Resolution on Wages, Prices, Profits and the Struggle against Inflation
Adopted by the 12th National Convention of the SWP, Nov. 15-18, 1946
Adopted: November 12-18, 1946
First Published:January 1947
Source: Fourth International, New York, Volume 8, No.1, January 1947, pages 22-24.
Transcribed/HTML Markup: Daniel Gaido and David Walters, February, 2006
Public Domain: Encyclopedia of Trotskyism On-Line 2006. You can freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit the Marxists Internet Archive as your source, include the url to this work, and note the transcribers & proofreaders above.
I. The Program of the Fourth International
The transitional program of the Fourth International, reaffirmed by the 1942 and 1944 conventions of the SWP, has set forth the main generalized slogans and methods of struggle necessary to combat the plague of inflation inflicted upon the masses under the prevailing conditions of disintegrating capitalism.
The transitional program sets forth as the central slogan of the struggle against rising prices the sliding scale of wages. This slogan calls upon us to conduct a struggle to have the trade unions insert a sliding scale clause in every union contract tying wages to prices, which would insure an automatic rise in wages with every rise in prices, under a guaranteed minimum. The sliding scale would defend the living standard of the workers by giving automatic protection against the concealed wage cuts in the form of rising prices which force the labor movement to fight over and over the same ground merely to maintain existing standards. By freeing the labor movement from the burden of the defensive struggles, the sliding scale would permit the workers to turn their efforts to the struggle to raise basic rates of pay. The fight for wage increases would then constitute an attempt on the part of the working class to improve its real standard of living and to share in the benefits of technological progress and the increase of the productivity of labor.
The transitional program rejects monetary stabilization as a slogan of struggle and counterpoises to it the slogan of the sliding scale of wages.
The transitional program takes cognizance of the fact that Big Business attempts to unload the responsibility for rising prices on the shoulders of the working class and its struggles for higher wages. “By falsely citing the ’excessive’ demands of the workers, the big bourgeoisie skillfully transforms the question of commodity prices into a wedge to be driven between the workers and farmers and between the workers and the petty bourgeoisie of the cities.” The program further recognizes that the petty bourgeois sections of the population are unable to fight under the slogan of a sliding scale of wages. This dilemma can be solved by the creation of broad consumers’ and workers’ committees to fight for the control of prices and against the high cost of living.
This broad political fight for price control under united front committees of the working class organizations and the representatives of the urban and rural petty bourgeoisie is not made a condition of or directly tied to the wage earners’ fight for a sliding scale of wages. Rather, the struggle for price control is conducted parallel to the latter. The two struggles thus stand on different ground and are conducted in a different manner. The advanced workers push for this class struggle program because they are aware that the official struggle of the government against inflation is a mockery and that inflation is inherent in capitalism in its period of death agony. The working class, in joint struggle with the petty bourgeois elements against high prices, however, is enabled to expose the propaganda of the big capitalists and to prove to the middle classes “that the real reason for high prices is not high wages but the exorbitant profits of the capitalists and the overhead expenses of capitalist anarchy.” Thus the labor movement is enabled to win the confidence and support of sections of the middle class—and the more backward workers, for that matter—and to mobilize them for greater struggles against big capital.
2. Lessons of the Recent Strike Wave
The post-war upsurge of the American working class climaxed by the greatest strike wave in its history provided a powerful vindication and verification of these aspects of the transitional program.
It is interesting to recall that this program, when first presented by Trotsky in 1938, was rejected by many skeptics as “unrealistic,” “unsuited to American conditions,” “revolutionary romanticism,” etc. (Burnham in his 1940 letter of resignation from Schachtman’s Workers Party, declared loftily: “The Transition Program document seems to me—as it pretty much did when first presented—more or less arrant nonsense, and a key example of the inability of Marxism, even in the hands of its most brilliant intellectual representative, to handle contemporary history.”) Yet, in the recent strike wave, the American workers, long considered one of the most politically backward in the world, adopted as their own several of the key slogans of the transitional program and demonstrated in action what a colossal power is lodged in the program when it is fused with the mass movement. The fact must be recorded that the recent series of strikes, particularly the GM strike, demonstrated in life, the realism and correctness, as well as the power of this section of the transitional program of the Fourth International.
