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Jack Ranger

A Year-End Economic Survey

Collapse or Prosperity?

(5 January 1948)

From Labor Action, Vol. 12 No. 1, 5 January 1948, p. 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

“Why, I was better off on WPA, bad as that was. The family had better food, and I had a car. Today, I’ve got my job and more dollars, but no car. We seldom have meat on the table. If the old refrigerator should give out, don’t know what I’d do ...”

Many, many times in the past three months I have heard the above words, or quite similar ones, uttered by workers, by white collar employees, by urban middle class people.

Here we are. This is the radiant post-war prosperity that Big Business promised would follow the “war to rid the world of dictatorship.”

How do you like it, fellow worker? Let us see what has happened and what is in the cards for 1948.

You’ll find only two predictions in this survey. The first: Prices will continue to soar. The second: In X years there will be a tremendous bust, that will make the last depression seem like good times.

What Are Ideal Capitalist Conditions?

First, for a few concepts that will help us understand the present state of the American economy. Let us in the beginning try to define what are the best possible economic conditions for capitalism. Such a state would include the following factors:

  1. A low national debt, one that is easily manageable at a fairly high rate of interest.
  2. Plenty of elbow room for expansion, that is, for the investment of surplus capital in new industries, new regions.
  3. A reasonably satisfied working class, disinterested in ideas of change, either unorganized or organized in unions with a safe capitalist-minded leadership acceptable to the ranks.
  4. The chance to more or less freely exchange; goods with foreign countries without hurdling high tariff barriers. A peaceful and solvent world.
  5. Absence of monopoly, which takes its toll from all the rest of industry.
  6. The chance for young men on the make to start up new businesses unhampered by patent pools, licensing restrictions, monopoly, or political discrimination.
  7. A farming class with an assured domestic market for most farm production, and an assured foreign market for any surpluses; low land values on the farm, low transportation costs for agricultural commodities and for farm machinery, reasonable prices on the manufactured commodities which the farmer buys.


These are just a few of the conditions which one could abstractly posit for an ideal capitalist system. Almost all of them were present in the American economy from the end of the Civil War up to 1900. Almost, all of them are absent today. The capitalist system has grown old. Its arteries have hardened into monopoly. Its heart has slowed down and can only be revived by periodic massage through military adventures. Its blood. has difficulty flowing to the extremities. The whole system is dying on its feet, as an honest examination will confirm.

The second concept it is important to keep in mind is one of chronology: Where is the system today in relation to the past?

Capitalism in the U.S., developing under the very most favorable conditions for the system for over a hundred years – an immense territory without an inner tariff barrier, a continent richer, than some in natural resources, an inexhaustible labor market through immigration, absence of a European-type militarism, absence of a class system of political parties – even this U.S. capitalism has been periodically shaken by crises, beginning with the first one in 1819, the next significant one in 1837, and thereafter one every, nine or ten years, up to the First World War. Then came the post-war crisis of 1921, then a period of great prosperity (a period, however, in which one-fifth of the industrial plant and equipment was idle), and then THE crisis in 1929, the sharpest and most devastating in the history of capitalism, which began in agricultural areas such as the Balkans and Latin America,. swept with terrific and growing fury across the earth and finally rolled up on the shores of this country in November with an impact that gradually numbed trade and production, doomed tens of millions of workers to unemployment, shattered the morale of the capitalist class and called into being the New Deal government of Roosevelt in 1933 to save the system and buy off the growing mass sentiment for revolutionary change.

The New Deal Failed

From 1933 to 1940 the New Deal administration strove, WITH TOTAL FAILURE, to restore the functioning of capitalism in this nation. Leaning on the theories of economists Keynes and Hanson, the government sought to spend the nation into a state of prosperity. Relief or WPA jobs were given to millions – not to all who needed them, but to millions. The depression gradually and slightly lifted by 1937, and then again in 1938 the system again fell flat on its back. In 1939, when the Second World War broke out in Europe, there were STILL more than 10,000,000 unemployed here, and a nation-wide strike broke out that year over the question whether Congress should give $700,000,000 or $1,100(000,000 to WPA. Think? Over a matter of a piddling $400,000,000 – what Truman shoved to the Greeks and Turks this year, a tiny fraction of the hundreds of billions which America’s Sixty Families were shortly to spend on world-wide destruction.

Roosevelt’s policies failed to rescue the economy, as had Hoover’s before him. But the war which he and the other capitalist politicians and bankers and industrialists encouraged, temporarily revived the dying patient. Capitalism came back with a bang once the war really got going. But it was an artificial recovery, just as our present so-called prosperity is bogus, artificial.

But Production Is Up ...

