Читать книгу The Coming of the American Behemoth - Michael Joseph Roberto - Страница 11

2—Fascist Processes in Capitalist Accumulation

“THE GERM OF FASCISM,” wrote A. B. Magil and Henry Stevens in 1938, in The Peril of Fascism, “was inherent within American monopoly capitalism; but it was not until the economic crisis of 1929 that it developed into a definite political force of ominous proportions.”¹

Today, their long-forgotten book remains the only comprehensive account of the rise of U.S. fascism in its specific, national form. Readers will find great resonance in the warning issued by Magil and Stevens. Fascism already had destroyed democratic governments in Italy and Germany, and a similar outcome was plausible in the United States. A decade earlier, the Wall Street crash had ushered in what they called a general crisis of U.S. capitalism that “provided the conditions necessary for the speedy growth of embryonic fascism.”² There was no time to lose in creating a united front against fascism at home and abroad.

Magil and Stevens were American communists who understood how fascism had come to power in Italy and Germany and how the road to fascism in the United States looked different. In line with the position of the Communist International, they certainly had Italy and Germany in mind when they defined fascism as “the open terrorist dictatorship of the most predatory sections of the capitalist class.”³ In both cases, nationalist, racist, and terrorist mass movements rising primarily out of the lower middle class catapulted Mussolini and Hitler toward dictatorship—once they had secured the allegiance of the ruling classes in their respective countries. In the United States, however, embryonic fascism had emerged in a different form. Homegrown U.S. fascism lacked the visceral movements of its European counterparts, which in the case of Germany delivered the spectacle of Hitlerism. To dwell on analyzing American resemblances in relation to distinctive European forms was a mistake. “The national peculiarities of each country, its specific economic and social position, its historical traditions,” they wrote, “all play a part in shaping the form that fascist movements and fascism take.” Americans should not be looking for “a Man on Horseback riding down Pennsylvania Avenue, or a megalomaniac with a little mustache, making speeches in a big voice.” Rather than adhering to some “stereotyped formulae” to explain why fascism arose anywhere in the world, it was better to recognize its “diverse, and frequently subtle, forms” from one place to another.⁴ Still, to locate the germ of fascism in monopoly capitalism implied something common to all of them, and for communists like Magil and Stevens it could not be clearer what this meant. “Judged by its works, and not by its professions of faith, fascism stands forth as a form of rule by finance capital.”⁵ This was especially true for the United States. “The scattered streams and trickles of developing American fascism,” they wrote, “have a common source: Wall Street.” Big Business was the “fountainhead” of American fascism.⁶

A historic partnership between government and business during the First World War had created what Magil and Stevens called an “entire mechanism of repression” with an array of new agencies and legislation, including the War Industries Board in 1917 and passage of the Sedition Act a year later.⁷ All were designed to maximize cooperation between the two sectors in order to produce for the war and quash dissent or opposition to America’s involvement in it. This partnership, a leap in the advance of U.S. state monopoly capitalism, delivered profits never before seen to the largest capitalist enterprises during the war and in the decade that followed. As Magil and Stevens wrote:

The steady concentration of power in the hands of executive officials and the corresponding diminution in the power of legislative bodies … was encouraged by big business in the Harding, Coolidge and Hoover administrations, which used their enhanced powers in the interest of the monopolies. Commissions, executive officials and judges, appointed by the President and by state governors, and not elected by the people, were vested with unprecedented authority.⁸

As they make clear, the difference between capitalist states and those that went fascist was not a matter of “class content,” but in their respective “methods of rule.” In fascist states such as Hitler’s dictatorship, fascism

still represents the rule of finance capital, but in an open terrorist form, involving the complete destruction of democracy, the most brutal suppression of the people, the restoration of feudal relationships on the farms, the destruction of culture, the revival of medieval racial beliefs, the organization of all society for war. It means rule by the most ruthless and predatory sectors of finance capital; by dark reactionaries and fanatics who seek to impose upon modern capitalist society the primitive practices and beliefs of barbarism.⁹

When the crisis of capitalist rule in Germany became acute in January 1933 and the threat of communist revolution or a complete breakdown of the existing capitalist system seemed imminent, German elites, never champions of democracy, turned to Hitler as their only resort to protect, preserve, and further their class interests.¹⁰ As Magil and Stevens rightly observed, the transition from democracy to fascism in Germany had not occurred in a “single leap” but rather was the result of “a long process of whittling down democratic rights.” As for the United States, the transition from liberal capitalist democracy to fascism was still in its “preliminary” stage.¹¹

