Living With Crisis By Fritz Sternberg [John Day, Publishers, 184pp.]
In this, his latest work, subtitled “The Battle Against Depression and War,” Fritz Sternberg has written another provocative exposition of his theory of the “Progressive Left.” In doing so, he not only again throws down a challenge to revolutionary socialism he also poses the dilemma of social-democracy on an international scale.
However one might disagree with Sternberg’s theses, and that we do so strenuously will be shown below, there is no denying that he does an excellent job of accumulating statistics and representing his material. However, a good style is no substitute for correct politics.
Living With Crisis is divided into four chapters, and thus lends itself to easy treatment under four headings.
The first chapter deals with the position of American capitalism following the second World War. With an imposing array of statistics, the author proves his case. The United States emerged from the war as the strongest industrial power in the world, but the contradictions of the system (vast accumulation of factories and production on one hand, and a decreasing purchasing power among the masses on the other) have brought it to face with a situation where today it must continue in what he calls a “truce economy” or else face a serious crisis.
This truce economy is one in which the economy has just emerged from one war and is preparing for the next. It is not a war economy, but contains the potentialities of becoming one at any moment. This truce economy finds it’s reflections in the huge armament program, the Marshal Plan, and now the program under the North Atlantic Pact.
This increase in armaments coming at a time of full employment increases the danger of inflation. If the latter is not checked, it will be followed by an economic setback, by a minor depression, but as long as the military sector continues its vast expansion, there is little likelihood of a crisis approaching that of 1929 in gravity and duration.
In other words the factors making for a crisis are strongly reflected by international events. It is to this world situation we know turn.
Europe in Crisis
The second chapter, “Europe in Crisis” is to our way of thinking the most informative and interesting in the book. With his customary ample statistics, Fritz Sternberg shows that Europe has been replaced by the United States as the financial heart of the world. The loss of its colonies and colonial markets, the devastation wrought by the second World War, and finally, the establishment of a “Russian Empire” on its eastern borders, which formerly was a market for its industrial products and a source of food and raw materials – all these factors and others make it impossible for Europe to gain its pre-World War II political position. Europe can only survive as a political entity on a new basis, on the basis of a progressive solution, the establishment of a United States of Europe.
This progressive solution calls for the socialist transformation of Europe. England, under the Labor Party which has already taken steps along the road to “socialism” (Dr. Sternberg graciously admits that England is not a socialist society) cannot do it alone. German Social-Democracy must ally with it. If the democratic socialist forces in Germany prevail against all opposition, it is possible that, in conjunction with the British Labor Party they would constitute a basis broad enough to realize a democratic socialist planned economy capable of maintaining itself as an independent force in the sphere of world powers.
What is this opposition? Intervention not only from the United States, but also from a “state with a new social system, the Soviet Union.”
The third chapter of the book logically takes up The Soviet Union and the Russian Empire.
The Soviet Union has come out of the second World War as a world power second only to the United States. Furthermore, it has been able to bring Eastern Europe into its orbit, so that to the 12% total of world industrial production which Russia enjoyed prior to the war has been added another 6 or 7%, an increase of 50% over its own share. Now in this post-war period Russia has set a goal of industrial production equal to that of all the rest of Europe, including Great Britain and Germany before the second World War. In spite of this, Russia remains far behind the Unites States, who’s superiority in industrial production today is roughly 41/2 times to 1. Neither in the next 15 years, with all its five year plans, can Russia hope to overtake the U.S. It can close the gap, but not eliminate same.
Quite a map of a different color, however, if Russia draws Germany under its influence. Russia would be irresistible on the European continent. “A Russian empire extending to the Atlantic might overtake and conceivably surpass American production.” Such a Russian empire might reasonably hope to become the first power!
“What Ahead” is the meaningful title to the final chapter of this book. Picture the situation as drawn by Sternberg. On the dramatic front, the danger of a crisis, owing to the fact that the huge armament program coming at a time of full employment, has had the effect of wiping out large reserve markets at home through inflation. The growth of the military sector, “while concealing the growth of the crisis, has at the same time increased the latency of the crisis, making it so much more dependent on the continuation of the truce economy.”
Thereby the danger of war increases. Since a reduction in the military sector might lead to a grave economic crisis, “awareness of this fact might easily beguile certain circles into demanding the continuation of the war economy at any price.” (Authors emphasis)
The threat of war is further enhanced by the expansion of Russia in Europe. As long as the threat of further expansion over all of Europe remains, there will be strained relations between Russia and the U.S., and the possibility of war.
