sharon smith, "the 1930s"

(...) By 1932 it was estimated that 75 percent of the population was living in poverty, and fully one-third was unemployed. And in many places, Black unemployment rates were two, three, or even four times those of white workers.

(...) In 1933, President Franklin Delano Roosevelt granted workers the right to organize into unions in Section 7(a) of the National Recovery Act, and workers rushed to join unions.

(...) By the 1930s, objective conditions were overripe for mass industrial unionism in the United States. Industrial productivity had risen by less than 10 percent between 1899 and 1914, but between 1920 and 1930 productivity increased by 7 percent each year. By 1926, the Ford Motor Company announced that 43 percent of its jobs required only one day’s training. Most importantly, the working class was no longer segregated along racial lines. The slowdown in immigration after 1914 brought with it a corresponding increase in internal migration. A half-million Southern Blacks moved north during World War I. By 1930, more than 25 percent of Black men were employed in industrial jobs, compared with only 7 percent in 1890. By the mid—1930s, Black workers made up 20 percent of the laborers and 6 percent of the operatives in the steel industry nationally. And one-fifth of the workforce in Chicago’s slaughterhouses was Black. White workers couldn’t hope to win unless they united with Black workers–and that wouldn’t happen unless they organized on the basis of equality.

(...) Moreover, Lewis had supported Republican Herbert Hoover in the 1932 presidential election. He was woven of the same cloth as the rest of the AFL leadership. But unlike the others, he recognized that if the AFL didn’t open its doors to the unskilled, another rival union organization would develop and grow from the mass organizing drives which were already taking place. As Lewis’ biographer, Saul Alinsky, concluded, Lewis merely "read the revolutionary handwriting on the walls of American industry," when he pushed to organize an industrial union federation.

(...) When the Committee for Industrial Organization (CIO) formally opened its doors as a section of the AFL in 1935, industrial workers flooded in. And those groups of workers who were already at the forefront of struggle, such as the auto and rubber workers, quickly affiliated their unions with the CIO. In 1938, when the AFL finally expelled the CIO and its million members, the CIO changed its name to the Congress of Industrial Organizations and emerged as a rival union federation.

(...) As the level of working-class struggle grew, and the economy began to stabilize, big business began to desert Roosevelt. As Mike Davis argues, "It was this mass desertion of business from the administration in 1935 that drove a reluctant Roosevelt temporarily into the arms of Lewis and the CIO insurgents."27 Roosevelt needed the working class vote in order to win the 1936 election, and he shrewdly tailored his campaign to win the hearts and minds of workers. He put on quite a convincing show, declaring at one point during the campaign that if big business hated him, "I welcome their hatred," and if he were given the chance to serve a second term they will have "met their master." It was toward this end that in 1935 Roosevelt made two far-reaching concessions to workers.

(...) He pushed through the National Labor Relations Act (also known as the Wagner Act), which finally made it illegal for employers to refuse to bargain with unions. And he secured passage of a Social Security program, by which the U.S. government agreed to provide a minimal standard of living for the poorest families in society and for the elderly. These two concessions proved to be the biggest gains workers won from the government during the Depression decade–gains which earned Roosevelt his legendary status as a friend to the working class. But although Roosevelt promised workers that "we have only begun to fight," these were to be the last significant reforms he would grant to working class people.

(...) Although Roosevelt remained popular, many workers–especially those who were most active in building the new industrial unions–began to turn away from the Democratic Party as the Depression decade wore on. Indeed, Democratic politicians were proving in practice that they stood firmly on the side of the bosses, while the compassionate New Deal rhetoric went out the window as soon as the class struggle intensified. In 1935 alone, 20 state militias–most controlled by Democratic governors–were called out against strikers in 73 disputes. A 1937 Gallup poll showed that at least 21 percent of the population supported the formation of a national farmer-labor party as an alternative to the Democrats and Republicans.

(...) [UAW 1935 Congress -- first no support for Roosevelt, then threat from leadership]

(...) Thus, despite the significant shift leftward in working class consciousness by the mid—1930s, the pressure to support Roosevelt was tremendous, even among many socialists. The Minnesota Farmer-Labor Party fell into step behind the New Deal coalition, its politics virtually indistinguishable from Roosevelt’s by that time. Many long-standing members of the Socialist Party as well succumbed to the pressure to campaign for Roosevelt in 1936.

