The Decline of American Capitalism (1934)

7/24/2019 The Decline of American Capitalism (1934)

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Lewis Corey

The Decline of American Capitalism (1934)

Lewis Corey, The Decline of American Capitalism, New York 1934.First published by Covici Friede Publishers, New York in 1934.r!nscribed by "inde #$C!ll!%h!n&or the Marxists nternet Archi!e.'s &!r !s we c!n !scert!in this book is &ree o& copyri%ht.Copyleft" Lewis Corey(Louis Fr!in! )nternet 'rchive *+!rists.or%-, epte+ber /00.Per+ission is %r!nted to copy !nd(or distribute this docu+ent under the ter+s o&the Cre!tive Co++ons License.

Proo&re!d by Chris Cl!yton in epte+ber /00.

T#$sther

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ntro./ctory

0 +allyhoo" The -ew Capitalism

0 The Meanin of rosperity

0 The Decline of Capitalism" 2eneral '/r!ey

'/mmary

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ntro./ctory

50 rofits an. rosperity

50 The olicy of &ih %aes
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50 rofits an. %aes" 'tate Capitalism

'/mmary

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ntro./ctory

50 Acc/m/lation an. the Composition of Capital

50 The all in the *ate of rofit

70 M/ltiplyin Contra.ictions an. Capitalist Decline

'/mmary

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ntro./ctory

70 $conomic an. Class Contra.ictions

70 $xcess Capacity Competition an. 'pec/lation

70 The #nset of Crisis an. Depression

70 ro./ction an. Cons/mption" Capitalist Decline

'/mmary

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ntro./ctory

750 rosperity an. 6nemployment

750 Disemployment an. '/rpl/s op/lation

750 The $conomics of Technoloy

'/mmary

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ntro./ctory

750 Class Distri8/tion of ncome

750 The M/ltiplication of 'tochol.ers

770 Class Distri8/tion of %ealth

'/mmary

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ntro./ctory

770 Tr/sts" Concentration an. Com8ination

770 Monopoly an. inance Capital

770 The Dynamics of mperialism

'/mmary

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ntro./ctory

770 rosperity an. Capitalist Decline

7750 'tate Capitalism lannin an. ascism

7750 The Crisis of the American Dream

7750 The American *e!ol/tion

'o/rces Cite.

2raphs"

0 Ma:or $conomic Tren.s 1;93=>9
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0The 'hare of La8or in rosperity 1919=>9

50Capital an. La8or in Depression

50 Chanes in the Composition of Capital

50 The all in the *ate of rofit

50 Contra.ictions in ro./ction an. Cons/mption

50 The 'taes of 'pec/lation 19>3=>9

70The +asic actors in Capitalist ro./ction

70 The Creation of Disemployment

70The 6pwar. Tren. of 6nemployment 19??=33

70ro./ction %aes an. Capital Claims

70 Class Distri8/tion of ncome 19>?=>9

750 Class Distri8/tion of 'toc #wnership 19>;

750 Class Distri8/tion of %ealth 19>;

750 Concentration an. Centrali@ation 19>3=>9

750 The Dynamics of inance Capital

750 American mperialism in Action

770 American Class Di!isions 1;?=19>9

P'2 #N"

he '+eric!n Crisis

ntro./ctory
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'"2)C'N li&e +oves !nd ch!n%es swi&tly. overn+ent !nd industry resort to new !nddesper!te +e!sures. r!ditions bre!k down. 'ccepted truths !re ch!llen%ed orrepudi!ted. he present is d!rk, the &uture uncert!in !nd thre!tenin%. here is !n!ccu+ul!tin% pressure o& underlyin% &er+ents !nd &orces which cre!te soci!l eplosions.Cl!sses +obili5e6 ide!s cl!sh. hese !re !ll indic!tions o& ! crisis.

#ne !spect o& the '+eric!n crisis !rose out o& the depression !nd the e&&orts tooverco+e it. 7hile b!llyhoo pro+ises ! new !nd everl!stin% prosperity, ! new world,+illions hope +erely &or ! 8ob, !ny sort o& 8ob &or !n inco+e, !ny sort o& inco+e to w!rdo&& ch!rity. illions +ust !ccept ch!rity, whether direct or in the &or+ o& :relie& work.; he+obili5!tion o& %overn+ent to :w!r upon depression; !roused hopes which were +e!%relyre!li5ed.

'nother !nd +ore &und!+ent!l !spect o& the crisis involves the decline o& '+eric!nc!pit!lis+. )t is ! crisis o& the econo+ic order itsel&. his is evident in the in!bility to

restore prosperity on !ny subst!nti!l sc!le. he &uture is one o& inco+plete recovery6 o&econo+ic decline, +!ss dise+ploy+ent *includin% +illions in cleric!l !nd pro&ession!loccup!tions-, lower st!nd!rds o& livin%, !nd w!r. "very depression is in ! sense ! crisis o&c!pit!lis+.


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recovery. here w!s the o+inous spect!cle o& ! +inor but co+plete cycle within ! &ew+onths6 reviv!l in 'pril, recovery in !y, !nd :boo+; prosperity in >une !s production!nd pro&its outstripped w!%es !nd consu+ption, :prosperity; broke down in >uly,!cco+p!nied by ! cr!sh in the stock +!rket recession !nd depression !%!in, !nd !nintensi&ic!tion o& the crisis.

hese recurrent bre!kdowns o& prosperity !re ! typic!l, d!+n!ble spect!cle o&c!pit!list civili5!tion. en, wo+en, !nd children st!rve or !%oni5in%ly !ppro!ch st!rv!tion

while whe!t !nd corn rot, ve%et!bles perish, +ilk !nd co&&ee !re destroyed. he wheels o&industry slow down while +illions o& workers e!%er to work !re conde+ned toune+ploy+ent. 7!nts %o uns!tis&ied on !n enor+ous !nd oppressive sc!le, !lthou%h !llthe +e!ns eist to s!tis&y the w!nts. *Depression +!%ni&ies the condition prev!ilin% evenin periods o& the +ost &lourishin% prosperity, when there !re !lso +illions une+ployedtheir w!nts !nd +!ny w!nts even o& e+ployed workers !re uns!tis&ied.- his +onstrousst!te o& !&&!irs w!s unknown to the people o& prec!pit!list civili5!tions6 they knew w!nt !sthe result o& sc!rcity, n!tur!l c!l!+ity, or w!r, !nd the tor+ent o& l!bor l!y in its severity.C!pit!list civili5!tion introduced ! new &or+ o& w!nt, w!nt in the +idst o& !bund!nce !new tor+ent o& l!bor, the tor+ent o& workers deprived o& work while there is !n!bund!nce o& the +e!ns !nd ob8ectives o& workin%. #ur !ncestors would h!ve consideredthe situ!tion idiotic it is considered idiotic to=d!y by the non=c!pit!list, developin% soci!listcivili5!tion o& the oviet Anion.

'&ter every depression the cry h!s %one up, :)t c!n never h!ppen !%!inE;


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N!tion!l )ndustri!l 2ecovery 'ct, o& st!te c!pit!lis+. he c!pt!ins o& industry !nd &in!nce,so+e s!y, h!ve proven their inc!p!city6 let the %overn+ent !ctE


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en!tor C!pper6 :he ch!n%es !re revolution!ry.; ... J.). J!rri+!n, president, Ch!+ber o&Co++erce o& the Anited t!tes6 :' new business dispens!tion holds out the pro+ise o& !better d!y.; ... ' spe!ker !t ! convention o& the 'dvertisin% Feder!tion o& '+eric!6 :!rksthe threshold o& ! new er!.; ... Nelson


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he pre=19/9 b!llyhoo o& prosperity, which epressed the :olden '%e; o& '+eric!nc!pit!lis+, h!d !s its b!sic cl!i+ the old concept o& :! new re%i+e o& production !ndconsu+ption,; thus rest!ted by one bour%eois econo+ist6

:)ncre!sin% productivity o& l!bor !nd industry, !dv!ncin% w!%es, hi%her livin% st!nd!rds

!nd %re!ter consu+in% or purch!sin% power r!pidly bec!+e the !vowed policy !ndpr!ctic!l pro%r!+ o& '+eric!n industry ... ! new industri!l revolution which is the +!rvelo& the civili5ed world.; 3G

'nother econo+ist s!id6

:' new principle works6 consu+ption &in!nces production. he +ore we!lth is consu+ed,the +ore it will incre!se. )n this country the de+onstr!tion o& th!t ide! occurred. )t is the'+eric!n contribution to econo+ic eperience.; 4G

'+eric!n c!pit!lis+, the prophets insisted, !ccepted the &!ct th!t prosperity dependsupon +!ss consu+ption, !nd, conseHuently, upon incre!sin%ly hi%her w!%es. )t w!she!dy wine, this &l!ttery o& the c!pit!lists they be%!n to believe in the b!llyhoo !nd+illion!ires %r!vely prophesied the end o& poverty ... Ch!rles ". itchell, president,N!tion!l City

w!rned o& the %re!ter dis!ster to co+e.- ... ".'. Filene, president, 7. Filene !nd onsCo+p!ny6 :7h!t the soci!lists dre!+ed o& the new c!pit!lis+ h!s +!de ! re!lity, but not

by their +ethods. he ever=present hu+!n desire &or %re!ter tot!l pro&its will le!d to the!doption o& the new principles.; ... J!ley Fiske, president, etropolit!n Li&e )nsur!nceCo+p!ny6 :Jere is ! new business er!. he %lory o& we!lth &!des. "tent o& power &!des.7h!t does re+!in here !nd throu%hout eternity is th!t every +!n try his best in servin%od to serve well his &ellow+en.;BG

C!pt!ins o& industry !nd &in!nce !ppe!r >ovelike in prosperity !nd bewildered indepression, but !t no ti+e do they re!lly underst!nd the +ove+ent o& the econo+ic&orces they eploit. heir pre=19/9 invoc!tions to the :new er!; epressed sheer+isunderst!ndin% but they !lso epressed, i& p!rtly unconsciously, the de&ensive, sel&=

8usti&yin% ideolo%y o& pred!tory c!pit!lis+. 1MG
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he prosperity b!llyhoo re!ched its crescendo in ! book, Mae $!ery8o.y *ich n./strys -ew 2oal, published ! &ew +onths be&ore the bre!kdown o& prosperity in19/9. )t is ! curiosity o& econo+ic liter!ture. he the+e w!s this6