As Marxists, Magil and Stevens described the historic origins of fascism in the most general terms. It had emerged in the twentieth century from contradictions in monopoly-finance capitalism, primarily “between the enormous forces of production … and the system of private appropriation—the profit system.”¹² In this respect, they saw how repression inhered in capitalist growth itself as the result of a growing divide between the ruling class—which had become richer, fewer in number, and more powerful during the prosperous 1920s—and everyone below them in the pyramid of capitalist wealth. They knew that wages represented only a small part of what workers produced, leaving them unable to purchase the products of their labor at sufficient levels to gain a decent standard of living. Still, on this basis, the United States had achieved a “degree of temporary stabilization” in the national economy, but only in the short term. Basic capitalist contradictions had been “glaringly revealed” to those who paid attention. Even in the midst of prosperity, a widening gulf between mass production and consumption caused by “a technical revolution” had become historic by “dooming a large proportion of the productive system and millions of workers to permanent idleness.” Then the crisis came in 1929, and “the flimsy props” that had gone into the making of the Great Boom collapsed in a heap.¹³

But why did this happen? Since their primary motive in writing The Peril of Fascism was to educate Americans about fascism’s immediate threat to U.S. democracy, Magil and Stevens did not provide a more complex analysis of American fascism from the standpoint of political economy. For sure, they detected the germ of fascism in the United States in the myriad processes that created a spectacle of unprecedented capitalist economic growth during the Great Boom of the 1920s; then fascism became an ominous political force during the crisis years of the Great Depression.¹⁴ As Marxists, they surely knew that the “entire mechanism of repression” created by Big Business and the Republican Party had been necessary for the further accumulation of capital and profits. Given the main tasks at hand, however, Magil and Stevens went no further in examining the relationship between capitalism and fascism. Yet their seminal contribution to our understanding of the origins of American fascism remains vital.

Given our greater knowledge in the present, we can move beyond their historical and theoretical position in 1938. Fascist processes in the United States inhered in the drive for capitalist accumulation during the 1920s, a moment of unprecedented economic growth anywhere in the world-capitalist system. The inherent tendency in capitalist accumulation to create greater wealth fueled the simultaneous advance in the centralization of capital and capitalist ownership while displacing working people from the processes of production through technological innovation, thereby fueling a reserve army of labor of the unemployed and underemployed and a general population that became increasingly superfluous to existing methods of production, and thus to the needs of the capitalists. The germ of fascism inheres in the division of labor in the epoch of monopoly-finance capitalism and imperialism. In the end, this is what makes fascism the dictatorial rule of capital over American society.

To grasp how this occurred in the 1920s requires a brief look at one of the most important discoveries of Karl Marx, in Capital, his masterwork published in 1867.

MARX ON CAPITALIST ACCUMULATION: THE INHERENT SUBJUGATION OF LABOR TO CAPITAL

Geographer David Harvey, who has spent many years teaching and writing about capitalism, says that “Marx’s aim in Capital is to understand how capitalism works by way of a critique of political economy.”¹⁵ In the course of examining the anatomy of capitalist production, Marx demonstrates how the system it creates is contradictory to the core. In its constant and necessary drive to accumulate more capital, its movement increasingly subjects society to its imperatives. Owners and workers alike are bound to processes that give rise to a unique feature of the capitalist mode of production, the paradox of growing poverty in an ever-rising sea of plenty.

As Harvey says, Marx makes his case in Capital on the basis of concepts that appear to be a priori, or even arbitrary, but are in fact historical. This is because his “method of inquiry starts with everything that exists—with reality as it’s experienced, as well as with all available descriptions of that experience by political economists, philosophers, novelists and the like.” Marx then subjects this material to “rigorous criticism” from which he forms “simple but powerful concepts that illuminate the way reality works.” This method, which became central to Marx’s work in the mid-1840s when he began his studies in political economy, involved two main steps: conceptualizing empirical evidence and then using those concepts as the basis for discovering the myriad deceptions that abound in the capitalist world. In the first volume of Capital, Marx began with the concepts, especially those he believed made sense of capitalist realities and the historical forces that created them.¹⁶ Marx’s conceptual arguments about production were derived from his knowledge of Great Britain in the 1850s and 1860s, then the most advanced capitalist nation, as well as in other parts of Europe and North America where similar conditions existed but were not as highly developed.¹⁷

Marx’s masterwork is a detailed and complex treatise that reveals how capital as accumulated wealth in many forms—most importantly as money—must always expand, thereby enlarging the mode of production, which raises the magnitude of the total product. This is how growth and prosperity are sustained across the capitalist system, and it must occur to offset what Marx viewed as a tendency toward stagnation and an eventual crisis. This would become a general condition of capitalism with the further development of technology operating on the basis of monopoly and finance capital. Marx had expounded this tendency in Capital. What concerns us here, however, is how he explains that sustained growth depends on the ability of capitalists to produce and sell commodities as efficiently as possible in order to maximize profits—and to do this exponentially. This is their sole purpose as capitalists. Their success always comes at the expense of the workers, whose laborpower is the one thing workers own and, therefore, must sell to the capitalists to survive. For Marx, this contradiction between capital and labor, between the capitalist and the worker, was evident in certain laws of motion peculiar to industrial capitalist production, revealing why economic growth created wealth and poverty together, and how the capitalist assumed even greater control and domination over the worker.

