAM Into a Panic

(13 January 1947)

From Labor Action, Vol. 11 No. 2, 13 January 1947, pp. 3 & 6.
Transcribed & marked up by Einde O’Callaghan for ETOL.

THE publication of the now celebrated and sharply disputed Nathan Report for the CIO in preparation of its struggle for nation-wide and industry-wide wage increases has brought forth an official “refutation” from the NAM through its hired economist, Prof. Ralph Robey, as well as numerous replies from the editorial and financial writers of the daily press. Many reams of paper are now being filled in a battle of statistics, the net effect of which is to obscure the real issues involved, namely: whether industry and finance are in a position to grant new wage increases without increasing prices.

Mr. Nathan maintains that on the basis of present profit levels and the prospects for 1947, it is possible for industry to grant a 25 per cent increase in wages without increasing prices. He did not say that all branches of industry, or that every company within a given branch, were capable of granting such increases. As can be seen from the report, its greatest validity applies precisely to large-scale, monopolistic, mass production industries where the CIO is concentrated.

Drs. Robey and Jules Backman, the latter associate professor of economics at New York University who joined Robey in an attack on Nathan, are both spokesmen for big business. Robey, for many years connected with New York University, is a “business man’s” economist, and the economics department of the school has long been noted for its outspoken bias in behalf of big business and the profit system. Robey and Backman deny the ability of industry to pay wage increase without again increasing prices. Echoing the interests of big business, they declare that “if things could remain as they are competition and the old law of supply and demand would prevail and the national economy would straighten out.”

In behalf of the NAM, Robey proposed either:

“1. Hold wages steady and thereby keep the way open for competition and buyer resistance to hold prices to proper levels.”


2. Give another round of wage increases and thereby force prices still higher – higher, as shown by the experience of earlier this year, by just about the amount of the wage increase.”

The history of the nation shows that while in general, competition and the law of supply and demand effect the level of prices and contribute to their fluctuations and adjustments, the era of monopoly has mitigated this law considerably; it no longer operates as freely as it did during the years when a free and competitive economy was the outstanding feature of capitalism. Again, the real economic history of the nation shows that even when competition and the law of supply and demand did operate more freely, wages never kept abreast of prices, and certainly, they never kept abreast of profits which always outdistanced the income of the wage earner.

When Robey and his like-minded economists ask for the operation of so-called natural laws, they are merely asking the mass of people in this country to await adjustments in the economic situation initiated by the capitalists themselves – adjustments which can only come at the expense of labor.

If labor is to hold its wages “steady” and await this period of adjustment, i.e., “for competition and buyer resistance to hold prices to proper levels,” the mass of people will in the meantime continue in its present economically depressed state as it has for a considerably long period of time already. That Robey himself does not believe in “buyer resistance” is disclosed in the rather violent interview he gave to the press which is recorded in Washington Memo of the New York Post:

“Did he (Robey) favor organized consumer resistance to higher prices including mass pledges to boycott high-cost goods? Robey doubted that such methods would be ‘effective.’”

The interview revealed that Robey was not a disinterested professor seeking answers to an economic problem, but was an extremely conscious capitalist economist serving his one real master: the National Association of Manufacturers. The Post report recorded the following exchanges:

“Could he offer any advice to families that were unable to purchase vital foods? Robey pointed out that diets were flexible things; beans could be substituted for meat until prices fell ... Another correspondent, voicing polite impatience over Robey’s insistence that prices would automatically decline, if wages were curbed, asked how low-income families could be protected in the interim. ‘By the American system that has made us the envy of the word,’ Robey replied sagely and vaguely ...

“Finally, a correspondent stood up and said a little heatedly (the press conference was indeed a stormy one, with reporters unable to get an honest objective statement of facts from the professor) that it was fine to debate mathematics, but what hope did the NAM offer to a family head earning $45 a week – or less – in inflationary times,

“‘I don’t know what he can do,’ Robey began. As the critical silence deepened, he added, hesitantly:

“‘He can bargain for more. I’m all in favor of his bargaining.’”

How Can One Judge?

The details of the Nathan report are not too important. What does stand out in it, is that profits are now the highest in history. From the point of view of profits and the welfare of the capitalist class (and Nathan is a pro-capitalist economist!) it is more than able to increase the share of the worker in the national product. It is entirely beside the point that Nathan’s prognosis of 8,000,000 unemployed after the war did not actually occur. (We might advise these gentlemen of the NAM that as long as they hold the reins in this country, they will not be disappointed in respect to mass unemployment. Even a Robey will recognize the long lines of jobless.) But there is one important dispute between Robey and Nathan: Robey insists the way to proceed in this present desperate situation is to permit prices to decline and allow an adjustment in the living standards of the people to occur in this way. Nathan says that prices will never decline to proper levels and the way to achieve a balance is to increase wages – otherwise, the country is faced with a sharp crisis.