:he re!l industri!l le!ders o& present=d!y '+eric! do not need to be told th!t the %o!l o&

industry is to +!ke everybody rich. )t w!s they who discovered the &!ct ... who discoveredthe econo+ic necessity o& hi%h w!%es ... Not +erely will prosperity be st!bili5ed, but therule o& cl!ss will &or the &irst ti+e in hu+!n history utterly dis!ppe!r.; IG

7ithin ! &ew +onths industry ch!n%ed its :%o!l; !nd be%!n to +!ke everybody poor, !nundert!kin% crowned with in&initely %re!ter success. #ne o& the two !uthors o& Mae$!ery8o.y *ich,


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:he %re!t w!r produced ! nu+ber o& politic!l revolutions in "urope. )t h!s not yetproduced !n econo+ic revolution. he only econo+ic revolution now under w!y is %oin%on in the Anited t!tes. )t is ! revolution th!t is to wipe out the distinction betweenl!borers !nd c!pit!lists by +!kin% l!borers their own c!pit!lists !nd by co+pellin% +ostc!pit!lists to beco+e l!borers o& one kind or !nother, bec!use not +!ny o& the+ will be!ble to live on the returns &ro+ c!pit!l. his is so+ethin% new in the history o& the

world.; 11G

Not even, C!rver insisted, w!s there !n econo+ic revolution in oviet 2ussi!, where theworkin% cl!ss epropri!ted the c!pit!lists !nd l!ndowners. C!rver w!s one o& thebour%eois schol!rs who %reeted the New "cono+ic Policy in 2ussi! !s ! :reversion toc!pit!lis+,; the &in!l proo& o& the b!nkruptcy o& !ris+. hey dis+issed !s r!tion!li5!tionLenin$s !r%u+ent th!t the new policy w!s +erely ! retre!t to reconstitute &orces &or ! newo&&ensive. Yet in ! &ew ye!rs the oviet Anion unloosed !nother o&&ensive !%!instc!pit!lis+ !nd syste+!tic!lly be%!n buildin% the econo+ic b!sis o& soci!lis+. C!rver$s'+eric!n :revolution; led to the +ost !pp!llin% o& cyclic!l bre!kdowns !nd econo+icdecline, the 2ussi!n revolution le!ds to econo+ic !dv!nce !nd soci!lis+ ? ! tri&lin%di&&erenceE


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president o& the '+eric!n Feder!tion o& L!bor. )n its report, issued a few months beforethe breakdown of prosperity in 1929, the Co++ittee s!id6

:Control o& the econo+ic or%!nis+ is incre!sin%ly evident ... #nce !n inter+ittent st!rtin%!nd stoppin% o& production=consu+ption w!s ch!r!cteristic o& the econo+ic situ!tion. )t

w!s 8erky !nd unpredict!ble, !nd overproduction w!s &ollowed by ! p!use &orconsu+ption to c!tch up. For the seven ye!rs under survey 19//=/9G! +ore +!rkedb!l!nce o& production=consu+ption is evident ... ' sensitive cont!ct h!s been est!blishedbetween the &!ctors o& production !nd consu+ption which were &or+erly so o&ten out o&b!l!nce ... )n +!ny c!ses the r!te o& production=consu+ption see+s to be &!irly wellunder control ... here is now ! +ore even &low &ro+ producer to consu+er ... )t wouldsee+ we c!n %o on with incre!sin% !ctivity.; 13G

'n econo+ist=st!tistici!n epressed the %ener!l illusion in :ob8ective; ter+s6

:here h!ve developed in this n!tion +!inly since the w!r period b!sic &!ctors o& ! lon%=ti+e n!ture which c!n be ter+ed l!r%ely '+eric!n ... First, incre!sed use o& power per

worker second, the receptivity o& the public to new co++odities third, +oderni5eddistribution techniHue &ourth, incre!sed purch!sin% power o& the public !nd, &i&th,industri!l rese!rch ... '+eric!n industry !nd business h!ve re!ched th!t st!tus o& well=bein% where it no lon%er h!s to &e!r ! recurrence o& the r!dic!l spre!ds &ro+ prosperity todepression th!t &or+erly !&&licted business !nd industry.; 14G

ore +oder!te, but de&initely opti+istic, w!s the opinion o& 2e&ord uy u%well,pro&essor o& econo+ics !t Colu+bi! Aniversity, who l!ter bec!+e ! +!8or prophet o&

Nir!is+6

:Depressions continue to recur. hey see+, however, to lessen in etent ... o+e o& theirworst e&&ects +!y be s!id to h!ve been +iti%!ted ... 7e see+ to h!ve +!de so+econsider!ble pro%ress tow!rd correctin% the swin%s o& the rhyth+ !nd tow!rd s+oothin%out the &luctu!tions in !ctivity.; 1BG

his con&idence epressed itsel& in unli+ited specul!tion. uch o& the b!llyhoo o&prosperity w!s cre!ted by intellectu!ls !nd pro&ession!l people, who were in&l!+ed bytheir sh!re o& the :e!sy +oney; o& specul!tion. #ne d!y be&ore the stock +!rket cr!shed

in 19/9, Pro&. )rvin% Fisher s!id6 :Current predictions o& he!vy re!ction !&&ectin% the%ener!l level o& securities &ind little i& !ny &ound!tion in &!ct.; he +!rket will :returneventu!lly to &urther ste!dy incre!ses,; !nd :%!ins !re continuin% into the &uture; ?senti+ents he repe!ted &ive weeks !&ter the +!rket cr!sh, when he s!id there would be:no per+!nent ill e&&ects; &ro+ the :&!lse &e!r; cre!ted by the &!ll in stock prices. 1IGhebelie& in prosperity everl!stin% w!s so stron% th!t the depression, in its e!rlier st!%es, w!snot t!ken seriously. !id Colonel Leon!rd 'yres, b!nk econo+ist6 :)t does not see+ !t !llprob!ble th!t the be!r +!rket o& 19/9 will be &ollowed by !ny slowin% down o& business !t!ll co+p!r!ble with the old business depressions. he business !nd b!nkin% o& 19/9 !re!l+ost inconceiv!bly stron%.;1G
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Crudely epressed or subtly r!tion!li5ed, the b!llyhoo o& the :new c!pit!lis+; evoked!n enor+ous response. he :new; liber!ls !nd :pro%ressives,; while they continuedsnipin% !t !buses, believed th!t prosperity, with !ll its shortco+in%s, w!s workin% tow!rdthe :l!r%er %ood.; hus tu!rt Ch!se wrote 8ust be&ore prosperity cr!shed6

:he scene is !t once ludicrous, !rrestin%, inspirin%, !nd !lw!ys %enuinely sti+ul!tin% ...here is 8ust ! ch!nce th!t '+eric! +i%ht whirl itsel& into the +ost bre!th=t!kin%civili5!tion which history h!s yet to record ...


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!%ricultur!l crisis +!de pe!s!nts o& newer !nd l!r%er %roups o& '+eric!n &!r+ers. heli%htnin% o& the !cco=K!n5etti tr!%edy reve!led the y!wnin% %ul&s o& rulin%cl!ss s!v!%ery.


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:)n +!kin% l!bor co=p!rtner in your e&&orts !nd your enterprise, sh!rin% your pro&its !ndyour dre!+s with so little to be %!ined on your p!rt !nd so +uch to be lost, you h!veprob!bly t!ken the !reatest forward step in human conduct th!t the world h!s everknown.

:o=d!y l!bor is buyin% over "#$ in dollar volumeo& the thin%s it helps to +!ke ... )t isthe freedom from carewith which they !re buyin%, the &reedo+ &ro+ worry in their eyes,the &reedo+ &ro+ fearin their shoulder bl!des.;

)t worked6 Tr/e 'tory+!de +illions in pro&its. une /9, 1933 >une /B, 1933 >une /@, 1933 >une @, 1933 >uly @,1933 >uly /9, 1933 editori!l, %he &pirit of '((, -ew or %orl.=Teleram, >uly 3, 1933#sw!ld !rrison Kill!rd, %he Roosevelt Revolution, -ation, >uly /I, 1933, p.91 -ewor Times, >une /B, 1933 !y /3, 1933 2e&ord uy u%well, %he )deas *ehind theNew +eal, -ew or Times Maa@ine, >uly 1I, 1933, p./ Leon!rd 2o%ers, )ndustry's

New +eal, -ew or %orl.=Teleram, >une 1/, 1933.

/.D!vid '. 7ells, *ecent $conomic Chanes*1@@9-, pp.v, 3@1, 4II.

3.7. >ett L!uck, The -ew n./strial *e!ol/tion an. %aes*19/9-, pp./, @4.

4.C!ret !rett, The American #men*19/@-, p.@4.

B.elvin '. r!ylor, -ew or Times, #ctober 10, 19/ ".'. Filene, Times, !rch @,19/@ J!ley Fiske, -ations +/siness, !y /0, 19/ the itchell, 2!nd !nd ellon

Huot!tions !re &ro+ -ew Maret -ews, !n !dvertisin% pro+otion public!tion issued bythe +!%!5ine Tr/e 'tory*19/@-.

I.


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10.F.P. tockbrid%e, %he New ,apitalism, 'at/r.ay $!enin ost, Nove+ber I, 19/I,p.//I.

11.ho+!s Nion C!rver, The resent $conomic *e!ol/tion in the 6nite.'tates*19/4-, pp.9, /I1=/.

1/.C!rver, $conomic *e!ol/tion, pp.91, /I3.

13.2eport o& the Co++ittee on *ecent $conomic Chanes, o& the President$sCon&erence on Ane+ploy+ent, Jerbert Joover, Ch!ir+!n, N!tion!l uly 1B, 1931,p.//B.

[email protected]!rt Ch!se, rosperity" act or Myth*1930-, p.1@4.

19.tu!rt Ch!se, #/t of the Depression an. After*193/-, p.n.

/0.Ch!rles '. !nd !ry 2.


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C&AT$* The Meanin of rosperity

J" crisis o& '+eric!n c!pit!lis+ +!ni&ests itsel& !s ! crisis o& prosperity.7h!t isprosperity )t h!s three i+port!nt ch!r!cteristics6 it is !lw!ys li+ited in its +!ssscope, it periodic!lly bre!ks down, !nd it cu+ul!tively develops the ele+ents o& thedecline o& c!pit!lis+. his is cle!rly reve!led by ! survey o& the +ove+ent !nd ch!r!ctero& '+eric!n prosperity, which necess!rily beco+es ! survey o& the +!8or !spects o&'+eric!n c!pit!list develop+ent.