Back in 1933 the Brookings Institute in Washington published a study entitled America’s Capacity to Produce, a work which created considerable interest and which was quoted frequently by socialists to substantiate our contentions that this nation, given an over-all economic plan and workers’ control, could turn out goods in much greater abundance than capitalism had ever done. “

The study indicated that from 1925 to 1929 available pjaht was used between 80 and 83 per cent of capacity. If this unused capacity, rendered useless by the idiocies of capitalism, were put to work, annual productivity would have increased by approximately $15 billions, or from the $81 billions realized in 1929 (the peak productive year up to then) to about $97 billions.

The actual production of 1929 was accomplished on an industrial work week which averaged close to 51 hours (before the CIO remember?) and the potential 1929 production was predicated upon the same week of 51 hours.

Today we are producing at a rate far beyond that hopefully envisioned in the Brookings report. In the third quarter of this year, the Department of Commerce reported that the gross national product, which is the total output of goods and services, reached an annual rate of $232 billions. Even making allowances for the depreciation of the dollar since 1933, this is well beyond the 1929 production, and the work week is actually at an average of about 45 hours compared with the 51 hours used in the Brookings study.

Not only is production way up. So is employment. Henry Wallace’s “dream goal” of 60,000,000 – savagely attacked as visionary by big business in 1945 – has been attained and bettered. By late June the number of civilian jobs had risen to a record high of 60,055,000, surpassing even wartime employment.

... And Profits Up Too

Profits are “out of sight.” The period since the end of the war has been an endless banquet for big business, and the food gets richer with each course. Net corporate profits – after taxes but before tax rebates – in 1946 were at a record high of $12.5 billions, $2 billions over the previous peak set in the wartime year of 1943. Corporate net dividend payments to stockholders last year totaled $5.6 billions, an increase of 26 per cent over 1945.

In 1947 profits rose yet higher. The number of American corporations with assets of one billion dollars or more reached an all-time high of 45 in 1947, compared with 20 in 1929, and 28 in 1939. The assets of these 45 corporations total more than $103 billions. Of the 45 companies, 19 are banks. 12 are insurance companies, and six are railroads. The fact that more than two-thirds of the 45 billion-dollar corporations are banks and insurance companies, should surprise no one familiar with Lenin’s analysis of the role of the banks in the period of finance capitalism.

Time magazine reported in August that U.S. corporations were making a fabulous $33,000 a minute. The Department of Commerce estimated that for the first six months of 1947 profits were at an annual rate of $29 billions before taxes, up $8 billions from last year and $4.5 billions above 1943’s previous all-time high. Estimated profit after taxes this year would be $17.4 billions, up 28 per cent over last year.

As company after company released its second-quarter earnings reports, it was noted that, profit increases of 100 to 300 above the very profitable 1946 period were not uncommon. Of 342 companies surveyed, 237, or more than two-thirds, showed bigger earnings, and 67 showed decreases. For the third quarter of 1947, a survey by the Wall Street Journal (see October 31 issue) showed 149 major companies in 15 industries “raked in earnings of $446,147,392, a spanking 42 per cent above last year’s third quarter. Earnings for all 1947 up to the end of last month unquestionably added up to the highest ever recorded for such a period.”

Nor is the prospect for big business in 1948 less sunny. “A bright New Year for U.S. business is being predicted at the 52nd annual congress of American industry of the National Association of Manufacturers,” recently reported the Wall Street Journal, adding that “delegates wandering through Peacock Alley and chatting in the grand ballroom of New York’s Waldorf-Astoria Hotel are facing up to 1948 with little of the pessimism recorded a year ago ... With a year of near-peak record earnings behind them, businessmen think the New Year will be just as good – maybe better than 1947.”

Does It Spell Prosperity?

So we have production at an all-time high, employment at an all-time high and profits at an all-time high.

Does all this spell prosperity? Viewed from the ruling class summits, it undoubtedly does. But viewed from the sunless economic canyons where dwell the masses, the picture is startlingly different.

It is a strange sort of prosperity, when prices we relatively so high that automobile workers cannot buy the cars which they produce, when workers in household appliance factories cannot afford to purchase those goods for their own use, when coal miners earning $65 and $75 a week cannot afford to buy the meat with which to keep up their health and strength.

Elements of the situation are reflected in recent headlines in the nation’s financial press:

The situation may be summarized through a recent release of the Department of Labor’s Bureau, of Labor Statistics, in which the Bureau estimated that today it requires from $3,200 to $3,600 for an average worker’s family of four to maintain a “modest” American standard of living, “without frills.” In October 1947, the average for factory workers stood at $50.97 a week, or roughly $2,650 a year IF EMPLOYED FULL TIME THE YEAR AROUND, That’s from $550 to $950 less than the minimum budget.

(Continued next week with a detailed examination of today’s “prosperity”)

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