(...) The Great Depression was the most significant period of class struggle that has ever taken place in the United States. The sheer intensity of the struggle led ever broader sections of the working class to become radicalized and to begin to generalize politically. For a very short period of time as the working class movement advanced–between 1935 and 1937–the level of radicalization was such that on a fairly large scale workers began to realize that if they were to have a chance at winning, they had to confront all the bosses’ attempts to divide and weaken the working-class movement. Workers had to break down racial barriers and build genuine unity and solidarity; they had to prepare themselves to confront the violence of the bosses, which grew in ferocity during this period; they had to fight against anti-communism; and they had to break with the Democrats and the Republicans and form an independent working-class party. Thus, the Depression decade marked the key turning point for the working class movement in the United States: For the first time, the potential existed to build a genuine mass revolutionary workers party. But such a revolutionary alternative would have required a forceful revolutionary leadership inside the working class movement. Instead, there was the Communist Party.

(...) There was one reason in particular why the Communist Party was the organization which played the decisive role in the labor movement of the 1930s: its comparatively large size. Even at the very beginning of the Depression, the Communist Party claimed a membership of 7,500, compared with the Communist League of America’s 131 members in 1931. At the end of 1938, the CP had grown to 82,000, while the membership of the Trotskyists, by then in the Socialist Workers Party, peaked at 2,500. Meanwhile, the Socialist Party continued its process of decline. Subsumed by inner turmoil as its right and left wings continued to do battle, SP membership actually declined in 1935–a pivotal year of growth for the class struggle. [oh but come on! this is not an 'exogenous' factor!!!]

(...) As American CP leader Earl Browder argued in the mid—1930s, "If one is not interested in directives from Moscow, that only means he is not interested in building socialism at all."

(...) But for all the weaknesses of the American Communist Party, its commitment to fighting racism was exemplary. In fact, the CP in the 1930s provides an extraordinary example for socialists on how to go about building a working-class movement that makes fighting racism an integral part of the class struggle. This was true despite the CP’s bizarre "Black Belt" theory. As part of Stalin’s left turn during the Third Period, he argued that the American CP should advocate "self-determination for the Black Belt." This meant calling for a separate Black republic in the Southern states, where a majority of Blacks still lived–even though no demand for such a republic had ever been raised by Blacks themselves. Perhaps for this reason, the Black Belt theory’s call for a Black republic had virtually no influence on the party’s practice, and was rarely even mentioned in its literature.

(...) All literature, whether communist or union, had to be secretly distributed–smuggled inside baskets of laundry by Black women posing as laundresses or at the local barbershop, where communists would drop in for a "trim" and pick up their leaflets. The communists issued their own leaflet in response to the Klan, which read, "KKK! The workers are watching you!" And in 1933, the CP held a demonstration in front of the Birmingham courthouse, which demanded that the KKK and other white supremacists be outlawed, and the right to vote without the racist restrictions that prevented a majority of Blacks from voting throughout the South.

(...) All over the U.S., communist youth circulated petitions against segregation in baseball and other sports, in a campaign which featured white and Black ball players calling for integration in sports. When communists traveled to Washington, D.C. for a demonstration to free the Scottsboro Boys, they stopped off on the way and sat in at restaurants that refused to serve Blacks–a tactic adopted decades later by the civil rights movement.

(...) By 1934 the party claimed 1,000 members in Birmingham, mostly Black. After three members of the Sharecroppers Union were shot and killed by police in 1932, 3,000 people marched in a funeral procession for six miles, following caskets that were draped in banners with the communist hammer and sickle, while 1,000 stood along the route in tribute.

(...) This meant that, after spending the previous seven years denouncing as social fascists not just Roosevelt and the Democrats, but also liberals and reform socialists, the CP was instructed to become virtually indistinguishable from them. And as the 1936 presidential election approached, the Popular Front meant that the CP was instructed to do everything in its power to help ensure Roosevelt’s victory. Communists were to become loyal–if uninvited–members of Roosevelt’s New Deal coalition. [this is distinct, really, from Davis' explanation -- important, then, to think through the argument more carefully]

(...) As late as January 1935, the Daily Worker described Roosevelt as "the leading organizer and inspirer of fascism in this country." But by the end of 1936, the CP formally entered the Democratic Party. While it didn’t formally support Roosevelt in the election (voicing fear that open communist support might hurt his campaign), the CP made it clear that it hoped he would win.

(...) Some left-wing historians–those who wish to downplay the problems of Stalinism, along with those who wish to apologize for reformism–argue that the Popular Front was a major step forward for the CP, because it ended its self-imposed isolation of the Third Period. They point to the fact that the party more than tripled in size during the Popular Front period, from 26,000 members in 1934 to 82,000 members in 1938, as evidence of success. But that line of reasoning ignores the fact that the CP’s membership also tripled in size during the Third Period years between 1930 and 1934, when it grew from 7,500 to 26,000.

