Labor and Economic Construction After the War
GOODS CANNOT BE SOLD WITHOUT BUYERS
By RT. REV. JOHN A. RYAN, D.D., Director, Social Action Department, National Catholic Welfare Conference, Washington, D. C.
Delivered at the Annual Convention of the American Catholic Sociological Society, Cleveland, December 29, 1942
Vital Speeches of the Day, Vol. IX, pp. 266-269.
BEFORE considering the place and prospects of labor in the post-war world, I shall describe briefly the main ethical principles that must underlie any satisfactory scheme of economic reconstruction. I. The Ethical Principles.
The two main principles have been stated in similar language by Pope Pius XII and in the Atlantic Charter. In his radio address on Pentecost Sunday, June 1, 1941, the Holy Father said:
Every man as a living being gifted with reason, has in fact from nature the fundamental right to make use of the material goods of the earth, while it is left to the will of man and to the juridical statutes of nations to regulate in greater detail the actuation of this right.
His Christmas Message of December 24, 1941, includes the following:
Within the limits of a new order founded on moral principles, there is no place for that cold and calculating egoism which tends to hoard the economic resources and materials destined for the use of all to such an extent that the nations less favored by nature are not permitted access to them.
The first of these propositions asserts the natural right of every human being to a livelihood (of course, the Pope means a decent livelihood) from the common bounty of the earth; the second proposition declares that the material goods and resources created by God for all His children should not, in the post-war order be withheld by the richer from the poorer nations.
I quote now the corresponding declarations in the Atlantic Charter. Point Five pledges the respective countries of the signers tobring about the fullest collaboration between all nations in the economic field with the object of securing, for all, improved labor standards, economic advancement and social security.
Point Four promises that those countries will endeavor, with due respect for their existing obligations, to further the enjoyment by all states, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity.
The claim of every individual to a share in the earth's bounty which the Pope lays down as a natural right, the Atlantic Charter promises to make good by international agreement. The claims of the weaker nations to a proper share of the world's resources which the Holy Father bases upon "moral principles", the Atlantic Charter promises to effectuate by international action.
II. Labor and Organized Labor.
Our main concern here, I assume, is not labor all over the world; it is labor in the United States. In this respect and for present purposes, we are all isolationists. And take the liberty of restricting the subject still further. I shall deal mainly with organized labor. All intelligent and realistic observers are aware that the condition of the wage-earning classes in a reconstructed capitalist order will be determined, as in the past, mainly by their ability to organize. In this connection, 1 desire to quote the eloquent historical summary put down more than forty years ago by Adams and Sumner:
In the last six centuries the laboring population has risen from a condition of serfdom to a state of political freedom. In this struggle for economic equality, the victories have been won by the wage earners themselves. When they did not pursue their interest, they lost their interest. When they forgot to demand their full reward, they failed to receive their full reward. They had occasional encouragement, and even an occasional leader, from the employing class, but in the main they fought their way against the opposition, and not with the assistance, of their employers. Their weapons were the strike and the trade union. When the ponderous machinery of supply and demand was ready to give them a lift, its inertia and initial friction had to be overcome with a strike. When it had begun to thrust wages down, it was prevented from entirely degrading the wage earner by the trade union. Always and everywhere the salvation of the working class has been collective action; and while the wage system remains, their progress will continue to depend upon collective action. (Labor Problems, p. 205)
Either of two diametrically opposite situations may confront American labor after the war. It may lose all the advantages that it has obtained since June, 1933, in particular the National Labor Relations Act and the Minimum Wage and Maximum Hours Act.
This will undoubtedly happen if it can be brought about by the dominant economic groups and their associates and satellites. That such is their deliberate desire and design is clearly indicated by certain significant events: the declarations of the National Association of Manufacturers; the attitudes and utterances of the majority of the metropolitan newspapers; the pronouncements and performances of the most powerful of the farm organizations, and the reactionary attitude of the majority of the recently elected Congress. These persons and institutions are the authentic Bourbons of our time. They have learned nothing and forgotten nothing.
In an address delivered, December 7, in New York City, Mr. Wayne L. Morse, one of the ablest members of the War Labor Board, denounced those industrialists who are so "doped by the philosophy of economic feudalism" thatthey misinterpret the trend of events and jump to the conclusion that the time is ripe to "carry on a fight against unionism." He went on to say, however, that "the number of these would-be feudal barons among American employers is small . . ." I wish I could agree with him in this encouraging estimate. Even if the group of "feudal barons" among employers be small numerically it will, I am afraid, exercise a dominant influence upon the thinking and plans of business as a whole with reference to post-war industrial relations.
If the Republicans elect their candidate for the presidency in 1944 and if they are able, with the assistance of Democratic reactionaries, to control both Houses of Congress, the status and influence of organized labor, and therefore of the whole body of wage earners, will undergo a disastrous decline. As a matter of fact, this combination of Republicans and reactionary Democrats already dominates the House of Representatives; that is, the body that was elected the third of last month. Except for two obstacles, the most important recent gains of labor would all be swept away within the next six months. These obstacles are the Senate and the President, and we cannot be too confident about the Senate. So long, however, as the present occupant of the White House remains there, no fears need be entertained for the cause of labor or the cause of social justice.
After the beginning of the year, 1945, the situation may be disastrously different, and labor may face the imminent peril of losing all that it has gained through legislation since 1933.