CAPITALIST ACCUMULATION AND THE PERMANENT DIVIDE OF CAPITAL AND LABOR

One of Marx’s most important laws of motion, “The General Law of Capitalist Accumulation,” is the title of a chapter in Capital. Here Marx explicates why the sole purpose of accumulation is forever to raise the value of capital. This involves the drive to increase productivity—the rate of output per hour—by replacing human labor with machines, making production more efficient and thereby sustaining the rate of profit required for further capital investment. The consequence of this is not only the growth of output but the chaining of the vast majority of society, the working class, to the systemic imperatives and dictatorial powers of capital. As capital expands, so does the power of those who own and control it. Two major contradictions occur. Accumulation, which generates fierce competition between capitalist enterprises, drives the less efficient and profitable out of the market, resulting in the greater concentration of capital. This then widens and deepens the gap between fewer and wealthier capitalists and a growing mass of impoverished workers. The laborpower that the capitalist buys from the worker at the lowest price, the so-called minimum or subsistence wage, is the ultimate source of the capitalist’s wealth. Marx shows that each step in the process of creating more wealth among fewer and fewer capitalists is accompanied by the increasing diminution of workers and their disposability in capitalist production. Simply put, the march of capital tramples those who initially create it, the working class.

Marx begins the chapter by recognizing how the growth of capital impacts the working class as the result of processes that govern capitalist accumulation and determine the composition of capital, which is always determined by the ratio between constant capital—buildings, machinery, land, raw materials, etc.—and variable capital, human labor-power. Once capitalism enters its industrial stage, the drive for greater efficiency in production always causes constant capital to grow—with greater reliance on technological innovation—relative to variable capital. Marx posits the relation between these two variants as the organic composition of capital. Simply put, as greater wealth is produced on the basis of more machines employed throughout production, an increase in constant capital, the more that living labor, or variable capital, is diminished in production. Every technological advance aimed at greater efficiency in production to maximize profits also disposes more workers who thereby become impoverished.¹⁸

At the risk of reducing complex formulations to simplest terms, we can say that Marx aims at a scientifically based argument that demonstrates how the value of capital at any moment is based on the amount of labor-power extracted from workers by capitalists in the course of expanding production. It can be extracted because the capitalists own what the workers must have access to, the nonhuman means of production. This fundamental inequality is what allows employers to take from workers more than what they are paid in wages. Put simply, workers produce all of the output but, in effect, get only part of it back, just enough to sustain their lives. For the capitalist, the appropriation of labor-power from the worker translates into surplus-value, or unpaid labor, which is the basis of capitalist profit. Human labor, therefore, is the dynamic force in production that creates more capital through its appropriation by those who already own it. As the political economist Harry Braverman wrote, “The working class is the animate part of capital, the part which will set in motion the process that yields to the total capital its increment of surplus-value.”¹⁹

Marx argues that all growth in capital is based on the productiveness of labor, specifically, the necessary levels of productivity supplied by the labor-power of workers. For capital to accumulate within the framework and mechanisms of industrial production requires that part of the surplus-value generated by it must be “re-transformed” into additional labor-power.²⁰ When this occurs, capitalists must employ more workers to accumulate more capital. On the surface, this seems like a good thing for workers since their numbers rise. Given the degree to which the requirements of accumulation may exceed the supply of labor, wages might even rise. But the “favourable circumstances in which the wage-working class supports and multiplies itself, in no way alter the fundamental character of capitalist production.”²¹

Why is this so?

As stated above, Marx explains that the enlarged scale of production requires capitalists to employ more workers. Yet the increase of employed workers must always benefit the owners of capital since their sole aim is to raise productivity by whatever means and methods necessary to maximize profits. Marx emphasizes that the bottom line for every capitalist is the “augmentation” of his capital. This means ensuring that the production of a commodity contains more labor-power than is paid to the worker in wages. For the capitalist, this is the source of surplus-value; in other words, the amount of unpaid labor-power that is realized as profit when the commodity is sold. On this basis, Marx concludes that the “production of surplus-value is the absolute law” of the capitalist mode of production.²²

At any given moment, the capitalist must acquire as much surplus-value as necessary to offset the wage he pays the worker. This will vary depending on specific conditions and circumstances in production and exchange. For example, a burst of accumulation and growth dictates a corresponding need for additional labor. Capitalists suddenly need more workers to boost production. It could even lead to higher wages, so long as the cost does not impede the rate of surplus-value required to sustain accumulation and more profits. This is beneficial to workers but only in the short term. As Marx says, an immediate reaction sets in as soon as the amount of paid labor impedes the production of surplus-value. This means there is less profit that can be invested in furthering the means of production. The bottom line is that any rise in wages diminishes surplus-value and impedes accumulation, which is why capitalists must check rising wages at some point.