(...) The fact remains that from 1928 on, the CP never decided its strategy based upon what was needed to move the labor movement forward. Because it was tied to Stalin’s coattails, the American CP could not aim to build an independent revolutionary movement inside the working class–either during the Third Period or the Popular Front. In shifting from the Third Period to the Popular Front, the Party merely traded one disastrous policy for another, shifting from outlandish sectarianism to the adoption of equally outlandish patriotism.

(...) Because of the Popular Front, the communist shop floor leaders were instructed to help the CIO leadership in delivering the working-class vote to the Democrats. Despite the fact that many of the most militant workers were already willing to break with the Democratic Party in 1936, Roosevelt was reelected in one of the biggest landslides in U.S. history. [if only -- not sure if this claim is tenable, though]

(...) During the course of the Flint sit-down strike, which began on December 30, 1936 and lasted until February 11, 1937, 140,000 out of a total of GM’s 150,000 production workers either sat down or went out on strike. But the strike’s importance was more than just economic. The attention of the entire nation was riveted on the Flint auto workers, as they took matters into their own hands and stood up to the bosses, the CIO leaders, the National Guard, and even Roosevelt–and won.

(...) The Flint victory had an impact nationally, raising working-class confidence still higher. By the end of 1937, nearly a half-million workers all over the U.S. had taken part in a sit-down strike. The number of all strikes more than doubled between 1936 and 1937, from 2,172 to 4,740, involving nearly two million workers overall.

(...) Outwardly, Lewis appeared to defend the communists from conservatives within the CIO. "I do not turn my organizers or CIO members upside down and shake them to see what kind of literature falls out of their pockets," he told red-baiters. But privately Lewis made it quite clear that he was merely using the communists. He argued, "Who gets the bird, the hunter or the dog?" And later, once the union had finally gained a foothold in the steel industry and he no longer needed them, he fired all the communists from the union’s payroll.

(...) But the CP leaders’ newfound aversion to wildcat strikes did not immediately filter down to communists on the shop floor–many of whom continued to lead the wildcats and sitdowns which erupted during the course of 1937. Not only was confidence still rising among the rank and file, but that confidence enabled workers to begin to try and assert some control over the pace of production and other working conditions. [this is critical]

(...) [November Pontiac strike] The Communist Party finally broke the stalemate–by condemning a strike led by its own members, which it had publicly supported only days earlier. After an article appeared in the New York Times blaming the strike on the Communist Party, the CP leadership immediately switched sides, fearing it might alienate its New Deal allies. Earl Browder personally ordered the party’s Pontiac auto workers fraction to end the occupation.

(...) The Pontiac strike effectively marked the end of the CIO strike wave of the 1930s. The dynamic of class struggle is such that, if it does not continue to move forward, it very quickly begins to backslide. The monthly average of strikes fell by more than half between 1937—39, while the CIO added only 400,000 new members–compared with nearly 4 million in its first two years. By late 1937, recession had once again set in. Between August and November of 1937, the industrial production index dropped by 27 percent, once again throwing millions of workers into unemployment. Between November 1937 and January 1938, U.S. car production fell from 295,000 to 155,000. Employment in the auto industry dropped from 517,000 in 1937 to 305,000 in 1938.

(...) Once the 1936 presidential election was out of the way, Roosevelt was free to show his true class loyalties. Moreover, with a new war on the horizon, as Mike Davis argues, "FDR’s overriding desire to win support for an increasingly interventionist foreign policy, pre-empted further reform initiatives or new concessions to labor."93 As Roosevelt began his war buildup, he looked to reestablish his ties with big business. Thus, Roosevelt slashed relief and works programs for the poor and unemployed in 1938 and again in 1939, even though unemployment was rising sharply. And he made a pronounced turn against the labor movement, beginning in 1937.