C!pit!lis+ in the Anited t!tes c!+e to re!l power with the Civil 7!r !nd thepro%ressive &orces epressed !nd invi%or!ted by th!t stru%%le. "!rlier c!pit!lis+ w!s stilll!r%ely in the co++erci!l st!%e. he co++erci!l, not industri!l, c!pit!list do+in!ted thescene. )ndustry w!s not hi%hly developed, !nd it w!s s+!ll=sc!le industry. !ny industri!lproducts were still i+ported while &orei%n tr!de rose &ive&old &ro+ 1@/0 to 1@I0, i+portso& +!nu&!ctured %oods rose si=&old. 1Ghe country w!s predo+in!ntly !%r!ri!n, !ndprosperity w!s pri+!rily dependent upon !%riculture *whether &ree or sl!ve-. here werestill %re!t unsettled re%ions !nd other re%ions only thinly settled. e&&erson !nd >!ckson. For the co+in%to power o& industri!l c!pit!lis+ subordin!ted !%riculture to industry, !nd the costs o&industri!lis+ were piled on the &!r+ers *!nd workers- . he w!r !cceler!ted the

develop+ent o& Northern industry, p!rticul!rly in iron !nd steel !nd tetiles, !nd it w!sincre!sin%ly l!r%e=sc!le industry. 7ithin &orty ye!rs '+eric!n c!pit!lis+, econo+ic!lly !nd
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politic!lly do+in!nt, w!s the +i%htiest in the world. Prosperity w!s now overwhel+in%lydeter+ined by the +ove+ent !nd the interests o& c!pit!list industri!lis+.

Prosperity in the North &lourished durin% the Civil 7!r.


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sti+ul!ted r!ilro!d construction !nd &!vor!bly !&&ected &orei%n tr!de. Prices &ell sh!rply!nd re!l w!%es by 1@/ were +uch hi%her th!n in 1@IB !nd even hi%her th!n in 1@I0 IG,!nd the resultin% incre!se in +!ss purch!sin% power pro+oted the production !nd s!le o&consu+ption %oods. he &!ll in prices !lso r!ised the re!l v!lue o& +oney c!pit!l!ccu+ul!ted durin% the w!r, !u%+entin% invest+ent !nd the output o& c!pit!l %oods.)ndustri!li5!tion proceeded r!pidly the output o& +!chinery !nd other &or+s o& c!pit!l%oods w!s incre!sed %re!tly by the +ech!ni5!tion o& old industries !nd the develop+ento& new industries *iron !nd steel, boots !nd shoes, %l!ss, petroleu+, +inin%, +ech!nic!ltr!nsport eHuip+ent, +illin%, re&ri%er!tion, +e!t p!ckin%, !nd !%ricultur!l i+ple+ents-.echnolo%ic!l e&&iciency !nd the productivity o& l!bor rose subst!nti!lly. his incre!sin%output !nd !bsorption o& c!pit!l %oods +e!nt !n !ctive conversion o& pro&its into c!pit!l. )tt!kes ti+e, p!rticul!rly in the c!se o& construction !nd r!ilro!ds, &or new c!pit!l %oods to+!ke !ny de+!nds on consu+er purch!sin% power.


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2e!l w!%es scored the l!r%est %!ins in '+eric!n history.


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decre!sed. en!ncy rose &ro+ /B.I in 1@@0 to 3B.3 in 1900. 13Ghese conditionsproduced the !%r!ri!n uprisin%s o& the 1@0$s=90$s./MG

he develop+ents which produced prosperity !lso !nd necess!rily produceddis!strous depressions6 they !re the insep!r!bles o& c!pit!lis+. )ndustri!li5!tion

proceeded h!ph!5!rdly, co+petitively, soci!lly unpl!nned !nd unre%ul!ted. heep!nsion o& industry !nd !ccu+ul!tion o& c!pit!l eceeded b!l!nced reHuire+ents. 'snew industries *includin% r!ilro!ds- developed they sti+ul!ted prosperity by !bsorbin%c!pit!l %oods !nd cre!tin% new purch!sin% power.


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s+!ll=sc!le industry- w!s bein% be!ten down or tr!ns&or+ed into ! &in!nci!l c!pit!list,who is deprived o& !ll constructive industri!l &unctions !nd pre&ers specul!tion toproduction. onopoly, by etortin% hi%her pro&its, incre!sin% the disp!rity betweenproduction !nd consu+ption, !nd w!%in% w!r upon s+!ll=sc!le industry, !%%r!v!tedinst!bility !nd the &orces +!kin% &or cyclic!l crisis !nd bre!kdown !nd by the power toprotect itsel& &ro+ the de&l!tion !nd liHuid!tion which !re the preconditions o& reviv!l,+onopoly tended to prolon% depression. oreover, by r!isin% prices, restrictin%production !nd de+!nd, !nd li+itin% technic!l pro%ress, +onopoly w!s identi&ied with theele+ents o& the decline o& c!pit!lis+.


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&oodstu&&s decre!sed. onopolist co+bin!tions or%!ni5ed !nd inte%r!ted production butthe pl!nnin%, wholly within the li+its o& p!rticul!r enterprises, sh!rpened co+petition !ndspecul!tion, !nd !%%r!v!ted !ll the contr!dictions o& !ccu+ul!tion !nd prosperity.
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invest+ent, in 1901, o& 10,000 in the co++on stocks o& 93 industri!l, public utility, !ndr!ilro!d corpor!tions yielded, by 1913, c!sh inco+e o& @,II1 plus !n incre!se o& 3I inc!pit!l v!lue./0G he rise w!s +uch %re!ter in the prices o& stocks o& +onopolistco+bin!tions, bec!use o& +onopoly prices. 2ec!pit!li5ed co+bin!tions, such !s theAnited t!tes teel Corpor!tion, sHuee5ed the :w!ter; out o& their stock by reinvest+ento& p!rt o& their %re!t e!rnin%s. 7hile the re!l inco+e o& !ll w!%e=workers incre!sed !n!ver!%e o& only 0.4 ye!rly !nd th!t o& workers in +!nu&!ctures decre!sed 0.1, there!l inco+e o& stockholders incre!sed 1./. /1G

hus prosperity, !lthou%h li+ited by the ele+ents o& econo+ic decline, w!s!cco+p!nied by incre!sin%ly hi%her production, productivity, !nd pro&its, but notbyincre!sin%ly hi%her re!l w!%es. 2e!l w!%es were pr!ctic!lly st!tion!ry, ecept &or s+!ll%!ins !+on% s+!ll %roups o& or%!ni5ed skilled workers. oney w!%es rose, but theirpurch!sin% power w!s cut by risin% prices, while ! sli%ht incre!se in re!l hourly e!rnin%s

w!s o&&set by shorter workin% ti+e. 2e!l ye!rly e!rnin%s in the ye!rs 1@9@=190I !ver!%ed3 below the 1@91 level they &ell in the 190=0@ depression !nd rose !%!in, but wereonly ! tri&le !bove the level o& 1@91. //G L!bor did not sh!re in the %!ins o& risin%production !nd productivity.

he workin% cl!ss received ! decre!sin% sh!re o& the n!tion!l inco+e, while theconcentr!tion o& inco+e rose consider!bly. )n spite o& the epropri!tion o& independents+!ll producers, the +iddle cl!ss incre!sed its sh!re o& the n!tion!l inco+e, !s ! result o&the %rowth o& the :new; +iddle cl!ss o& technic!l, supervisory, !nd +!n!%eri!l e+ployeesin corpor!te !nd trusti&ied industry, o& e+ployees in the distributive tr!des, !nd o& personsin pro&ession!l occup!tions. 2isin% prices *!nd ! rel!tive restriction o& !%ricultur!lproduction- &!vored the &!r+ers, !s the rise in the price o& &!r+ products w!s %re!ter th!nthe price rise o& industri!l products. 7hile the &!r+ers constituted ! decre!sin% proportiono& the %!in&ully occupied, they incre!sed their sh!re o& the n!tion!l inco+e 14 perc!pit!. Not !ll &!r+ers +!de %!ins, however6 prosperity w!s concentr!ted in the upperl!yers the rise in c!pit!l costs eceeded the rise in prices !nd ten!ncy rose &ro+ 3B=3(0in 1900 to 3 in 1910. /3Ghe l!r%est %!ins were scored by the richest 1.I o& thepopul!tion, the upper c!pit!list bour%eoisie, whose sh!re o& the n!tion!l inco+e rose &ro+10.@ in 1@9I to 19 in 1909. /4G'll cl!sses sh!red in prosperity ecept the w!%e=

workers *hired &!r+ l!borers, however, +!de so+e s+!ll %!ins in re!l e!rnin%s-.
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7hile consu+ption !+on% workers w!s st!tion!ry or downw!rd, there w!s !n incre!se in%ener!l soci!l consu+ption. )t w!s, however, consider!bly s+!ller th!n in the precedin%period. Consu+ption rose !n !ver!%e o& only 1.9 per c!pit! in 1900=1910, co+p!red

with 4.3 in 1@0=90. /BG'nother esti+!te, coverin% the ye!rs 1901=14, indic!tes !n!ver!%e ye!rly incre!se in consu+ption o& only 0.I. /IGProduction w!s sti+ul!ted+ore by the output o& c!pit!l %oods th!n by the output o& consu+ption %oods6 where the&or+er +!de !n !ver!%e ye!rly %!in o& B, the l!tter +!de ! %!in o& only/.I. /G'ccu+ul!tion o& c!pit!l incre!sed +ore th!n production !nd prosperity w!sb!sed pri+!rily on the production o& c!pit!l %oods !nd o& consu+ption %oods whose

incre!se w!s !bsorbed by non=workers.
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he opinion w!s %ener!l, even in non=l!bor circles, th!t the workers h!d %!ined little i&!nythin% *ecept ! s+!ll %!in &ro+ shorter hours- in recent ye!rs. #ne liber!l econo+ists!id6

:here is nothin% in the &!cts ... which c!n %ive the w!%e=workers c!use &or re8oicin%. he

doctrine so popul!r in cert!in Hu!rters th!t while the rich h!ve %rown r!pidly richer inrecent ye!rs the poor h!ve !lso ste!dily risen in the sc!le o& econo+ic wel&!re h!s no&ound!tion in &!ct.; /@G

'nother liber!l econo+ist, stressin% the s!+e &!cts, !l+ost developed ! cl!ss conceptiono& prosperity6

:)t is per&ectly possible, !s history h!s repe!tedly de+onstr!ted, &or the st!nd!rd o& livin%o& ! society !s ! whole to be i+provin% while th!t o& one or +ore %roups within the societyis declinin%. oreover, i& the distribution o& econo+ic power within ! society is very

uneHu!l, it +!y h!ppen th!t the %roup, the st!nd!rd o& which is declinin%, +!y constitute! very l!r%e proportion, even ! +!8ority, o& the tot!l popul!tion.;/9G

Prosperity is not si+ply !n econo+ic c!te%ory its decisive !spects !re cl!ss=politic!l, itsdistribution deter+ined by cl!ss power !nd the cl!ss stru%%le in %ener!l !nd by c!pit!listdo+in!tion in p!rticul!r.