This is why Marx says that “the rise of wages therefore is confined within limits that not only leave intact the foundations of the capitalistic system, but also secure its reproduction on a progressive scale.” Wages can never rise beyond the limits required for the progressive reproduction of capital. Put another way, capitalists can never allow wages to undercut the rate of surplus-value, to the extent that it impedes or halts the reproduction of capital needed at any moment. Conversely, Marx says, this is why labor becomes increasingly subject to capital. In the period of early industrial capitalism, the requirements for accumulation often took the form of lengthening the working day without increasing wages, thereby extracting an even greater amount of surplus-value from the worker in absolute human terms. This is why trade unionism in the second half of the nineteenth century in England fought for and succeeded in reducing the legal limit of the working day from twelve to ten hours. Despite these victories, however, there were limits to what labor could achieve. For Marx, the great and unique irony about the capitalist mode of production was “man … governed by the products of his own hand.”²³ What does this mean? Simply this: workers set in motion the greater reliance on the machinery they themselves produce, which ultimately removes them from the processes of production.

These processes became more intense as a result of competition between capitalists. Winners succeed in great part because the surplus-value they appropriate from their workers enables them to sell their commodities at the cheapest price. As winners, they vanquish small businesses and larger competitors as well, either drawing in the capital of those they have overcome, or destroying it completely. Either way, the result is a greater centralization of capital, which pulls together scattered sources of money across the marketplace, helping to fund a credit system that facilitates the further expansion of capital. Marx says that centralization and credit become the “two most powerful levers” in the further development of capitalist production and accumulation.²⁴

On this basis, the joint-stock company, forerunner of the modern corporation, accelerates accumulation “in the twinkling of an eye.”²⁵ Empowered by credit, revolutionary advances in the technical composition of capital—in a word, machinery—continue to raise the proportion of constant capital in relation to variable capital. This is how the value of capital increases. Existing production must always be re-transformed to a higher degree of technical perfection, requiring a smaller quantity of labor to set in motion a larger quantity of machinery and raw materials.

Marx proceeds to argue how capitalist accumulation creates a “disposable industrial reserve army” of labor that exists solely for the benefit of the capitalists. With the advance of technological innovation, workers are set free into a growing population of the unemployed. Some do find work in other capitalist enterprises, usually older companies that lag behind in new machinery and pay lower wages. Accumulation determines at any given time those employed at various wage levels as well as the unemployed, all who make up what Marx calls “the social capital in its totality.” But this totality is always rocked by fluctuations caused by the changing composition of constant and variable capital, that is, more machines, less human labor. Sometimes these fluctuations are what Marx calls “violent.” When production expands, so does the need for variable capital, though this is temporary. Because growth is based on constant technological innovation in the most advanced industries, fewer workers are required for production over the long haul. This results in the striking and outright loss of jobs in those industries and makes the absorption of labor in the older capitalist enterprises more difficult. The very expansion of production and all that it unleashes is set in motion by a mass of workers whose own productiveness leads to their removal from it. What the laboring population produces on top of accumulated capital is the means by which it itself is made relatively superfluous, is turned into a relative surplus-population; and it does this to an always increasing extent.²⁶

For Marx, a surplus laboring population is a necessary product of accumulation and the development of wealth on a capitalist basis. Regardless of its varying rate at any time in the various phases of production, the outcome is always the same. The rise in constant capital and the diminution of variable capital mean that “with the greater breadth and fullness of all sources of wealth, there is also an extension of the scale on which greater attraction of labourers by capital is accompanied by their greater repulsion.” As Marx concludes, “This is a law of population peculiar to the capitalist mode of production.”²⁷ It also is the cause of a disposable industrial reserve army, which is always available to be exploited by capital. Labor ultimately loses out as some workers wind up in lower-paying jobs in lesser industries while others are entirely thrown out of employment. But the one continuous factor is the growth of the reserve army of labor. As Marx says, “The course characteristic of modern industry … depends on the constant formation, the greater or lesser absorption, and the re-formation of the industrial reserve army or surplus-population. In their turn, the varying phases of the industrial cycle recruit the surplus-population, and become one of the most energetic agents of its reproduction.”²⁸

Marx goes to great lengths to explain how work performed by an increasing reserve army of labor takes various forms. At each stage in accumulation, the capitalist can utilize whatever labor he employs to set into motion more production by increased use of machinery, which then allows him to replace skilled laborers with the less skilled, male with female, and adults with children. Nevertheless, the supply of available labor is always greater than the demand for it. Moreover, those who are employed are often forced “to submit to over-work and to subjugation under the dictates of capital.”²⁹

