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From The Militant, Vol. 12 No. 18, 3 May 1948, p. 3.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Apart from the universal horrors and devastation it must bring in its wake, Wall Street’s war program is bound to deal savage blows to the living standards of the American workers and the mass of the people as a whole.
They will be compelled to bear the main brunt of all the war expenditures under conditions where the whole world, together with the American economy, has not had the time to recover from the terrible wounds of the last world slaughter. A war program launched under such conditions is unprecedented even in the annals of modern capitalism.
This means that before the actual outbreak of hostilities, universal scarcities of foodstuffs and raw materials will multiply as more and more of American production is siphoned off into war channels. It will force millions throughout the world to fall below subsistence levels and this will act inexorably to drag down the living standards in the United States itself.
The internal drain on the country’s economy will be much more severe than during the last war. Prices for everything have more than doubled since pre-World War II days. Should government deficits, as the war program unfolds, pile up at the same rate as they did the last time, then the public debt, along with the taxes, would pile up twice as fast, since two dollars and more must now be spent where one dollar sufficed before. But the actual deficits will be much greater, because the costs of the next war will be far higher. Increasing amounts of money will have to roll off the government printing presses and thus feed the inflation.
Furthermore, the United States is the first major power in modern times to project a huge rearmament program without first instituting controls (rations, price regulations, credit restrictions, etc.). Such controls will have to be imposed sooner or later. But in the meantime speculation is given free rein, assuring that prices will be driven up to the highest possible levels by the time full-scale war production gets underway.
The actual imposition of controls will provide scanty safeguards to the American workers, as their entire experience in the last war testifies. Capitalist wartime controls mean first and foremost the freezing of wages while prices of all necessities keep steadily rising. Workers found themselves badly squeezed during World War II despite the fact that pre-war prices of food and other necessities had been deflated and rose relatively slowly during the war years. This time all prices are highly inflated even before “war-scarcities” have ‘ begun to assert themselves. The next price squeeze on the workers will therefore prove far worse.
There are many other factors that act to further aggravate the situation. Last time American economy disposed of several advantages that no longer exist.
This country did not immediately feel the full shock of World War II, which was absorbed first by Eastern Europe and later by the Soviet Union. Meantime, American economy was fed from 1939 to. 1941 by large war orders from France and England.
In the beginning there was no major diversion from peacetime to wartime production in the United States, as a large section of the productive plant still lay dormant due to, the preceding depression, and a similar situation existed in agriculture. At that time, expansion took place both in industry and agriculture, and this provided a cushion against the subsequent shift to full-scale war production.
This time just the contrary is true. Western Europe represents not a cushion for, but a drain on American economy. The full impact of Wall Street’s projected war must be borne from its very inception by this country. No significant peacetime expansion of either industry or agriculture is possible. Peak production in both industry and agriculture has already been achieved. Every step toward rearmament can he taken only at the expense of mass consumer goods, the production of which must decline in proportion as the production of armaments is increased.
Declining civilian production will tend to push up all prices still higher. This coupled with deficit government spending plus a growing national debt plus a constant expansion of currency carries the threat of runaway inflation.
From the standpoint of their immediate economic interests, the American workers are therefore most urgently in need of an effective program to safeguard themselves against this terrible danger. Such a program must include among its key planks the struggle for the escalator clause, a sliding scale of wages.
Organized labor passed through the last war without this indispensable safeguard and found itself later compelled to engage in a whole series of strikes merely to maintain previous living levels. Should labor enter the next period without this safeguard, it will find itself helpless before the ravages of inflation.
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