Corporate Profits

Robey insists that Nathan cannot judge profits because he cannot know what 1947 will be like. Backman joins him in saying that the Nathan report is “speculative.”

The hypocritical New York Times, which has repeatedly criticized the Nathan report editorially, and is the most consistent spokesmen for big business profits against higher wages, was compelled in its New Year financial page to record two important facts about the prospects for 1947. In one article entitled Big Year Expected in Heavy Industry, its writer, Hartley W. Barclay, writes:

“Record backlogs and firm orders for durable goods, equipment, tool and machinery lines now on hand point to 1947 prospects for stabilized production at a high level, with the major trend of increased productivity In evidence as assurance of a strong upward surge in this field of business.

“The underlying post-war development which provides proof of the further bulwarking of the American economic scene, largely based upon ‘capital goods’ investments, is the further increase in the investment of capital in heavy equipment to create bath output and employment, as well as profits.”

Elsewhere in these pages, C.M. Reckert writes:

“Corporate net income in 1946 reached the highest level in the history of the nation despite the fact that about one-third of the year was beset by non-production occasioned by strikes. The result of industrial manufacturers as a whole in 1947 may surpass even this impressive showing, providing further disruption of the national economic situation does not take place.”

By “further disruption” this gentleman has in mind strikes for higher wages. But if labor was able to produce record production and profits for big business despite all the strikes, its productive feats for 1947 without any strikes will surpass even 1946. This would mean even greater profits in 1947 than in the record year 1946. Then, actually, what the capitalists are asking of labor is that it keep quiet and accept its present conditions, while industry and finance continue to reap the greatest profits in history. And nothing so gives away the capitalist game as the real estimates of the capitalist economists when they are not speaking directly to labor or answering its queries.

But disputing with the professional economists and statisticians over figures is a pretty fruitless game. Even reliance on a report such as Nathan made is fruitless. All the Nathan report can do is add to the ammunition which the labor movement already has in abundance. A page of statistics won’t add to the worker’s dissatisfaction which exists when he gets his pay envelope and tries to stretch it to meet the needs of his family. It is only additional proof of what he already knows. What is really involved, and this is what the obtuse labor leaders do not understand, despite their endless experiences, is that in this kind of struggle, the demands of labor strike at the very heart of the capitalist system itself.

The capitalist economists who represent big business are defending the right of the industrialists and financiers to make profits off the labor of the millions of wage earners in the country. The more profit they make, the better it is for the prosperity of the system as a whole – especially for economists who are on the payrolls of the business institutions. The share of labor, they freely admit, is a minor share, enough to keep “body and soul” together. And that’s enough. If labor’s share gets too big, then the profits will decline, industry will close, unemployment will rise. For after all, they say with monotonous repetition, without profits, there is no incentive for big business to produce. It follows, therefore, the greater the profits, the greater the incentive. But it also follows, since wages are directly linked to profits, the smaller they are the greater the profits, the higher, the less the profit. Therefore, keep wages as low as possible and thus insure greater profits.

The labor movement cannot therefore enter the war of statistics as though it were its main struggle. At one time or another it has to say: We don’t give a damn about the profits of a handful of monopoly capitalists who control the wealth of the nation. We are interested in the welfare of the people, of the mass of wage earners who make up the overwhelming majority of the people of the country. It is they who produce the wealth of the nation and the profits of the bosses. If the capitalists cannot run industry unless their profits are safeguarded, if the people have to live at sub-standard levels to guarantee these profits, then, we can get along without the capitalist parasites. Labor can run the industrial machine without any help from’the coupon clippers. Eliminating the profiteers will make it possible to really increase productivity, the wages of workers, and the level of existence of the whole people.

But until the labor movement reaches that kind of maturity, it must still carry on the big fight: profits or higher wages; profits or a higher standard of living; profits or food, clothing and decent shelter. But then, too, labor will have to grow up politically. That means, its fight will have to become a political struggle as well as an economic one, to defeat the capitalists and their government which daily acts in the interests of the profiteers. And for that, labor needs its own party, an independent labor party to fight for a labor program of plenty for all.

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