Marx identifies various forms of superfluous labor subject to the worst of conditions. An example of what he calls “floating” employment are young boys—he likely had in mind the doffers who crawled into industrial machinery to clean it, then perhaps mangled or killed because they could not finish before the bell rang to restart the machine—and who became unemployed if they reached manhood. For Marx, this was a glaring contradiction of the needs of accumulation and its impact on labor, particularly when capitalists complained that they needed more of these young hands while many thousands of men were out of work. Another example was in agriculture, where capitalist innovation caused demand for agricultural labor to fall. Here the contradiction was more extreme compared with industry, where the advance of one phase of production might call for additional labor from an existing surplus pool that could be channeled into secondary capitalist enterprises. This was not the case in agriculture, where machines did away entirely with the need for agricultural labor. The workers might find their way to the city, but they would only augment the industrial reserve army there. For Marx, those left behind in the countryside made up a “latent” surplus population that only grew larger. “The agricultural labourer is therefore reduced to the minimum of wages, and always stands with one foot already in the swamp of pauperism.”³⁰

The third example, which made up “the broad basis of special branches of capitalist exploitation,” was that part of the active labor army that faced extremely irregular employment. “Hence,” Marx said, “it furnishes to capital an inexhaustible reservoir of disposable labour-power” whose “conditions of life sink below the average normal level of the working class.” Apart from the “dangerous classes” that consist of criminals, prostitutes, etc., paupers fall into three categories: those able to work, orphans and pauper children, and the demoralized and ragged. As Marx writes, “pauperism is the hospital of the active labour army and the dead weight of the industrial reserve army.”³¹

From this he concludes:

The greater the social wealth, the functioning capital, the extent and energy of its growth, and, therefore, also the absolute mass of the proletariat and the productiveness of its labour, the greater is the industrial reserve army. The same causes which develop the expansive power of capital, develop also the labour-power at its disposal. The relative mass of the industrial reserve army increases therefore with the potential energy of wealth. But the greater this reserve army in proportion to the active labour-army, the greater is the mass of a consolidated surplus-population, whose misery is in inverse ratio to its torment of labour. The more extensive, finally, the lazarus-layers of the working class, and the industrial reserve army, the greater is official pauperism. This is the absolute general law of capitalist accumulation.³²

For Marx, the increasing subjugation of labor by capital is characterized by the growth of a relative surplus population and a reserve army of labor always at the ready to be exploited by capitalists. This is the most important dynamic in capitalist accumulation. At the same time, the growth of a reserve army of labor establishes the basis of a coming crisis of the entire system.

CAPITALIST ACCUMULATION AND ITS CONTRADICTIONS IN THE GREAT BOOM

Marx discovered the general law of capitalist accumulation in the actual conditions of modern production in England in the 1860s, then the center of capitalist industry in the world economy. The sudden emergence of the United States as the new industrial leader in the 1920s created conditions and processes that developed on much greater levels and degrees of complexity. But the result was still the same. In a rising sea of plenty, more and more working Americans found themselves unemployed or displaced in ways that consigned them to poverty and pauperism. Meanwhile, the rich got richer until their speculative excesses created the bust.

In 1934, Lewis Corey applied Marx’s law of capitalist accumulation to explain the root causes of the Great Depression. With a thorough analysis of statistical evidence in The Decline of American Capitalism, Corey explained why the unprecedented buildup of the means of production raised the profits for capitalists to new heights but at the expense of workers who were increasingly displaced from production. “Precisely because it is the most highly developed,” Corey wrote, “American industry offers the fullest confirmation of the analysis Karl Marx made of the laws of capitalist production.”³³

Corey revealed that the value of constant capital rose more than wages and the output of manufactured goods during the 1920s. Between 1923 and 1929, constant capital in goods had increased by more than four times that of variable capital. Affirming one of Marx’s principal arguments about capitalist accumulation, Corey showed that the average American worker in 1929, the year of the Wall Street crash, was earning about the same in wages as in 1923. But during that same period, workers set in motion nearly one-third more constant capital, one-sixth more materials, and one-fifth more output. As the capitalist mode of production expanded to new heights, profits rose and wages fell. “As wages are the price of labor-power, of the worker’s skill and muscle and nerves,” Corey wrote, “the fall in wages involves displacement of labor and unemployment.”³⁴

Corey also showed that a qualitative advance in the numbers of displaced workers had occurred between 1923 and 1929, the most prosperous years of the Great Boom. Relative displacement—the number of workers set free from the most mechanized areas of production who found work in less-developed industries or in other areas of the economy—had become a trend. In every year of the period, the number of workers in manufactures was lower than it was in 1919. As capital investment rose 19.1 percent, the absolute displacement of a little more than a million workers contributed to the number of about two million unemployed workers annually in that six-year period.