The Authors Solution
F. Sternberg has a two-fold solution to this problem of crisis and war. Government controls alone are not sufficient to bring about the redistribution of income, the increase of savings among the poor classes, which are necessary to provide a reserve market in case the truce economy ends. It depends on whose interests these increasing government controls will be made to serve. The “Left-Wing” and progressive groups must exert every effort in this direction, to organize to “wrest away from the giant corporations and the political reactionaries they support, a part of the economic and political influence they have gained in the last few years.” In short, the progressives must get control of the state to serve the interests of the workers.
More yet, this New Deal must be extended to foreign policy. The latter first of all would call for sufficient military support to Western European countries against Russia, guaranteeing them that “any step on the part of the Russian against the European powers constitutes a declaration of war on the United States.” Next, the European crisis, the second of the two weapons Russia is using today – the first being its military strength – must be solved with the “socialist transformation” of Europe and the formation of the United States of Europe. The present American foreign policy of blocking the “socialization” of Germany must be reversed to one of making it possible for a socialized Germany to ally with British socialism, and thus present Europe as an independent political entity. The latter will confront an obstacle to further Russian expansion in Europe, and reduce the Soviet Union to third among the world powers. In this way, the crisis can be averted, and the threat of war eliminated.
Arthur Rosenberg in his History of Bolshevism pointed up very well the dilemma of the social-democrats. They try to be Marxists, but since a Marxist is revolutionary or nothing at all, and the social-democrats like Sternberg seek a “progressive” solution within capitalism, they find themselves in an inescapable contradiction.
Is there a middle ground between capitalist economic and socialist economics, and intermediate, half-grade between the two schools in which we can place the social-democratic economists?
Let us first of all examine F. Sternberg’s use of the expression “democratic socialism.” He applies it to the British Labor Party, and also speaks of the German workers after the first World War as “desiring only to put through certain reforms within the framework of capitalism, in spite of their socialist program.” (Our emphasis). Come now! In the latter case, how is it possible for socialists to advocate reforms under capitalism, when socialism calls for the abolition of socialism?
As Integer, writing in his more sober days, states in his introduction to Rosa Luxemburg’s Reform or Revolution the social-democratic workers really wanted reform of capitalism and not socialism. That is the reason they followed the German Social-Democratic Party. Integer further shows where Rosa Luxemburg erred in believing that obtaining immediate demands was the way to socialism, the means to the end. The means, the capitalist reforms, became the end in themselves, because the party was built on this basis.
As to the British Labor Party, Sternberg gives them far too much on the credit side of the ledger. He states that they are moving towards socialism. The Fabians and the social-democrats (the so-called socialists in the BLP) have always made it clear that their conception of socialism is what they have in England today, state capitalism. This is their goal, and they can have no other. They ran for office, and will run in 1950, on the program of reforming capitalism, and maintaining and increasing nationalization.
Is Nationalization Socialism?
If, with nationalization, the British Labor Party is moving toward “democratic socialism,” why not apply the same yardstick to Russia, where nationalization is practically 100% whereas in England it is only 20%? The Stalinists too say they are moving toward communism (giving to each according to his needs, receiving from each according to his ability, which is the same as socialism). If one objects to Russia merely on the grounds of its political terrorism, party dictatorship, concentration camps, etc. this is no economic analysis at all. Or perhaps the Sternbergians would suggest there is an “undemocratic socialism” as well as a “democratic socialism”. The point is as we and the Socialist Party of Great Britain have pointed out repeatedly, the nationalization which has taken place in England (and incidentally in the Western European countries now behind the Iron Curtain) are merely the substitution of state ownership for traditional private ownership. The forms of capitalism – wage-labor and capital – remain in full force. The state now becomes the agency through which surplus value is extracted from the workers and distributed to the owners of government bonds or those who control the state apparatus. Under state capitalism collective exploitation of the working class replaces the traditional exploitation by individual capitalists under “free enterprise.” Thus, nationalization in Germany, allied with nationalized Great Britain, would not mean a “democratic socialization of Europe,” but the creation of a State Capitalist United States of Europe. Indeed, it is not unlikely at all that under the force of the development of their own system, the capitalist class itself will create these state capitalist forms. Or should we say, “will continue” to create these forms, as they have already done much along these lines in Western Europe today without a Labor Party or social-democracy in office.
Labor Party England, a Social-Democratic Germany, containing all the forms of capitalism, will likewise have to solve the problems of capitalism, the foreign trade, the dollar exchange, the speeding up of the workers to gain a favorable place on the world markets, etc.