' new up&l!re o& l!bor +ilit!ncy +!rked these ye!rs. trikes were +!ny !nd bitterly&ou%ht. !nu&!cturers$ !ssoci!tions w!%ed ruthless w!r on tr!de unions, while the unions+oved tow!rd +ore +ilit!nt policies !nd !ction. "cono+ic decline, the uneHu!l

distribution o& prosperity, !nd the %rowin% str!ti&ic!tion o& cl!sses resulted in !n incre!seo& the soci!list vote !nd ! r!llyin% o& +ore r!dic!l workers to the )ndustri!l 7orkers o& the7orld. Diss!tis&ied l!bor, uncle!r !bout cl!ss purposes !nd +e!ns, l!r%ely +er%ed itsel&in the pro%ressive revolt !%!inst the trusts the l!st st!nd o& the older co+petitive !nd!%r!ri!n c!pit!lis+ which since the 1@@0$s h!d been ur%in% the %overn+ent to s+!sh orre%ul!te corpor!te co+bin!tions6 individualist+iddle cl!ss !nd !%r!ri!n r!dic!lsde+!nded collectivest!te !ction to !ssure freeco+petitionE his +ove+ent bec!+e itsel&the +e!ns o& de&e!tin% the purposes o& its sponsors. heodore 2oosevelt used the+ove+ent to i+pose &or+s o& re%ul!tion which consolid!ted the systern o& industri!l !nd&in!nci!l centr!li5!tion, o& +onopoly c!pit!lis+3MGthe revolt o& the s+!ll producers !nd

&!r+ers ended in their co+plete sub8ection, bec!use o& the econo+ic wei%ht o& c!pit!list+onopoly !nd its politic!l power, epressed in the upre+e Court$s decision to !pply the:rule o& re!son; to the trusts. he co+ple rel!tions o& +onopoly c!pit!lis+ !nd itstendency to !%%r!v!te contr!dictions !nd produce econo+ic decline +!de indispens!bleso+e +e!sures o& st!te intervention !nd re%ul!tion *the initi!l st!%es o& st!te c!pit!lis+-,but the +e!sures were pri+!rily in the interests o& +onopoly c!pit!lis+. 2e%ul!tion w!s

we!kened in the &!t ye!rs o& post=w!r prosperity, but the depression !nd econo+icdecline resulted in the need !nd de+!nd &or +ore re%ul!tion, +ore st!te c!pit!lis+. hisnewer re%ul!tion, unlike the old, openly !ccepts +onopoly c!pit!lis+ !ccordin% to !noutst!ndin% spokes+!n o& the N!tion!l 2ecovery 'ct !nd its institution!l propos!ls6
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:7e !re resolved to reco%ni5e openly th!t co+petition in +ost o& its &or+s is w!ste&ul !ndcostly th!t l!r%er co+bin!tions +ust in !ny +odern society prev!il. 7e %o &urther6 we s!yth!t they should be !llowed to prev!il, but only under such conditions o& control !s !ssure! 8ust distribution o& the we!lth they develop !nd now !ccu+ul!te to the people !s !

whole.; 30G

For+erly the :8ust distribution o& we!lth; w!s to be !ssured by +e!sures to restore or:protect; co+petition, now by :control; o& +onopoly but the eploitin% rel!tions o&c!pit!list production, p!rticul!rly under conditions o& econo+ic decline, deter+ine therepetition o& the older eperience6 the stren%thenin% o& +onopoly c!pit!lis+ !nd the +oreuneHu!l distribution o& we!lth ...

he ye!rs 191B=1@ were +!rked by :w!r prosperity,; which prevented !nother +!8ordepression !nd te+por!rily overc!+e the tendency to econo+ic decline. 7!r +!rkets

were !l+ost ineh!ustible. Production, pro&its, !nd the !ccu+ul!tion o& c!pit!l sur%ed

upw!rd. !nu&!cturin% output !ver!%ed 31. hi%her th!n in 1913 !nd tot!l production/3.B hi%her. 31GPro&its were etr!ordin!rily hi%h in 191I, bec!use o& the w!r de+!ndso& belli%erent "urope !nd the c!pture o& its &orei%n +!rkets by '+eric!n eports. heconcentr!tion o& inco+e incre!sed %re!tly6 the nu+ber o& inco+es o& 100,000 !nd overrose &ro+ /,/90 in 1914 to I,I33 in 191I.3/G'&ter the Anited t!tes, interlocked with the

world +!rket !nd i+peri!lis+, entered the w!r, pro&its +ounted !%!in, !lthou%h p!rt o&the+ w!s !ppropri!ted by the %overn+ent in w!r t!!tion, while !nother p!rt w!sreinvested to ev!de t!!tion. he distribution o& pro&its w!s uneven so+e industries weredepressed while industries supplyin% w!r needs piled up l!r%e e!rnin%s, ! new che+ic!lindustry w!s cre!ted, !nd +ost pl!nts !u%+ented or i+proved their productiveeHuip+ent. 2et!il tr!de w!s prosperous. he !ccu+ul!tion o& +oney c!pit!l, in the &or+o& %overn+ent bonds, w!s %re!t, !nd, !s !&ter the Civil 7!r, its re!l v!lue w!s incre!sedby the post=w!r &!ll in prices. F!r+ers %!ined &ro+ the upw!rd +ove+ent o& prices !nd"urope!n de+!nd, !nd their sh!re o& the n!tion!l inco+e rose !%!in *!lthou%h the rise inl!nd v!lues, !s the &!r+ers c!pit!li5ed prospective pro&its, prep!red dis!ster-. here w!s! l!r%e eport o& %oods !nd o& c!pit!l6 the Anited t!tes bec!+e ! creditor n!tion. he7orld 7!r not only in&luenced prosperity !nd the tendency to econo+ic decline but !lsothe very structure o& '+eric!n c!pit!lis+ by &orcin% the +!turity o& three &und!+ent!ldevelop+ents6 the control o& industry by +onopolist co+bin!tions, the eport o& c!pit!l,!nd the e+er%ence o& i+peri!lis+ !s ! do+in!nt &orce.

'%!in l!bor did not sh!re in prosperity *ecept in the &or+ o& %re!tere+ploy+ent-.4MG2e!l hourly e!rnin%s in 191B incre!sed 3 over 1914 but werest!tion!ry in the &ollowin% ye!r !nd decre!sed *over 191B- I in 191 !nd 4 in191@. 33G


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!bsorbed by luury consu+ption !nd w!r needs, by eports to the 'llies *p!id &or bylo!ns, the eport o& c!pit!l-, !nd by c!pit!l %oods. L!bor w!s ecluded ...

#ne thin% is cle!r6 incre!sin%ly hi%her w!%es !nd +!ss consu+ption !re notinsep!r!ble !cco+p!ni+ents o& prosperity. #& the seven periods o& prosperity in the ye!rs

1@I0 to 191@, only three periods tot!lin% &i&teen ye!rs were +!rked by incre!sin% re!lw!%es !nd +!ss consu+ption, while &our periods tot!lin% twenty=one ye!rs were +!rkedby st!tion!ry or &!llin% re!l w!%es !nd +!ss consu+ption. )ncludin% the periods o&depression, re!l w!%es !nd +!ss consu+ption were st!tion!ry or &ell durin% &orty=three o&the &i&ty=ei%ht ye!rs o& the period under survey. o=c!lled prosperity +!y !ssu+e &our&or+s under c!pit!lis+6

1. )ncre!sin%ly hi%her re!l w!%es, consu+ption *includin% l!bor consu+ption-,production, productivity, !nd pro&its.

/. t!tion!ry or &!llin% re!l w!%es, production, !nd consu+ption, but incre!sin%lyhi%her pro&its.

3. )ncre!sin%ly hi%her production, consu+ption, !nd pro&its, but st!tion!ry or &!llin%re!l w!%es, l!bor consu+ption, !nd l!bor st!nd!rds o& livin%.

4. )ncre!sin%ly hi%her production !nd pro&its, but st!tion!ry re!l w!%es !ndconsu+ption, the incre!se in production bein% !bsorbed by c!pit!l %oods, the eport o&%oods or the eport o& c!pit!l, or ! co+bin!tion o& !ll three.

he productivity o& l!bor rises in all&our &or+s o& prosperity. #nly oneo& the &our &or+s o&prosperity, however, is !cco+p!nied by hi%her re!l w!%es !nd +!ss consu+ption.


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thepossibilitieso& the prev!ilin% st!te o& the industri!l !rts, is deter+ined by theecono+ic=cl!ss consider!tion o& pro&it, not by !ny st!nd!rds o& wh!t is soci!lly +ostdesir!ble !nd hu+!nly +ost bene&ici!l. L!bor$s %!ins !re s+!ll6 they !re secured slowly!nd !%oni5in%ly, !re interrupted by periods o& prosperity in which the workers %et none o&the &ruits o& econo+ic pro%ress, !nd !re wiped out in depression. For there is !ninevit!ble !nd recurrent bre!kdown o& prosperity, bec!use the econo+ic=cl!ssconsider!tion o& pro&it does not per+it o& ! :b!l!nced; develop+ent o& production !ndconsu+ption. Depression is ! condition where production is te+por!rily unpro&it!ble,pro&its !re s+!ll, !nd their conversion into c!pit!l is restricted the !ccu+ul!tion o& c!pit!ll!%s, !nd there&ore +illions !re thrown out o& work !nd +!ss st!rv!tion prev!ils.

hus, !t the best, on the b!sis o& previous eperience, the prospect !he!d is o& !prosperity in which the workers *!nd the &!r+ers !nd pro&ession!ls- +!y not sh!re or willsh!re +e!%erly, &ollowed by !nother depression in which they will su&&er untold !%ony.