The GM strikers made an important contribution towards advancing the struggle by their big propaganda campaign against rising prices. Under Reuther’s leadership the union conducted forceful propaganda to prove that huge profits, not high wages, are responsible for rising prices. By this significant campaign, setting a new precedent in modern American trade union practices, the union was able, to an important degree, to shift the onus for rising prices where it belonged—onto the shoulders of the big capitalists—and to deepen the social understanding of the workers. This propaganda campaign was essentially very progressive and was so estimated by our party.
The main slogans under which Reuther projected this propaganda campaign were “Open the Books of the Corporations” and “Wage Increases Without Price Increases.” The slogan “Open the Books” is borrowed directly from our transitional program: We have already mentioned what a great impression it made on the minds of the working population, how it served to put the General Motors Corporation “on the spot,” and to expose the criminal responsibility of the war profiteers for rising prices. Reuther, however, never agitated for this slogan in the revolutionary spirit of our transitional program which conceives this as a bridge to workers’ control of production. Rather he maneuvered the fight to proving that the Corporation could “afford to pay” a 30 per cent wage increase while retaining a “reasonable profit.” At one point, during the hearings before the “Fact Finding Board” in Washington, he even agreed to delegate the examination of the Corporation’s books to the Government “Fact-Finding” arbitrators, and that, if it was found that GM could not “afford” to pay the wage increase, the union would scale down its demands accordingly! The second slogan “Wage Increases Without Price Increases” is not our slogan and we do not accept it. The erroneousness of this formula consists in the fact that it directly links together the struggle for higher wages with the fight against high prices. But as we have seen, these struggles are parallel struggles, conducted on different grounds and in different ways.
We hail the fight of the GM workers against price increases and point out the colossal significance and progressive character of this struggle. At the same time we criticize and correct its shortcomings and work to broaden the struggle into a truly natural political struggle conducted along the correct, truly fruitful lines as indicated by our transitional program. We support every genuine mass struggle against the high cost of living. We participate in such struggles with our own program.
3. On Morrow’s Proposals to Revise the Transitional Program
Morrow’s document “The Political Committee’s Principal Mistake in Trade Union Policy During the Strike Wave” dated April 6, 1946 and his remarks at the April 23 PC meeting make clear that Comrade Morrow is not making specific criticisms of our trade union tactics or the character of our Militant articles from the common standpoint of our transitional program. Morrow is instead proposing a fundamental revision of this program with regard to the questions under discussion.
Morrow declares in his document:
“Thus the Transitional Program demanded that wages should follow the movement of prices but, quite clearly, made no proposal for struggle to halt the movement of prices. On the contrary it implied that such a struggle would be futile.
“Can we take these formulas of the 1938 program and insist on them today? Manifestly not.” (our emphasis).
Why not? Because in the opinion of Morrow there exists an entirely new situation today. The newness consists in this:
“This time there was the OPA system for which there was no parallel in 1917-18. Every worker who thinks at all knows that this time, with far more pressure on prices than in 1917-18, there was no comparable rise in prices since OPA was established. Hence the indubitable popularity of OPA, the widespread demand not only of union officialdom but of the masses for continuation of OPA. Hence the absurdity of the doctrinaire position of telling the worker to concern himself with the movement of wages but not with the movement of prices; the worker, not saddled with a literal adherence to the 1938 program, looking instead at reality, knows that the labor movement can do something not only to raise wages but also to stop prices.”
It is obvious that Morrow considers the declaration of the transitional program that “the official struggle of the government with high prices is only a deception of the masses” is today outlived.