These major developments defined the U.S. economy during the prosperous 1920s. Productivity rose dramatically because of a massive transformation in constant capital resulting from mechanization. Although this presented the potential of plenty for workers—and was trumpeted by capitalist apologists as the key to universal prosperity—it had the opposite effect. As Corey observed, rising constant capital intensity was an “expression of economic progress” that concealed the contradiction of rising displacement and impoverishment for the majority of the U.S. population. As Corey argued, the growth in capitalist production based on greater use of machines, “simultaneously and antagonistically,” had an adverse effect on employment, thus driving down the purchasing power of the workers. As wages fell relative to output, the growing disproportions between wages and profits set “in motion the forces of cyclical crisis and breakdown.”³⁵ As Corey explained:

The decrease of variable capital (wages) in favor of constant capital (equipment and materials) limits the production of surplus value in proportion to the total invested capital; while the increase in the output of goods and the restriction of mass purchasing power and consumption saturate markets and lower prices to unprofitable levels, thereby limiting the realization of surplus value in the form of profits. The mass of profits rises, but the rate of profit on the total invested capital tends to fall.

Thus the higher composition of capital [the growth of constant capital and diminution of its variable counterpart] is the basic objective factor in the contradictions of accumulation and of capitalist production and prosperity.³⁶

This contradiction is crucial to Corey’s argument about the rising displacement of labor during the Great Boom of the 1920s. Corey used statistical evidence from several sources to argue why the Depression emerged in the midst of “flourishing prosperity” between 1923 and 1929. The main reason was due to the “violent expansion” of production based on higher productivity that compelled even higher rates of efficiency. This created a downward push on what was then the level of “normal unemployment,” which he defined as the way “capitalist industry is so organized and managed that there must always be a reserve of unemployed workers, even in the most prosperous times, to provide labor for new enterprises and as a means of forcing down wages.” Given the “greater and more violent expansion” of American capitalism historically and relative to all other countries, unemployment in the United States always exceeded that in other countries. This was clear during the previous boom of 1900–1913 (excluding the Depression years 1907–1909) when unemployment averaged 7.8 percent of available workers, but it was far worse between 1923 and 1929 given the even greater and “unusual prosperity” generated.³⁷

Carefully following Marx, Corey explained how unprecedented capitalist prosperity during those years generated a corresponding higher rate of unemployment than what was normal.

Unemployment is essentially an aspect of the higher productivity of labor under the social relations of capitalist production. Normal unemployment grows when the productivity of labor rises disproportionately to output. Cyclical unemployment prevails in depressions, brought about primarily by forces identified with the higher productivity of labor (which is not matched by higher employment and wages). And the increasingly greater unemployment of capitalist decline is a result of industry having become so highly productive that it is unprofitable to use all its capacity: hence millions of workers are thrown out of work. The increasing efficiency of American industry in 1920–29 considerably raised the total of “normally” unemployed workers. For while the higher productivity of labor may mean higher wages, it always means a displacement of labor because fewer workers are required to produce a larger output. Thus labor is penalized by its own efficiency.³⁸

The basis for the rise in the productivity of labor, in output per worker, was set in motion at the beginning of the decade. Corey uses examples to make his case. Of thirty-five plants surveyed in 1927, output per worker was 75 percent higher than in 1919 and 39 percent higher than in 1924. Labor productivity in automobile production rose 98 percent between 1919 and 1927; it was even higher, 198 percent, for rubber tires. After temporarily shutting down in 1922 to improve machinery, Ford Motor Company resumed production on a new level of productive capacity that reduced the workforce from 57,000 to 40,000. The operation of blast furnaces had become almost completely automated by 1929, raising productivity 135 percent higher than in 1919. Productivity in steel mills and rolling mills rose 43 percent, and there was an increase of 44 percent in petroleum refining. In 1925, something as simple as the adoption of the Owens automatic bottle machine drove man-hour productivity to rise 4,100 times. The invention of the dial telephone displaced more than half the number of operators. Generally, productivity of labor occurred unevenly across U.S. industries, though it rose substantially in all.³⁹

Significantly, rising productivity between 1919 and 1929 caused an absolute, or permanent, displacement of labor for the first time in U.S. history. Large numbers of workers were displaced between 1919 and 1927, in manufactures, where productivity rose 42.5 percent, 40.5 percent in mining, 12.5 percent in railroads, and 29.5 percent in agriculture. By 1929, it had displaced 2,832,000 workers, of whom 2,416,000 found employment elsewhere; thus 416,000 workers were permanently displaced. In both mining and railroads, lower output due to technological innovations increased the rate of displacement to 171,000 and 345,000 workers respectively. The improvements in trucking “competed more effectively” with railroad transport, while “electricity increasingly cut into the demand for coal.” Steam power plants used less coal by turning to more efficient energy sources, such as hydroelectric plants. But nowhere else in the U.S. economy was there greater permanent displacement than in agriculture. It was the first time this had occurred in U.S. history, a historic development given that so much economic growth throughout the nineteenth century was based on the claiming of the frontier, opening new and massive agricultural production. Between 1919 and 1929, farms gave work to 540,000 fewer persons, as the number of farms fell over the same period. But the actual displacement was much greater, since the overall farm population dropped by about a million, of which many had to find employment elsewhere.⁴⁰