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*bec!use o& his indebtedness !nd the incre!sed v!lu!tion o& his l!nd- went &or thep!y+ent o& interest ch!r%es !nd t!es.; Louis . J!cker !nd ohn 2. 'rnold, %he %rend of ,onsumption in the 8nited&tates, Annalist, #ctober B, 19/@, p.B11.

I.J!nsen, Real a!es, American $conomic *e!iew, !rch 19/B, p.3/.

.7ill!rd L. horp !nd 7esley C. itchell, +/siness Annals*19/I-, pp.130=3.

@.Dep!rt+ent o& Co++erce, 'tatistical A8stract of the 6nite. 'tates, 1931, p.@13.

9.7ill&ord ). Qin%, %ealth an. ncome of the eople of the 6nite. 'tates*191B-, p.44.

10.D!vid '. 7ells, *ecent $conomic Chanes*1@@9-, pp./@=/9.

11.Anited t!tes,


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1/.'rnold, %rend of ,onsumption, Annalist, #ctober B, 19/@, p.B11.

13.Dep!rt+ent o& '%riculture, ear8oo of Aric/lt/re, 193/, p.49/.

14.Lewis Corey, The &o/se of Moran*1930-, pp./4=4@, /3.

1B.cott Ne!rin% !nd >oseph Free+!n, Dollar Diplomacy*19/B-, p.1/.

1I.Commercial an. inancial Chronicle, !rch /, 1901, p.41I.

1.-ew or Times, Dece+ber /9, 190.

[email protected] C. ills, $conomic Ten.encies in the 6nite. 'tates*193/-, p./.

19.ills, $conomic Ten.encies, p.3B.

/0.ills, $conomic Ten.encies, pp.139, 143.

/1.ills, $conomic Ten.encies, p.1B9.

//.P!ul J. Dou%l!s, *eal %aes in the 6nite. 'tates 1;9?=19>ones, Real a!es in Recent ears, American $conomic *e!iew, >une, 191,p.330.

/9.Jenry Pr!tt F!irchild, %he &tandard of -ivin! 8p or +own:American $conomic*e!iew, !rch, 191I, p.9.

30.2e&ord uy u%well, %he )deas *ehind the New +eal, -ew or Times Maa@ine,>uly 1I, 1933, p./.

31.ills, $conomic Ten.encies, p.1@@.

3/.


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34.'rnold, %rend of ,onsumption, Annalist, p.B11.MA B Archi!e B rainaCorey Archi!e B Decline of Am0 Cap0

Lewis Corey

The Decline of American Capitalism

A*T #-$The American Crisis

C&AT$* The Decline of Capitalism" 2eneral '/r!ey

J" decline o& c!pit!lis+ w!s evident in "urope even be&ore the crisis !nd depression

which set in !&ter 19/9. ' %ener!l econo+ic crisis prev!iled !nd cyclic!l prosperity w!s on! lower level th!n pre=w!r, while c!pit!lis+ w!s crushed in the oviet Anion.


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Anderlyin% +uch o& the '+eric!n co++ent on the depression w!s the &eelin% th!t new!nd i+ponder!ble &orces !re !t work involvin% ! crisis, !n econo+ic decline, or !t le!st itspossibility. o+e o& the desp!ir dis!ppe!red with the co+in% o& +!nipul!ted !ndspecul!tive reviv!l.


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!n ide!l o& individu!lis+ !nd de+ocr!cy which is now co+pletely repudi!ted byi+peri!lis+ !nd &!scis+. he co++erci!l revolution, with its new !ttitudes !nd its need&or +ore %oods !nd +ore e&&icient production, sti+ul!ted eperi+ent!l science !nd itstechnolo%ic!l !pplic!tion. #ut o& &orei%n tr!de, coloni!l conHuest, !nd settle+entsoverse!s !rose the world +!rket, cre!tin% incre!sin%ly l!r%er +!rkets !nd pro&its.


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!ssu+ptions o& bour%eois econo+ic theory !nd the :hope&ul; propos!ls o& liber!l !ndsoci!list re&or+is+.

he n!ture o& c!pit!list production, however, +!kes its develop+ent ! perpetu!lstru%%le between the &orces o& ep!nsion !nd decline, bec!use o& three &und!+ent!l

&!ctors6

1. C!pit!list production depends upon pro&it, upon the !ccu+ul!tion o& c!pit!l !ndincre!sin% opportunities &or its pro&it!ble invest+ent.


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co+petition. Pro&its !re thre!tened. onopoly !nswers the thre!t with control o& +!rkets,hi%her prices, li+it!tion o& output, !nd rel!tive or !bsolute restriction o& pro%ress intechnolo%ic!l e&&iciency. his is !n ele+ent o& decline, !s it e+ph!si5es the inc!p!city todevelop &ully !ll the &orces o& production !nd consu+ption. 'nother ele+ent o& decline is+onopoly$s introduction o& &!ctors o& ri%idity *control o& +!rkets !nd prices, li+it!tion o&co+petition, resist!nce to liHuid!tion in depression- into the structure o& c!pit!lis+, whoseb!sic reHuire+ent is the &leibility involved in the &ree pl!y o& econo+ic &orces.

onopoly is identi&ied with !nother !spect o& c!pit!list decline6 the eport o& c!pit!l !ndi+peri!lis+, the stru%%le to control &orei%n +!rkets c!p!ble o& !bsorbin% surplus %oods!nd surplus c!pit!l. his surplus o& c!pit!list industry beco+es const!ntly %re!ter !nd+ore +en!cin% !s the inner lon%=ti+e &!ctors o& ep!nsion !ppro!ch eh!ustion. )tbeco+es necess!ry to :industri!li5e; econo+ic!lly b!ckw!rd re%ions to !bsorb c!pit!l!nd %oods *p!rticul!rly the &or+er- which !re un!bsorb!ble in the ho+e +!rket. husc!pit!lis+ co+es incre!sin%ly to depend upon eploit!tion o& outer, the intern!tion!l,lon%ti+e &!ctors o& ep!nsion. 7here the older industri!l n!tions o& "urope once sou%ht&orei%n outlets +!inly &or %oods, the b!sis o& the older coloni!lis+, they be%!n !&ter the1@0$s to seek outlets +!inly &or c!pit!l, the b!sis o& i+peri!lis+. 'n incre!sin% !+ount o&c!pit!l !nd c!pit!l %oods, produced by the older n!tions, w!s !bsorbed by +inin%,co++unic!tions, public works, pl!nt!tions, !nd &!ctories in coloni!l !nd otherecono+ic!lly b!ckw!rd re%ions. hese re%ions, !s ! result o& industri!li5!tion, !lsoincre!sed their i+ports o& consu+ption %oods.


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dec!y, !nd re!ction o& i+peri!list c!pit!lis+. #ne hundred ye!rs e!rlier, the N!poleonicw!rs h!d !n ob8ectively pro%ressive ch!r!cter, !n epression o& the lusty youth o&c!pit!lis+, bre!kin% down survivin% &eud!l b!rriers !nd prep!rin% !n econo+ic upswin%.he 7orld 7!r epressed the dec!dent old !%e o& c!pit!lis+. Never did ! w!r h!ve +orepro%ressive pretensions !nd ! +ore re!ction!ry ch!r!cter. 's ! result o& the stru%%le &ori+peri!list power, the w!r we!kened !ll the "urope!n n!tions !nd intensi&ied the declineo& c!pit!lis+6 its le%!cy w!s the post=w!r chronic econo+ic crisis. he w!r$s pro%ressivepretensions *:"nd w!rE; ? :!ke the world s!&e &or de+ocr!cyE;- were +ocked by the%ener!l re!ction it unloosed ? includin% &!scis+, the +ost violent epression o& thedecline o& c!pit!lis+, to whose support it +obili5es !ll the +ost sinister !nd re!ction!ryele+ents.


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c!pit!list conditions were !llowed to lin%er !&ter northern industri!l c!pit!lis+ consolid!tedits politic!l power in the Civil 7!r !nd 2econstruction-.


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hi%her prices &or '+eric!n whe!t, pl!yed !n i+port!nt p!rt in the reviv!l !nd upw!rd+ove+ent o& prosperity. 4Ghe &!r+ers bou%ht l!r%e !+ounts o& c!pit!l %oods in the&or+ o& !%ricultur!l eHuip+ent. hey cre!ted new +!rkets &or +!nu&!ctured consu+ption%oods. 'nd they provided the bulk o& the eports to p!y &or the i+ports o& c!pit!l !nd%oods which sti+ul!ted the r!pid ep!nsion o& '+eric!n industri!lis+. he &!ct th!tc!pit!list industry %!ined +ore &ro+ the ep!nsion o& !%riculture th!n did the &!r+ers w!sthe c!use o& the !%r!ri!n revolts in the 1@0$s=90$s.