From the alleged newness of the situation Morrow deduces the necessity for a new program, namely to transfer the center of gravity from the struggle for a sliding scale of wages to a fight for price control. “Until the next contract comes up, the sliding scale of wages slogan provides no avenue of struggle for the workers,” Morrow writes. “The workers want to know what they can do about stopping prices now. Reuther’s slogan provides him with an approach to an answer.” To this end Morrow proposed in the PC of April 23 that we add to our transitional program Reuther’s slogan of “Wage Increases without Price Increases” and make this slogan the central point of our struggle.
At this meeting Comrade Cannon put the question:
“We are confronted with the problem, then, what should be our central slogan: the sliding scale of wages, or wage increases without price increases? Which would you put in the center of our agitation at the present time in the next period? My impression is that you want the slogan, wage increases without price increases, as this central slogan.”
Morrow:
“Your impression is correct.”
The transitional program says:
“Neither monetary inflation nor stabilization can serve as slogans for the proletariat because these are but two ends of the same stick.”
What the program specifically rejects, Morrow proposes as the central slogan of struggle.
* * *
Our analysis of the movement of prices and the role of the OPA is diametrically different from Morrow’s. The OPA was set up in 1942 as part of Roosevelt’s fraudulent “Equality of Sacrifice” program which promised to hold down prices and profits along with wages. The facts show that wages alone were frozen while prices and profits soared. The Militant has demonstrated this week in, week out, for four years. Instead of stabilizing prices, OPA became the official instrument for sanctioning price increases. It was set up with the deliberate purpose of deceiving the workers with the false promise that price rises and profiteering would be halted in order to provide hypocritical justification for the freezing of wages.
The claim that the OPA held down prices is thoroughly spurious. As the CIO and AFL research staffs have demonstrated, all government figures on this score are tendentious and false. Their only value is to provide an indication of the trend. They are worthless in providing a picture of the extent of the real, the actual rise in the cost of living. All workers know from their experience that the real cost of living has soared. To arrive at a scientific estimate, one would have to study actual prices of commodities as distinct from the official OPA ceiling prices, the black market, the deterioration of quality of all commodities, the hidden price increases given producers in the form of billions of dollars of subsidies and paid for by the poor people through the draconian tax laws, etc. This state of affairs confronts the labor movement with an inescapable duty: To reject the official government figures and to set up its own price-index research staff which will issue at short intervals the true price index on which trade union wage demands will be based.
The current inflationary processes which are becoming increasingly pronounced in the U.S. are an inescapable expression of the decay of rotting monopoly capitalism and the unparalleled destruction of the Second World War. Monetary depreciation and soaring commodity prices are world-wide phenomena. These predominant trends in capitalist economy can be modified, that is, accelerated or retarded by governmental intervention, but they cannot be eliminated or reversed.
Capitalist politics consists in the attempt to unload the costs of the anarchy of the system and the burdens of the war upon the toiling masses.
Governmental “price-control” is an integral means along with currency depreciation and high prices to accomplish this same aim.
Government regulation of prices in the U.S. during wartime was undertaken exclusively in the interests of the monopolists. The sole commodity which was effectively frozen was the price of labor power, the wages of the workers. Other commodities were either permitted to rise, diverted to the black market or indirectly permitted to rise through huge governmental subsidies. Since the government was itself the biggest customer on the market, a certain amount of regulation was imposed by common consent of the business community for its own protection. But, as the unprecedented profits prove, this was done consistent with the greatest profiteering in history.
Now with the end of the war the dominant business community has declared that it sees no further need for even the measure of regulation of prices that existed during the war. Regardless of the exact legislative fate of the OPA, even the wartime regulation of commodity prices is virtually at an end. We are facing an explosive inflationary trend and the labor movement must prepare its struggles with this understanding.
* * *
On the basis of the above we reject Morrow’s analysis of the movement of prices and the role and significance of the OPA as false to the core and saturated with reformist illusions.
We furthermore reject his proposed revision of our transitional program. Morrow’s program—an opportunist adaptation to the fake “price control” campaigns of Murray and Green— would sidetrack the struggle into a dead-end reformist alley.
The recent strike experiences proved not the necessity of discarding and revising our transitional program, but of applying it more boldly, concretely and consistently.