For Corey, the total or “absolute displacement of directly productive workers,” during the greatest period of capitalist prosperity in the contemporary epoch was an indication of something more general about monopoly capitalism. Compared with earlier economic growth and its adverse impact on labor between 1889 and 1919, the level of labor displacement between 1919 and 1929 was even greater, which, for Corey, marked an “unprecedented development, of profound significance.” Considering the increase of 7,180,000 persons to the workforce, plus the 1,155,000 workers who were displaced in manufactures, mining, railroads, and agriculture, Corey reasoned that 8,335,000 workers had to find employment in occupations other than where the displacements had occurred. This would have required these other occupations to be more than three times the size they had been in the earlier twenty-year period. While some ground was gained in distribution services, motor transport, and other areas of trade, absorption in strictly productive enterprises such as construction was limited. As a result, displacement and the absorption rate over the decade of the 1920s revealed that “normal unemployment” increased at least as much as a million, resulting in about 2.5 million unemployed in the year of the crash. As Corey wrote, “This great increase in the reserve army of the unemployed took place in the midst of the most flourishing prosperity.”⁴¹

Indeed, the economy did function on this basis, but only for a short time before it became necessary to divert profits from further investment in actual production to non-productive sectors. These investments were essentially speculative. In this Corey saw a fundamental contradiction in U.S. monopoly capitalism that ushered in its decline. Although the economy seemingly performed spectacularly until the 1929 crash, enabling newly elected President Herbert Hoover to declare that American prosperity would continue indefinitely, nothing could be further from the truth. The seeds of the 1929 bust were already evident only a short time after the Great Boom had begun. Though it is generally agreed that the great upswing in the economy had occurred by 1922, the rate of profit in the productive sectors of the economy began to fall two years later and continued to do so until the stock market collapsed five years later. As the rate of profit declined in productive sectors, capitalists diverted their investments to non-productive areas, primarily in finance. Thus profits in the financial sector increased 177 percent between 1923 and 1929. While investments in new facilities and machinery remained constant during that period, new shares and bonds issued for speculative investments tripled.⁴²

But the move toward speculation was itself the product of the higher productivity of labor. Saturated markets for consumer goods meant less investment in capital goods—goods that are produced to make other goods, such as machines used in the production of automobiles—which affected the production of consumer goods and ultimately fueled the displacement of labor. This naturally affected consumption. As American workers who could get credit went into debt, capitalists diverted profits toward more speculative enterprises to make up for the declining rate of profit in productive enterprises. Prosperity became increasingly based on greater speculation until the Great Boom turned into its opposite, the Great Depression. Nevertheless, the underlying cause for this later development inhered in the fundamental divide between capital and labor created by capitalist accumulation. The law that Marx discovered in 1867 to explain how modern industrial growth in England created greater poverty in an ever-rising sea of plenty, was applied by Corey in 1934 to explain how the prosperity of the 1920s caused the greatest economic crisis in contemporary world history.

IN 1938, MAGIL AND STEVENS argued that the germ of American fascism was present in monopoly capitalism in the 1920s when Big Business and the Republican Party created an “entire mechanism of repression” to subject the working and middle classes to its control and domination. For much of the Depression decade that followed, the U.S. ruling class was split on how to end the economic crisis. This was abundantly clear in the battles between Roosevelt and his New Dealers who sought to save capitalism through direct government intervention, and those who remained wedded to the laissez-faire doctrine and ruling-class politics of Roosevelt’s three Republican predecessors. Through it all, however, the power of monopoly-finance capital remained superior despite the labor insurgency of 1934 that required the reformist Roosevelt and his administration to usher in Social Security, the National Labor Relations Board, and other components of what we know as the welfare state.

Nevertheless, the power of capital over American society continued to grow throughout the New Deal as the final phase in the transition to state monopoly capitalism. As the epicenter of the world capitalist system—Pax Americana in the making—the United States was the one advanced capitalist nation that could save its own version of liberal capitalist democracy from collapse. As the world’s banker and leading creditor to other nations, it prevailed through boom and bust, prosperity and depression, while the myriad and pervasive powers of capital became ever more totalizing at home and abroad. From a Marxist standpoint, it was a course irreversibly determined by the imperatives of monopoly and finance capital—the laws of motion governing its movement and social character—to accumulate exponentially in order to sustain profitability at the highest levels throughout the system. Those who profited most by it then forged new policies aimed at enhancing the executive power of government over the legislative branches and the judiciary, all aimed at preventing a revolutionary socialist alternative, real or perceived, to rise up against it. Simply put, capitalist progress meant the increasing subjugation of labor. Here was the root of the violence, deception, and manipulation that Magil and Stevens recognized as “the entire mechanism of repression.” The advance of such power to create and destroy at ever higher levels was a sure indicator of fascism as a result of the decline and decay of American capitalism. The centralization of wealth and power, monopoly, had mandated the increasing antidemocratic politics of the ruling class.