'nother !spect o& the renew!l o& the &rontier !nd the resultin% ep!nsion o& !%riculturew!s the construction o& r!ilro!ds on ! l!r%e sc!le. his w!s ! +ost i+port!nt &!ctor in the+ove+ent o& production, !ccu+ul!tion, !nd prosperity. 2!ilro!d +ile!%e rose &ro+3B,0@B in 1@IB to 1,4I in 1@9B c!pit!li5!tion rose to 10,34 +illion. BGost o& theincre!se w!s due to construction o& the tr!nscontinent!l r!ilro!ds, which depended +!inlyupon the tr!nsport!tion o& !%ricultur!l *!nd +inin%- products. 2!ilro!ds !bsorb l!r%e!+ounts o& c!pit!l %oods. he construction o& r!ilro!ds in econo+ic!lly undevelopedcountries is one o& the +!in ob8ectives o& the eport o& c!pit!l !nd i+peri!lis+ it !rousedthe +ost bitter pre=w!r i+peri!list !nt!%onis+s *Chin!, the

"p!nsion o& !%riculture !nd construction o& the tr!nscontinent!l r!ilro!ds were boundup with the %rowth o& popul!tion !nd o& cities, which proceeded on ! +uch %re!ter sc!leth!n in "urope. Popul!tion rose &ro+ 31,B0/,000 in 1@I0 to 9/,/I,000 in 1910 *includin%/3,000,000 i++i%r!nts-. Cities rose &ro+ 141 to @@ !nd their popul!tion &ro+ B,000,000to 3B,000,000, or &ro+ 1I to 3@ o& the tot!l popul!tion. IGhis %rowth, which reHuiredconstruction +!teri!ls, tr!ction eHuip+ent, !nd other c!pit!l %oods, !nd provided new+!rkets, enor+ously sti+ul!ted the develop+ent o& c!pit!lis+.

hus the &rontier, !nd its continent!l !re!s !nd resources, w!s directly connected withthe lon%=ti+e &!ctors o& econo+ic ep!nsion. )t per+itted !n incre!sin% output !nd!bsorption o& c!pit!l %oods bec!use o& the industri!li5!tion o& new re%ions. he ep!nsiono& the &rontier depended upon the develop+ent o& !%riculture *!nd +inin%-, which in turndepended upon the +!rkets o& the industri!l "!stern st!tes !nd o& "urope. 'nd the&rontier c!+e to !n end when industri!li5!tion w!s +e!sur!bly co+plete.


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!ni+!tin% +ost o& the e!rly colonists, who were rebels !%!inst the &eud!l order, !cHuirednew &or+s !nd vi%or in the new world. hey were consolid!ted by the '+eric!n2evolution, vit!li5ed by soci!l=econo+ic develop+ent on !n !l+ost wholly c!pit!list b!sis!nd by the :opportunity; !nd :sel& help; o& the &rontier !nd its in&luence in !cceler!tin%econo+ic develop+ent. he '+eric!n dre!+ w!s !n ideolo%y co+p!ct o& ten +!8orele+ents6

1. -ibertyhe ri%ht o& the individu!l to live his own li&e in his own w!y *o& which theori%in!l epression w!s &reedo+ o& conscience- toler!nce !s ! w!y o& li&e.

/. +emocracy he ri%ht o& the people to decide their own destiny in their owninterests !nd in their own w!y &!ith in the cre!tive initi!tive !nd !ction o& &ree +en !nd

wo+en.

3. pportunityhe ri%ht to !n eHu!l sh!re in econo+ic !nd politic!l opportunity,whose perpetu!l rebirth w!s !ssu+ed, unrestricted by ori%ins in its +ore subtle &or+s, !n!spir!tion !&ter hi%her thin%s.

I.


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bec!use o& the rel!tive &reedo+ !nd +obility cre!ted by the r!pid ep!nsion o& industry!nd the &rontier. rue, the re!li5!tion w!s woe&ully li+ited, the ide!ls eploited by therulin% cl!ss in its own interests !nd de%r!ded by the bucc!neers o& industry, &in!nce, !ndpolitics. Yet the ideolo%y w!s not +ere +!ke=believe, not wholly t!wdry. )t could not h!ve!risen in ! sl!ve or &eud!l society. )t epressed +!ny re!l !chieve+ents !nd, still +ore,thepossibilitieso& soci!l pro%ress. he ideolo%y w!s re!l enou%h to do+in!te the l!bor!nd !%r!ri!n revolts o& the 1@0$s=90$s.


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ependitures o& public +oney, involvin% ! tre+endous incre!se in the burden o& t!!tion,debts, !nd interest, is p!rt o& ! pro%r!+ b!sed on the conviction th!t industry c!nnotrevive !nd prosper without the !rti&ici!l sti+ul!nt o& st!te &in!nci!l !id. "ven i& prosperityreturns on !ny consider!ble sc!le, !nd corpor!tions rep!y the lo!ns, the burden on pro&its

will be %re!t, !nd still %re!ter on the people !t l!r%e in hi%her t!!tion *&or +ost o& the+oney is spent outri%ht-. )&, !s is +ost likely, prosperity does notreturn on !nyconsider!ble sc!le, !nd there is ! lower level o& econo+ic !ctivity !nd inco+e, the burdeno& t!!tion will be he!rtbre!kin%, &or corpor!tions will rep!y little i& !ny o& the public +oneythey now receive. )t will be worse i& in&l!tion is resorted to. 'nd +ost o& the burden will bethrust upon the workers *includin% &!r+ers !nd pro&ession!ls-6 !lre!dy there !re s!lest!es !nd lower re!l w!%es, !nd eventu!lly there +!y be direct t!es on w!%es, !s inso+e "urope!n countries.

t!te &in!nci!l !id to sust!in totterin% priv!te industry is the +!8or !spect o& the st!tec!pit!lis+ represented by the cre!tions o& Nir!is+, but which +!y !ssu+e otherinstitution!l &or+s. his is de&inite evidence o& the decline o& '+eric!n c!pit!lis+. )t ise!ctly wh!t %overn+ents h!ve been doin% in Fr!nce !nd "n%l!nd, on ! l!r%er sc!le in)t!ly !nd er+!ny. )n spite o& di&&erences in politic!l &or+s, the s!+e st!te=econo+ic+e!sures !re !dopted under the pressure o& c!pit!list decline. Pre=&!scist er+!n%overn+ents poured public +oney into industry the N!5is do the s!+e. F!scist )t!lyissues st!te lo!ns :&or relie& o& priv!te co+p!nies which &ind the+selves in di&&icultiesbec!use o& the depression.; he '+eric!n 2econstruction Fin!nce Corpor!tion serves !s!n or%!ni5!tion!l +odel &or the )t!li!n )ndustri!l )nstitute, but its policy w!s !lre!dy bein%pursued by the &!scist %overn+ent. @G' public=works pro%r!+ is the b!ckbone o&:recovery; e&&orts in )t!ly !nd er+!ny to ! lesser etent in Fr!nce !nd "n%l!nd, where,however, it is incre!sin%ly ur%ed. Ji%hw!y=buildin% is stressed, !lthou%h new ro!ds !rel!r%ely unnecess!ry !nd include construction o& :luury; !uto+obile super=hi%hw!ys. :)ner+!ny the present ro!ds +i%ht be !ble to c!rry ten ti+es the present tr!&&ic. #nly whenviewed +ost opti+istic!lly does it see+ possible th!t su&&icient tr!&&ic will develop toliHuid!te the present cost o& the sche+e.; 9G'nd the :recovery; pro%r!+ o& Nir!is+depends in l!r%e +e!sure upon public works. hus the '+eric!n %overn+ent resorts tothe st!te=econo+ic +e!sures ch!r!cteristic o& the decline o& c!pit!lis+ in "urope. 'ndthis decline only ! &ew ye!rs !%o w!s considered the lot o& lesser breeds outside the l!w ?the l!w o& '+eric!n prosperity everl!stin%E

Last Chapter E -ext Chapter

ootnotes

1M.'+eric!n prosperity bec!+e ! politic!l issue in "urope. :Look,; s!id the c!pit!lists!nd their !polo%ists *includin% le!ders o& the


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!polo%ists *includin% le!ders o& the . !nu!ry 4, 1934 >!nu!ry B, 1934 Ch!rleser5,A Record 7iscal ear uly 1, 1934.

@.-ew or Times, Nove+ber 10, 1933 Nove+ber 1/, 1933.

9.%he &uper@i!hway /roect in @itler's Recovery /ro!ram, Literary Diest, #ctober ,1933, p.41.

MA B Archi!e B rainaCorey Archi!e B Decline of Am0 Cap0

Lewis Corey
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A*T #-$

The American Crisis

'/mmary

)N its i++edi!te !spects the '+eric!n crisis is !n outco+e o& the depression !nd o& thein!bility to restore prosperity on !ny consider!ble sc!le. )t +ocks the pre=depressioncl!i+s o& prosperity everl!stin%. )n its l!r%er !spects the crisis is !n outco+e o& thedecline o& c!pit!lis+.

Prosperity under c!pit!lis+ depends upon the +!kin% o& pro&its !nd their conversioninto c!pit!l. he hi%her the pro&its !nd the lower the w!%es, the %re!ter is the!ccu+ul!tion o& c!pit!l. his l!% o& w!%es behind pro&its, !nd the resultin% l!% o& +!ssconsu+ption behind production, is ! condition o& !ccu+ul!tion.


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he decline o& '+eric!n c!pit!lis+ is conditioned by the eh!ustion o& the inner lon%=ti+e &!ctors o& ep!nsion. his eh!ustion, which is rel!tive !nd wholly c!pit!list, w!sbrou%ht to ! he!d by the prosperity o& the :olden '%e; o& '+eric!n c!pit!lis+. )t!ssu+ed the &or+ o& overdevelop+ent o& productive &orces, s!tur!tion o& c!pit!l pl!nt,+onopoly, the eport o& c!pit!l, !nd i+peri!lis+. he le%!cy w!s ! restriction o& theopportunities &or !n incre!sin% output !nd !bsorption o& c!pit!l %oods, &or the!ccu+ul!tion o& c!pit!l. hus, to underst!nd the decline o& c!pit!lis+, !n !n!lysis isnecess!ry o& the prosperity o& 19/3=/9, which involves !n !n!lysis o& the &und!+ent!ls o&c!pit!list production. 'nd the st!rtin% point o& the !n!lysis is the +ove+ent o& pro&its !nd

w!%es, which conditions both the upswin% !nd the decline o& c!pit!lis+.

