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From The Militant, Vol. 12 No. 52, 27 December 1948, p. 2.
Transcribed & marked up by Einde O’Callaghan for ETOL.
As 1948 draws to a close, American capitalism is getting another attack of the jitters. The chronic instability of the profits system is appearing openly again in the pre-Christmas decline in retail sales, the dip in employment, the shakiness of the price structure.
Bankers and industrialists are looking to the government to keep them on their feet with another and bigger inflationary shot in the arm of vastly increased arms spending. During the coming year the country will move with ever greater speed toward a permanent war economy – the sole hope capitalism now has to stave off economic crisis and depression.
During the past year the economy was shored up by more than $20 billion of government expenditures for war preparations, including sums for the U.S. armed forces and “foreign aid.” The results have been to inflate prices of consumers goods and, as the capitalist commentators put it, “to drive the consumers out of the market.”
That the ruling capitalists and their government have no way to cure the chronic illness of their system, which fluctuates between the fever of inflation and the coma of depression, is indicated in a statement issued on Dec. 12 by the Credit Policy Commission of the American Bankers Association. In a review of economic conditions, representing the views of 310 leading bankers from all areas, the commission said:
“In reality we may be at an economic crossroads. A turn one way can mean a continued inflationary spiral; a turn the other way can bring a recession. Strong inflationary and equally powerful disinflationary forces are actively struggling for dominance. The future picture is somewhat uncertain.”
How decisive the question of war spending has become for American capitalist economy is indicated by C.F. Hughes, business columnist of the N.Y. Times, who wrote on Dec. 19 that “once again it becomes necessary to qualify the business future by stating that military requirements may prove to be the determining factor.” He notes that “in the sag that developed in the late spring of 1947,” it was the Marshall Plan first of all that staved off depression. And “early this year the Russian crisis quickly overcame the influence of the commodity slump.”
But the more than $20 billion Washington spent on war preparations this past year provided only a temporary prop. The spread between the buying power of the masses – which provides the greatest market for the output of the economy – and production and prices has grown greater and greater.
The true process that has taken place since the end of the war – and at a swifter pace in 1948 – is shown in the figures of profits, prices and wages. Between 1945 and the present, prices rose 35.2%; profits, 234.5%; and wages only 23.1%.
In terms of the division of national income, the share of wage earners fell from 67.6% in 1945 to 61.2% in 1948. During the same four years, corporate profits rose from 4.8% to 9.1% of the national income. In the third quarter of this year, reported corporate profits were running at annual rate of 21½ billion – nearly double the all-time peak in 1944.
The reaction of the capitalist class to the economic trends of 1948 shows that it has no other perspective but to plunge America into a catastrophic depression or atomic war. This alternative can be avoided only if the working people take over the nation’s productive system and set up the planned economy of socialism.
Main Militant Index | Main Newspaper Index
Encyclopedia of Trotskyism | Marxists’ Internet Archive
Last updated on 28 March 2023
Main Militant Index | Main Newspaper Index
Encyclopedia of Trotskyism | Marxists’ Internet Archive
Last updated on 28 March 2023