Lewis Corey explained this in 1934 in The Decline of American Capitalism by demonstrating how capitalist accumulation and economic growth exacerbated fundamental and irreconcilable contradictions between capital and labor, now at a much higher stage of capitalist development than those Marx observed in nineteenth-century England. Still, Corey affirmed what Marx had discovered as one of many laws governing the motion of capital. The constant and necessary drive for capitalist accumulation during the booming 1920s had subjected American labor to even greater control by capitalists. Just as the seeds of the bust were evident in the boom, so were fascist processes aimed at the domination of capital over society. In the epicenter of world capitalism, fascism neither required an economic collapse, a strong working-class challenge to capitalist rule, nor the fiery rise of its most immediate antagonist, middle-class reaction.

American fascism came to life in the midst of prosperity as a property of capital, specifically in its constant quest to reproduce itself. This was what Magil and Stevens implied by terming Big Business and Wall Street as the “fountainhead” of American fascism and what they surely meant when they defined it as “the rule by finance capital.” As Corey noted, modern capitalism was in transition from its industrial stage to a higher form, monopoly-finance capital and imperialism, when Marx’s Capital was published in 1867. But nothing in this movement to a higher stage of development had fundamentally altered the general law of capitalist accumulation. Corey ably demonstrated that American capitalists were driven to do what Marx saw in their English predecessors: “To accumulate, is to conquer the world of social wealth, to increase the mass of human beings exploited by him, and thus to extend both the direct and the indirect sway of the capitalist.”⁴³

In the decline and decay of monopoly-finance capitalism and imperialism, the highest and final stage of capitalism, as Lenin had argued, is where we find the germ of fascism in American capitalism during the period between the two world wars. From the standpoint of the present crisis of American and world capitalism, it is now evident that fascist processes aimed at the domination of capital over labor were embedded in capitalist production, in what Corey observed as “the perpetual struggle between the forces of expansion and decline.” As Corey says, “Accumulation tends to outstrip itself and limit the means of profitably investing capital, which results in a periodical overproduction of capital goods.”⁴⁴ Since profits depend on the ability of capitalists to enlarge their markets to absorb the rising output of consumption goods, the failure to sustain this movement eventually compels capitalists to cut back on the production of capital goods.

Overproduction of capital goods reveals why capitalism is utterly contradictory at its core and inherently prone to crisis. This, Corey states, is “the real element” of capitalist decline:

Capitalist production tends to exhaust the long-time factors of expansion and to limit, at first relatively, then absolutely, the possibilities of economic advance. Capitalist production must yield profits and these profits must be converted into capital by means of an increasing output and absorption of capital goods. This is the accumulation of capital.⁴⁵

The contradiction of supply outstripping demand is only made greater with economic growth and the concomitant advance of concentrated wealth and power—monopoly—which ultimately gives way to breakdown, crisis, and the threat of declining profits. “Monopoly answers the threat with control of markets, higher prices, limitation of output, and relative or absolute restriction of progress in technological efficiency.” For Corey, “this is an element of decline, as it emphasizes the incapacity to develop fully all the forces of production and consumption.” Instead of fluidity in the movement of capital required for further accumulation, monopoly instead becomes more rigid in the face of mounting contradictions in production and exchange, imposing greater controls over the domestic economy while seeking to counter the forces of decline with the export of capital abroad—in a word, imperialism.⁴⁶ Throughout, capital strives to exercise greater control over all aspects of social and political life. These efforts, which are ultimately grounded in the fundamental contradiction between capital and labor, generate fascist processes aimed at the domination of the former over the latter.

From its very beginning, American fascism reveals in embryo the basic contradiction between capital and labor in the context of an unprecedented empire that defined the epoch of monopoly-finance capitalism and the contemporary world experience. In the U.S. epicenter during the 1920s, fascist processes inhered in the expansion and complexities of production and exchange, creating greater wealth and poverty at once and thus at every turn requiring mechanisms of repression at home and the ability to deliver militaristic clout whenever necessary in its imperial designs. To that end, the expansion of the means of production in the domestic economy also brought growing displacement of labor. This required capitalists to rely on the powers of government to defend their interests by disciplining and punishing the political forces of labor by whatever means necessary, while pioneering ways to persuade and manipulate mass consciousness through advertising, public relations, and propaganda.

Indeed, the global crisis of the 1930s brought fascism to power in its most brutal form in Germany. But political economy reveals fascist processes deep in U.S. capitalism a decade before Hitler’s rise, in the intensification of irreconcilable contradictions between capital and labor that also signaled the coming of the American Behemoth now fully upon us today. Fascism inheres in the processes of monopoly-finance capitalism that inevitably create a general crisis of the system, and from it the plausibility for a crisis of class rule that ends in a revolutionary reconstitution of society, socialism, or the savagery that is fascism, which leads to the common ruin of the whole society. This is a tragic hallmark of capitalism in the contemporary world.