The struggle between the Laborites and the social-democratic reformers on the one hand, and the capitalist class on the other is not one between the establishment of socialism as against the retention of capitalism, but one to decide who is going to administer capitalism.
So much for in-between economics. Social-democratic economics shows itself to be nothing more or less than the economics of the reform of capitalism and/or the introduction of state capitalism.
It’s only link to socialism is the use it makes of its phraseology. Stalin has also learned how to quote Marx and Engels to win support among workers for the expansion of his Russian brand of state capitalism.
International Dilemma
The dilemma of social democracy on the domestic field, that of trying to steer a middle course between capitalism and socialism, and ending up in the embrace of state capitalism has likewise been transferred to the international field. F. Sternberg and those of his school are fond of talking about new phenomena which we must take into account.
Let us take this one of social-democracy, as an example. Not having any independent revolutionary position, it can hardly be expected that social democracy can bring a revolutionary settlement in the international field. Thus, when Sternberg calls for the socialist transformation of Europe, he makes it clear that this can not be achieved without American economic, political, and military assistance.
Of course, he states that this American intervention must be of a “progressive” nature, but he is not so reticent about the necessity of using military aid against Russia. “A progressive American program… must oppose the Russians by supporting an increase in the American military sector and synchronization of the American and Western European armament program.”
Followers of the Sternberg school might hail his economics and politics as giving a new, fresh outlook to the world situation. From the foregoing, we view it as nothing but the old, stale outlook which has always characterized social-democracy. It is that of aligning itself with one imperialism, or one capitalism, as against another, as the lesser of two evils.
No Solution at all
Our criticism has completely ignored the manner in which F. Sternberg believes the domestic economy can be reformed to add to the savings and earnings of the working class to avoid crisis. And why? For the simple reason that in Living With Crisis, as in his preceding work, The Coming Crisis, the author fails to lay down any specific program, except to say it must be of a “progressive” nature. Certainly, if England is an example of his “progressive” solution, we want none of it here. It involves trying to reform capitalism by changing its form, something which can not be done as we have pointed out on numerous occasions. Certainly, England hasn’t avoided a crisis, but seems headed for a severe one. (The recent devaluation of the Pound is vivid evidence of crisis.)
In all fairness we report that F. Sternberg admits that England can’t solve the problem alone. But if one state capitalist economy cannot, how can two or three together? Or can capitalism plan? Now we are getting to the kernel of social-democratic economics. Planning under capitalism, accounts for the reason why in the U.S., the Social Democratic Federation and the Socialist Party of America has lost so many members to the New Deal. After all those years of “socialist propaganda,” these social-democrats finally found their “home” and settled down to a long comfortable residence.
The creation of a United States of Europe on the basis of state capitalist forms would not eliminate economic rivalry and the threat of war. Did the establishment of state capitalism in England in 20% of its sector lessen its imperialistic antagonisms with Russia? As a matter of fact, creation of a state capitalist United States of Europe might further sharpen the antagonisms in the world. Not only would it compete with Russia on the European and Asiatic continents, but it would also constitute a threat to American imperialism.
As we tried to point out in the series of three articles on “U.S. and World Economy” in the last three issues of The Western Socialist, the advent of state capitalism serves the purpose of sharpening capitalist antagonism, as it throws the whole weight of the state in support of its national economic interests in the world. And the reaction to such a threat is therefore quicker and more severe than under traditional “free” capitalism.
Socialism the Answer
In showing American capitalism how to combat Stalinism and Russian expansionism, the social-democrats and progressives of all stripes are objectively serving the interests of American capitalism. They are akin to the scouts who go ahead of an army, probing the weaknesses of the defense and reporting them back to the general headquarters. Did not we witness F. Sternberg advocating the military aspects of the North Atlantic Pact before it was passed in congress?
Revolutionary socialists realize that the solution to both Russian state capitalism and American capitalism lies not in running to one to escape the arms of the other. That the solution to crises under capitalism is not more capitalism, but its abolition, and the establishment of socialism. That the solution to wars under capitalism is not the establishment of rival state capitalisms, but the elimination of all forms of capitalism.
If this solution of the socialists appears too simple, we are sorry. But socialists are either revolutionary or – well, perhaps “Left Progressives” which is as good a term as any other, since it is descriptive of nothing. Returning to Living With Crisis, it is well-written and deserves to be read by all socialists. It is a challenge to them. After all the best answer to those who would seek to reform capitalism is not slogans or over-simplified statements, but the building of a revolutionary socialist movement. It is on this task we must concentrate as the real “battle against depression and war.”
The Western Socialist, Sept-Oct, 1949
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