(...) [thesis:] It was to be expected that Roosevelt would turn his back on workers, and that the CIO leadership would not lead a fight against Roosevelt. But by the time workers learned this bitter lesson, the greatest upsurge in U.S. working-class history was over. And the Communist Party had played a decisive role. The CP had an impact inside the labor movement which reached far beyond its own membership. Not only did the Communist Party have a substantial base among industrial workers, but by 1937, CP members held top leadership posts in 40 percent of CIO unions. There was a decisive missing element in the working-class movement of the 1930s: an organization of revolutionaries that was large enough to influence the course of the struggle. The Communist Party was large enough, but it had long ceased to be a revolutionary organization. So instead of leading workers toward revolution, the CP left thousands of workers without a way forward. Most workers who’d joined the CP during the course of the 1930s left by the end of the decade, undoubtedly confused and demoralized by the experience, with a grossly distorted vision of socialism. In the eyes of the most militant workers, the Communist Party discredited itself when it turned its back on the class struggle at its turning point in 1937. [too easy, one thinks]

It wasn’t only his desire to restore the health of capitalism that set Keynes apart from Marx. His theory of crisis was also fundamentally different. Where Marx saw the driving force of capitalism as accumulation for accumulation’s sake—the constant drive toward profit—Keynes continued to assume that “consumption…is the sole end and object of all economic activity.” The lack of “effective demand” in Keynes’ theory of crises is another way of saying that capital is not being invested; it does not, however, explain why. In short, whereas for Marx the possibility of the separation of purchase and sale that makes crisis a possibility is the starting point for understanding capitalist crisis, for Keynes it is the endpoint. Keynes’ theory of crisis—the lack of aggregate demand—is merely a description of the effects of crisis, not an explanation of why crises take place.
(...) The appeal for some, then, of Keynesian policy is that it calls for some redistribution of wealth from the top to the bottom, and that he pushes for “full employment.” However, Keynes’ perspective on this was strictly a ruling-class one. He supported not higher wages, but rather “the maintenance of a stable general level of money-wages” in order to maintain “equilibrium.” Keynes also thought it important that wages not become too high. In fact, though Keynes criticized the neoclassical theory of wages, he did not completely reject its premises, writing, for example, that, “A reduction in money-wages is quite capable in certain circumstances of affording a stimulus to output, as the classical theory supposes.”
(...) What Keynes added to this understanding was that at times, capitalists might view all other options as money-losing prospects and no matter how low the state moved interest rates, capitalists may still save. Keynes called this a “liquidity trap” and this is exactly the scenario that befell Japanese capitalism in the 1990s. For this reason, Keynes saw manipulating interest rates as only one tool for encouraging investment. The theory is that interest rates can be used to stimulate investment if real interest rates—that is interest rates adjusted for inflation—are cut to a point that they are negative. However, the Japanese experience illustrates that even if interest rates are negative, capitalists won’t invest if there is not a perceived avenue for investment. A similar dynamic is currently playing out within the U.S. economy. Federal Reserve chairman Ben Bernanke has reduced the target for the Federal Funds rate from 5.25 percent to 1 percent. This has failed to induce lending or investment because there is little for capitalists to invest in that is profitable. Furthermore, central banks only have control of the economic policies within their own countries. It makes the system unstable, because central banks can end up working at cross purposes based on national needs as opposed to having a cohesive view of fiscal policy within the global economy as a whole.
(...) Keynes conceptualized something called the “multiplier” effect. That is, by pumping $100 into the system at the right place, it could generate significantly more activity. Giving $100 to a worker might mean they immediately spend it at the local grocer. The grocer might then turn around and spend $90 of it himself on something else and so on and so on. On the flip side, giving $100 to a billionaire might not accomplish the same thing because the billionaire has no immediate need for the $100 and is only to going to spend if he sees investment opportunities with high rates of return.
(...) Neoliberal ideology, for its part, rejects the role of fiscal stimulus and puts greater emphasis on monetary policy, which accounts for the predominant role of the Federal Reserve Bank over the past thirty years in dealing with economic problems. In practice, however, neoliberals do have a fiscal policy—cutting taxes on the rich and increasing defense spending. As a result, during the neoliberal era government spending as a percent of GDP and per capita has risen, not fallen. Theoretically, neoliberalism is opposed to state intervention. In practice, military spending and corporate welfare are not only accepted but welcome. Now that the system is in crisis, ideology is discarded, and those who may have crowed loudest for the state to leave the market alone demand that the state intervene to save it.
(...) A key linchpin in this agenda was the dollar policy. Coming out of Bretton Woods every currency was pegged to the dollar, which, in turn, was pegged to gold. The fixed exchange rate put a dollar at $35 for an ounce of gold. Currencies would move against the dollar based on whether individual nations had balance of payments problems. If you had a deficit, you had to cut imports or else be forced to devalue. This arrangement more or less held until 1971 when the United States pulled the plug on the gold standard.
(...) The Bretton Woods institutions eventually took on much broader mandates than rebuilding capitalism in Europe and Asia, and after the crisis of the 1970s, adopted neoliberal loan conditions requiring nations to privatize and deregulate their economies. As Joel Geier writes,

Under the original Bretton Woods system, IMF loans were aimed at preventing devaluation and propping up demand. U.S. capital accepted these Keynesian measures when the U.S. was the major world exporter, ran large trade surpluses, and the rest of the world depended on its currency to pay for those imports. But in the 1980s, the IMF turned all of its previous policies on their heads: It now deliberately imposed devaluation and forced reductions in national income and demand in order to limit imports—all as a means to guarantee repayment of debt to international finance capital.