MA B Archi!e B rainaCorey Archi!e B Decline of Am0 Cap0

Lewis Corey


A*T T%#rosperity rofits an. %aes

ntro./ctory

)N the cl!i+s o& Nir!is+, o& st!te c!pit!lis+, re!ppe!r, in sli%htly di&&erent &or+, the b!siccl!i+s o& the pre=19/9 +ytholo%y o& prosperity. he older prophets insisted th!t under the

:new c!pit!lis+; w!%es necess!rily secured l!r%e %!ins &ro+ incre!sin% production !ndproductivity the !nt!%onis+ between w!%es !nd pro&its h!d been ended, the c!pit!lists:reco%ni5in%; th!t hi%h w!%es !nd hi%h pro&its !re insep!r!ble. he prophets o& Nir!is+!lso insist th!t hi%h w!%es !re pro&it!ble to the c!pit!lists6 they w!nt to :r!ise; w!%es !nd:control; pro&its in the interest o& prosperity !nd o& !ssured !nd hi%her pro&its. husPresident 2oosevelt cl!i+s th!t :&!ir w!%es !nd &!ir pro&its; is the !i+ o& Nir!is+. 1Gheidentity between the old !nd the new h!s been thus st!ted by ! liber!l critic6

:


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this pl!n conte+pl!ted no &und!+ent!l reor%!ni5!tion o& our +oribund econo+ic syste+.)ts centr!l &e!ture w!s !n !pplic!tion o& the old Joover=Ford doctrine o& hi%h w!%es,eercised in ! ti+e o& desper!te econo+ic distress !nd not, !s it w!s ori%in!lly conceived,

when !+ple pro&its were bein% produced.;/G

here is this di&&erence6 he pre=19/9 !polo%ists o& prosperity insisted on the :un&ettered;econo+ic !ction o& c!pit!lis+ the !polo%ists o& Nir!is+ cl!i+ th!t the %overn+ent will:control; industry to compel the c!pit!lists, in their own interest, to :r!ise; w!%es !nd:li+it; pro&its, !nd thus !ssure ulti+!tely hi%her pro&its.


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A*T T%#rosperity rofits an. %aes

C&AT$* 5rofits an. rosperity

J" endin% o& the 7orld 7!r in 191@ produced !n econo+ic recession, &ollowed by !n

upw!rd +ove+ent. ' he!vy eport o& c!pit!l !nd %oods w!s the decisive &!ctor in post=w!r prosperity. tricken by w!r$s destruction, intervenin% in oviet 2ussi!, !nd thre!tenedby the revolution!ry !ction o& its own workers, c!pit!list "urope +ort%!%ed itsel&, kept onborrowin% in the Anited t!tes !nd i+ported l!r%e !+ounts o& %oods. '+eric!n eports in1919=/0 were the l!r%est in history6 1I,14@ +illion, with !n ecess o& eports overi+ports o& I,9IB +illion.1G *his econo+ic intervention in "urope w!s :our; +!8orcontribution to the stru%%le !%!inst revolution.-


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)n the Anited t!tes !&ter the Civil 7!r, !ccu+ul!tion w!s invi%or!ted by the+ech!ni5!tion o& old !nd the %rowth o& new industries, p!rticul!rly the r!ilro!ds, !nd byindustri!li5!tion o& !%r!ri!n !nd &rontier re%ions. )n e!rly nineteenth=century "n%l!nd,prosperity w!s identi&ied with ep!nsion o& the tetile industry !nd l!ter o& the iron !ndsteel tr!des, while ep!nsion o& the electric!l industry produced !n unusu!l prosperity inthe er+!ny o& 1@90=190B !nother &!ctor o& ep!nsion w!s the eport o& c!pit!l *!ndc!pit!l %oods- to industri!li5e coloni!l !nd other econo+ic!lly b!ckw!rd re%ions. #nlythese lon%=ti+e &!ctors o& econo+ic %rowth sti+ul!te the output o& c!pit!l %oods !ndinsure !n incre!sin% !ccu+ul!tion o& c!pit!l.

'n unusu!l &e!ture o& the depression w!s the ste!diness o& +!chinery output, whichordin!rily drops severely. 7hile output dropped &ro+ 4,I@ +illion in 1919 to 3,/3B+illion in 19/1, there w!s no %re!t drop !s prices &ell output rose in 19// !nd w!s 4,/+illion in 19/3. /Ghe de+!nd &or +!chinery +odi&ied the depression !nd encour!%edreviv!l, !nd w!s +!inly due to e&&orts to r!ise the productivity o& l!bor, which rosesubst!nti!lly. here were, !pp!rently, &ewer o& the :postpon!ble; ependitures on c!pit!l%oods which !%%r!v!te depression ... he de+!nd &or +!chinery w!s stren%thened by !nupswin% in construction, the industry which led the reviv!l. Anlike industry in %ener!l,construction w!s not overproduced, but h!d !ccu+ul!ted ! l!r%e short!%e. Construction

w!s pr!ctic!lly st!tion!ry in 1914=1I, !nd in the &ollowin% &our ye!rs !ver!%ed /@ below1913. )n 19/1 construction, which h!d decre!sed one=h!l& the previous ye!r, re%!ined !llits losses !nd sli%htly +ore, !nd in 19// w!s 3B hi%her th!n in 1913, incre!sin% byne!rly 1,000 +illion 3G the incre!se w!s +!inly in industri!l !nd co++erci!l structures,essenti!lly !n output o& c!pit!l %oods ... 2!ilro!ds, whose ordin!ry reHuire+ents h!dbeen ne%lected durin% the period o& Feder!l control, incre!sed their c!pit!l ependituresto 1,0B9 +illion in 19/3 !nd 3,99I +illion in the &ive ye!rs 19//=/I.4G... hedepression drop in the output o& !uto+obiles w!s s+!ll output rose in 19// !nd w!s3,1I4 +illion in 19/3, ne!rly 1,000 +illion +ore th!n in 1919 !nd ! two&old incre!seconsiderin% the &!ll in prices. BG... he reviv!l w!s essenti!lly ! product o& the incre!sin%output o& c!pit!l %oods, but it w!s stren%thened by !n unusu!l develop+ent6 ! subst!nti!lrise in re!l w!%es, which incre!sed +!ss purch!sin% power !nd consu+ption.Consu+ption w!s I.B hi%her in 19/3 th!n in 19/0 IG, !n unp!r!lleled incre!se,sti+ul!tin% production !nd, +ore i+port!nt, the output o& c!pit!l %oods. '&ter 19/3 theupw!rd +ove+ent in re!l w!%es !nd +!ss consu+ption sl!ckened !nd c!+e pr!ctic!llyto ! st!ndstill6 while tot!l production in 19//=/9 incre!sed !n !ver!%e o& 4.1 ye!rly,c!pit!l %oods incre!sed I.4 !nd consu+ption %oods only 3.. G'ccu+ul!tion, !susu!l, outstripped consu+ption.

Prosperity w!s sust!ined by the upw!rd +ove+ent in the output o& c!pit!l %oods, byincre!sin% opportunities &or the !ccu+ul!tion o& c!pit!l. Construction +oved ste!dilyupw!rd /MG6 it w!s 31 hi%her in 19/9 th!n in 19//, scorin% !n !ver!%e ye!rly incre!seo& I.1 tot!l construction w!s 4@,@B9 +illion, !n !ver!%e o& I,100 +illionye!rly.@G'uto+obile output *wholes!le v!lue- !ver!%ed over 3,000 +illion ye!rly in19/3=/@, risin% to 3,19 +illion in 19/9 ! consider!ble p!rt o& the output consisted o&c!pit!l %oods6 re%istr!tions o& +otor trucks, t!ic!bs, !nd buses incre!sed +ore th!npriv!te c!rs, while the wholes!le v!lue o& +otor trucks !lone rose &ro+ 31 +illion in
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19/3 to B9B +illion in 19/9. 9Ghe lessened c!pit!l ependitures o& the r!ilro!ds w!sp!rtly o&&set by the rise in c!pit!l %oods represented by incre!sin% co++erci!l use o& the!uto+obile !nd !irpl!ne. he drive to r!ise the productivity o& l!bor *to incre!se pro&its-not only sti+ul!ted the de+!nd &or +ore industri!l +!chinery but resulted in !n incre!sin%electri&ic!tion o& industry, the etent o& which rose &ro+ BI in 1919 !nd I in 19/3 to@/ in 19/9 c!pit!l invest+ent in the electric power industry w!s 1/,B00 +illion in 19/9co+p!red with B,000 +illion in 19//. 10Ghe output o& electric!l +!chinery !nd!pp!r!tus rose &ro+ 1,/93 +illion in 19/3 to /,/3 +illion in 19/9. 11G"p!nsion innew or co+p!r!tively new industries !bsorbed l!r%e !+ounts o& new c!pit!l the +ovin%picture, r!dio, r!yon, che+ic!l, !vi!tion, +ech!nic!l re&ri%er!tion, !nd power l!undryindustries, whose co+bined v!lue output in 19/9 eceeded 1,B00 +illion. hisep!nsion +!de :l!r%e de+!nds upon construction ? industri!l !nd co++erci!lstructures, :+ovie p!l!ces,; !nd %!r!%es !nd service st!tions it !lso +!de l!r%ede+!nds upon +!chinery, the output o& which rose &ro+ 4,/ +illion in 19/3 to I,9I4+illion in 19/9. 1/Ghe ep!nsion o& new or co+p!r!tively new industries is p!rticul!rlyi+port!nt since it de+!nds +ore c!pit!l ependitures th!n si+il!r ep!nsion in oldindustries.

'n incre!sin% output o& c!pit!l %oods *not consu+ption %oods- is the decisive &!ctor inc!pit!list prosperity. )t provides &or the !ccu+ul!tion o& c!pit!l !nd +ultiplies the c!pit!listcl!i+s upon l!bor, production, !nd inco+e.


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contributin% c!uses6 the &in!l proo& o& the decline !nd hopeless st!te o& '+eric!n!%riculture.

7here the 7orld 7!r !%%r!v!ted "urope$s econo+ic decline, it contributed to theupsur%e o& prosperity in the Anited t!tes by its sti+ulus to old !nd new industries, its

cre!tion o& short!%es, !nd its openin% up o& new &orei%n +!rkets. Fro+ the '+eric!n!n%le, the +ost i+port!nt result o& the w!r w!s the redistribution o& world power in &!vor o&the Anited t!tes !nd the econo+ic decline o& its co+petitors. he '+eric!n sh!re o&

world eports rose &ro+ 1/.3 in 1913 to 1B.I in 19/@ the "urope!n sh!re declined&ro+ BB./ to 4I !nd the


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19/4 3,1II @1.@ 90 101.0 10,B0/ 9B.4

19/B 3,@ 100./ M M 10,30 9.B

19/I 3,910 101.0 M M 11,4II 104.1

19/ 3,431 @@.1 M M 10,@49 [email protected]

19/@ 4,330 111.@ 1,10 11B.3 10,3II 94./

19/9 4,I0 1//.9 1,11 11I.4 11,I@4 10I.1

M Not !v!il!ble.

ource6 Net pro&its *corpor!tions reportin% pro&its, less t!es !ndintercorpor!te dividends- !nd o&&icers$ s!l!ries *includin% bonuses!nd other co+pens!tion- ?