(...) The Great Depression played out in two acts. There was an initial drop to the depths in 1932, a recovery from 1933 to 1936, and then a second drop in 1937 and 1938, even after the initial Keynesian salves had been applied. The economy only decisively recovered in 1939, when the United States began war production for the Allies.
(...) The war effort created the rise in effective demand—in reality, government war spending, not consumer demand—that Keynesian measures failed to produce. As a result, employment and production, especially of arms, helped stimulate economic growth and an end of the Depression. Keynes himself saw the stimulating effects of the war effort as a vindication of his theories, having commented before the outbreak of war, “It is, it seems, politically impossible for a capitalist democracy to organize expenditure on the scale necessary to make the grand experiment that would prove my case—except in war conditions.”29 Of course, the cost of this method of recovery—fifty-five million dead—was a brutal price to pay. Moreover, the war played an important role in helping to wipe out and devalue capital and drastically reduce wages, both of which contributed to the restoration of profit rates after the war, but which were not part of Keynes’ remedies for crisis.
(...) Moreover, in adopting these state-led measures, nations were simply returning to the same policies of “war socialism”—“forced savings, controls on money, credit, prices and labor, priorities, rationing, government-borrowings”—that they had put in place during World War I, “despite the ‘orthodox’ approach to economics that prevailed at that time.”30 It was a sleight of hand for Keynes to now promote war—a product of the unplanned, competitive character of the world system—as proof of his theories.
(...) Yet there was never a point, except during the war itself, where the United States, or any European country, reached full employment. Though the term full employment was thrown around, in practice it was adjusted to mean, in the words of the American Economic Association in a 1950 report, the “absence of mass unemployment.” Proceedings of the British Royal Institute for International Affairs in 1946 defined full employment as “avoiding that level of unemployment, whatever it may happen to be, which there is good reason to fear may provoke an inconvenient restlessness among the electorate.”
(...) It was only well into the 1960s that they started to face competitive pressures that unearthed the contradictions. The U.S. was spending huge sums on its arms industry while its most dynamic competitors—Germany and Japan—were reinvesting in new plant and equipment. Those competitors began to outpace the U.S. in the 1970s. In order to retain economic power, the U.S. needed to lower its labor costs relative to Japan and Germany, a difficult task especially important given that it was saddled with heavy arms expenditures when those nations were not. It was this crisis, in which stagnation was accompanied by inflation, that ultimately paved the way for the neoliberal restructuring of capitalism.

(...) In practice, neoliberalism did not produce a full break from Keynesianism; and in some important respects the limitations of a return to full Keynesian economic policy are already clear. First of all, interest rate reductions—the first line of defense recommended by Keynes—have already been used under the Fed chair Alan Greenspan (when the economy was in boom) and now by Ben Bernanke (in response to the financial crisis). In the first instance, easy money helped create the housing bubble that formed the basis of the current crisis; and the more recent cuts aimed at lifting the financial crisis have not unfrozen bank lending. Second, the government has already run up large deficits for the past two decades—the federal debt now stands at $10.6 trillion, and the current deficit is set to go up to a $1 trillion next year as new stimulus plans are brought on line. The question is how far can this go? The government can print more money, as it has already begun to do now that the dollar has rebounded; but there is a long-term danger of runaway inflation, which could force them to raise interest rates that put a halt to growth.

(...) It is a sign of just how much the economic literacy of the left has deteriorated that Keynesianism—born as a reforming ruling-class economic program—today may become the default position when calling for an alternative to neoliberalism. Yet socialists must make a distinction between those measures of state intervention—such as the bank bailouts—that are measures of state monopoly capitalism designed to save the bankers to the detriment of the working-class taxpayer; and those measures of state intervention that will come as a result of popular demands. Socialists are not indifferent to the reforms—or the struggles to achieve them—that will be necessary to reverse the three decades of capitalist assault on the working class.