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he distribution o& pro&its *!nd o& prosperityE- is !lw!ys uneven. )t w!s p!rticul!rly unevenin 19/3=/9 bec!use o& the +!ny !nd r!pid ch!n%es in industries, technic!l eHuip+ent,!nd consu+er buyin% h!bits, !nd o& the resultin% intensi&ied co+petition. here were+!ny l!+ents !bout :pro&itless prosperity.; o+e industries were severely depressed

while others were eception!lly prosperous. he !uto+obile industry incre!sed its pro&its!n !ver!%e o& //.B ye!rly, +!chinery 14.9, !nd che+ic!ls !nd dru%s 1/.3 1G!uto+obile super=pro&its were ch!r!cteristic o& the newer industries.


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%re!ter industri!l concentr!tion !nd centr!li5!tion o& corpor!te control6 in 19/3 the l!r%est1,/40 +!nu&!cturin% corpor!tions received I4.9 o& !ll corpor!te net inco+e, while in19/9 the l!r%est 1,/@9 corpor!tions received B.I. 1@G'n incre!sin% nu+ber o&corpor!tions, +!inly the s+!ller, reported de&icits ? 34 in 1919, 41 in 19/3, !nd 4in 19/9. 19Ghese de&icits, which depressed the +!ss o& pro&its, !re ! condition o&c!pit!list production !nd prosperity !nd o& the pro&its o& other corpor!tions.

' ch!r!cteristic o& c!pit!list production is th!t its drive &or l!r%er pro&its cre!tes ! serieso& !nt!%onis+s which li+it the re!li5!tion o& pro&its. #utput incre!ses +ore th!n pro&its,bec!use c!pit!list production tends tow!rd !n !bsolute %rowth o& the productive &orcesre%!rdless o& the c!p!city o& +!rkets !nd o& the develop+ent o& consu+in% power.Co+petition is intensi&ied !nd prices &!ll to levels which yield s+!ll pro&its or no pro&its ?one result o& the hi%her productivity o& l!bor, which si+ult!neously incre!ses surplus v!lue!nd sets in +otion &orces which prevent its co+plete re!li5!tion. 's co+petition isintensi&ied by the hi%her productivity o& l!bor !nd l!r%er output, which outstrips +!rkets!nd consu+ption, there is !n incre!se in the costs o& distribution, o& +erch!ndisin% !nd!dvertisin%, costs which !re ! ch!r%e upon surplus v!lue !nd cut into pro&its6 in 19/3=/9th!t p!rt o& :v!lue !dded by +!nu&!cturin%; represented by overhe!d costs incre!sed+ore th!n pro&its *!nd w!%es-. he drive &or l!r%er pro&its cre!tes ! &in!l !nt!%onis+6 itdevelops the &orces o& cyclic!l bre!kdown by incre!sin% productivity, production, !ndpro&its +ore th!n w!%es !nd consu+in% power, disturbin% the b!l!nce betweenproduction !nd consu+ption !nd between one industry !nd !nother. he conseHuentdisproportions interrupt prosperity with +inor depressions, !nd eventu!lly prosperitycoll!pses into ! +!8or depression. Pro&its in +!nu&!ctures &ell consider!bly in the +inordepression o& 19/4 !nd in the +inor depression o& 19/, which severely lowered theye!rly !ver!%e o& pro&its in 19/4=/9. Depression is one o& the +ost dr!stic +e!ns by

which c!pit!list production li+its the re!li5!tion o& pro&its. 7hile pro&its in +!nu&!cturesdid not rise !s +uch !s production, the productivity o& l!bor, !nd surplus v!lue, pro&its !s! whole rose +ore subst!nti!lly. he %ener!l rise w!s l!r%er th!n in +!nu&!ctures &orsurplus v!lue, which eists ori%in!lly !s ! de&inite portion o& unp!id l!bor, !s ! surplusproduct, is &in!lly re!li5ed only in the process o& the circul!tion o& co++odities. hetr!ns!ctions o& the +!rket do not produce or incre!se surplus v!lue, but they distribute!nd !pportion it. 'll sorts o& Hueer thin%s now h!ppen which !re nor+!l under c!pit!lis+.Not only +!y the industri!l c!pit!list re!li5e !s pro&its only ! s+!ll portion o& surplus v!lueor none !t !ll, i& prices !re un&!vor!ble, but ! stru%%le occurs over the division o& thesurplus v!lue etorted &ro+ l!bor, !nd !n incre!sin% p!rt o& it +!y beco+e the pro&its o&the non=industri!l c!pit!list. he pro&its re!li5ed by the individu!l c!pit!list or corpor!tiondepend consider!bly upon trickery, the ch!nces o& the +!rket, !nd other si+il!rcircu+st!nces. Fin!nciers +!y plunder the +!nu&!cturin% corpor!tion, specul!tors +!ysei5e its pro&its. Ch!in stores co+pel s+!ll +!nu&!cturers to sell !t prices yieldin% lowpro&its !nd o&ten no pro&its !t !ll l!r%e +!nu&!cturin% corpor!tions *e3!3, the !uto+obileindustry- pursue the s!+e t!ctics with s+!ll +!nu&!cturers o& se+i=&inished r!w +!teri!lsor p!rts.
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!ccordin%ly !ppe!rs only in their &in!l re!li5!tion !nd distribution !s ! whole *!ble ))-.ot!l pro&its rose !nd rose subst!nti!lly. he pro&its o& !ll corpor!tions !re underst!ted, !sin +!nu&!ctures. )n !ddition, interest, !s +uch !s pro&it, is re!li5ed surplus v!lue6corpor!te interest p!y+ents rose &ro+ 3,/ +illion in 19/3 to 4,9/4 +illion in19/9. /0GPro&its in 19/9 were 41.1 hi%her th!n in 19/3, !nd o&&icers$ s!l!ries /9.hi%her. 'ver!%e ye!rly pro&its &or 19/4=/9 were 1/. hi%her th!n in 19/3. Pro&its rose+ore th!n production !nd the n!tion!l inco+e, !nd +ore th!n w!%es. he ye!rly !ver!%eo& !ll w!%es &or 19/4=/@ w!s hi%her th!n in 19/3 but this is not the true +e!sure o&

w!%es in rel!tion to corpor!te pro&its, &or it includes the w!%es o& serv!nts !nd o& workersin non=corpor!te enterprises, whose pro&its !re not included, !nd !ll o& which, however,h!ve l!r%e ele+ents o& soci!l=econo+ic p!r!sitis+. ' truer +e!sure !re industri!l w!%es*+!nu&!ctures, +inin%, construction !nd tr!nsport!tion- for 19242B the avera!e ofindustrial wa!es was only 53#$ hi!her than in 192(3

TA+L$ The Mo!ement of rofits 'alaries an. %aes 19>3=>9

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19/3 ,/1 100.0 /,BB 100.0 1@,10B 100.0 /@,I91

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19/B @,413 109.0 M M 1@,0@3 99.9 30,I/

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M Not !v!il!ble.Corpor!te pro&its ? net pro&its o& corpor!tions reportin% pro&its, less t!es!nd intercorpor!te dividends. #&&icers$ s!l!ries *corpor!tions- includesbonuses !nd other co+pens!tion. 7!%es ? !ll w!%es includes w!%es p!idto &!r+ l!borers, serv!nts, !nd workers in non=corpor!te industri!l,co++erci!l !nd service enterprises industri!l w!%es, +ore ne!rlyeHuiv!lent to corpor!te w!%es, !re the w!%es p!id to workers in+!nu&!ctures, +ines, Hu!rries !nd oil wells, construction, !ndtr!nsport!tion *r!ilro!ds, epress, tr!nsport!tion by w!ter, street r!ilw!ys,electric li%ht !nd power, telephones !nd tele%r!phs-.'o/rce"Pro&its !nd o&&icers$ s!l!ries ?


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Corpor!te disburse+ents to investors incre!sed %re!tly. Dividends *ecludin%intercorpor!te dividends- rose &ro+ 3,/99 +illion in 19/3 to B,IB +illion in 19/9 !ndinterest p!y+ents &ro+ 3,/ +illion to 4,9/4 +illion. ot!l corpor!te disburse+ents inseven ye!rs !+ounted to @@,000 +illion. 7hile the !ver!%e ye!rly incre!se in industri!l

w!%es w!s only 0.B, the incre!se in stockholders$ inco+e w!s 1I.4. /3GP!rt o& thei++ense pro&its w!s spent on the livin% epenses o& their !ppropri!tors, whose inco+e

w!s &urther swollen by etortion!te s!l!ries or &ees !nd by specul!tive pro&its but +ost o&it w!s invested, used &or the production o& +ore pro&its. he %re!t +!ss o& !v!il!bleinvest+ent c!pit!l w!s enl!r%ed by the pro&its o& non=corpor!te business !nd by the l!r%es!vin%s o& the +iddle cl!ss !nd the s+!ll s!vin%s o& better=p!id workers !nd &!r+ers.*here w!s %re!t co+petition &or the :+!r%in!l; inco+e o& the :co++on people.;

he tot!l o& new securities *ecludin% re&undin%- rose &ro+ 4,304 +illion in 19/3

to 10,1@/ +illion in 19/9, !n incre!se o& 13.

New corpor!te issues rose &ro+ /,031 +illion in 19/3 to @,00/ +illion in 19/9, !

&our=&old incre!se tot!l corpor!te issues in the seven ye!rs !+ounted to 30,B/3 +illion.

New &orei%n issues rose &ro+ @9/,000,000 in 19/3 to 1,B/ +illion in 19/ !nd

slu+ped to I/,000,000 in 19/9, the tot!l &or the seven ye!rs bein% ,@0B +illionwhere do+estic issues *ecludin% invest+ent trusts !nd tr!din% !nd holdin% co+p!nies-

incre!sed !n !ver!%e o& . ye!rly, &orei%n issues incre!sed 10.1 ? !n indic!tion o&the r!pidly incre!sin% i+port!nce o& the eport o& c!pit!l.

he !%%re%!te o& !ll new issues in 19/3=/9 !+ounted to 4@,B4@ +illion. /4G

)n !ddition to r!isin%

The Decline of American Capitalism (1934)

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Transcript of The Decline of American Capitalism (1934)