Assume that this possibility is realized. In order to simplify the problem, let us assume, too, that by 1945 the war will have ceased and the period of post-war reconstruction will have commenced.
What political and economic policies will the masters of industry adopt in order to guide and determine the processes of economic reconstruction? According to their most vocal representatives, they will restore what with wearisome reiteration they have been calling the "system of free enterprise". The phrase itself is not very precise. Probably it was not intended to be too definite. Probably it is more effective as a magic formula, a slogan, a shibboleth. At any rate, many of those who are fondest of it seem to give it about the same meaning that is conveyed by the phrase, laissez faire. "Free enterprise" implies freedom of business from the restraints imposed by either labor unions or political governments. Give business a free hand and it will automatically produce universal prosperity.
To be sure, the champions of "free enterprise" would admit that for a few months after the boys come marching home from the war, many of them will be unable to find jobs. But the "free enterprisers" wishfully think that this temporary difficulty can be adequately met by government relief. Vast public works will be as unnecessary as they are undesirable. When the brief emergency is over "free enterprise" will automatically ensure full employment.
I have called these men Bourbons. They have learned nothing from the false prosperity of the 1920's, nor from the real depression of the 1930's. They have forgotten nothing of their antiquated and discredited economic heresies. They look back longingly to the 1920's, as the golden age of "free enterprise", when government never interfered with the performances of business and when labor unions were almost equally impotent. They shut their eyes to the well-known facts that in that decade of pseudo prosperity "free enterprise" was unable to keep the industrial plant operating at more than 80 per cent of capacity, even though sufficient idle and willing workers were available to maintain operations at full capacity. Why did not "free enterprise"
bring the idle men and idle machines together? Because the "free enterprisers" knew that they could not sell the additional product. Why could they not have sold those additional goods? Because they had not put sufficient purchasing power into the hands of those who would like to buy, that is, the wage earners and the farmers.
This unpleasant bit of industrial history our champions of "free enterprise" have conveniently forgotten. They still believe—not explicitly, only implicitly—that goods can be sold without buyers. Hence they are longing for the time after the war when they can "put the labor unions in their place", even if that means greatly reduced wages and greatly reduced purchasing power.
A few weeks ago I heard over the radio a university professor extravagantly eulogize "free enterprise" because of its achievements in the last 150 years, and particularly, in the years 1921-1929. I listened in vain for the effective retort that his opponent should have made. It could have taken this form: "Yes, free enterprise had full scope in the 1920's and it did produce a kind of meretricious prosperity. But why did it not use its magic powers and formulas to prevent the crash of 1929? Why did it not bring about industrial recovery during the four long years that elapsed between 1929 and 1933? Why were the last months of this four-year period worse than the first? Free enterprise was as free and unhampered under Herbert Hoover as under Warren Gamaliel Harding and Calvin Coolidge." Sometimes I think that the exponents of "free enterprise" are without a saving sense of humor.
A few weeks ago, Walter Lippmann cited Alexis de Tocqueville's L'ancien regime et de la Revolution on the different reactions of the aristocracy of France and of England to the doctrines and the threat of the French Revolution. The privileged classes in England took account of these events, gave up some of their privileges and saved themselves from destruction. Les classes dirigeantes, that is, the aristocracy in France, refused to yield up anything and lost everything. According to Mr. Lippmann, the business classes of the United States have long occupied and still occupy the position of power which was held more than a century and a half ago by the nobility in England and France. He raises the question, whether our aristocracy of business will imitate their social forbears in England, or those in France. They will soon be compelled to make a decision. Here are the words in which he describes the situation:
I think that the American businessmen today face essentially the same choice as did the British and French nobles in the eighteenth century. Will the American businessmen assume very heavy burdens in order to continue to lead our industrial society, or will they become so absorbed in complaining about their burdens that they will not be able to lead? This is a very real question. It is the answer to this question which will determine the future of American businessmen and, I believe, the very future of American industrial society under private management.
It is somewhat more than a hundred years since De Tocqueville wrote the following sentences in another great work:
I am of opinion, upon the whole, that the manufacturing aristocracy which is growing up under our eyes is one of the harshest which ever existed in the world; but, at the same time, it is one of the most confined and least dangerous. Nevertheless, the friends of democracy should keep their eyes anxiously fixed in this direction; for if ever a permanent inequality of conditions and aris-
tocracy again penetrate into the world it may be predicted that this is the gate by which they will enter. (De Tocqueville, Democracy in America , II, 197)
Of course, the business element in our present society includes other groups in addition to the manufacturers, who were the dominant social class one hundred and ten years ago. The great financial, commercial, railroad, petroleum and mining interests have to be added to the manufacturing interest. Taken together these great economic groups wield far greater social power in our time than did the "manufacturing aristocracy" in the days of De Tocqueville. The question of what they will do with their great influence after the war, is one of the most crucial that has ever confronted the American people.
So much for the unpleasant situation that labor may have to face in the post-war period. Let us turn now to the contrary possibility. It is possible that the economic theories of the "free enterprisers" and their spiritual associates, will not determine the policies of post-war reconstruction. Accordingly, the Congress and the National Administration will recognize the immediate necessity of very large expenditures for public works to take care of the millions whom private industry will be unable to employ. The tragic mistake made in the years, 1933-1937, of spending only a fraction of the amount necessary to reemploy all who were unemployed in that period, must not be repeated. After the war, appropriations for public works must not be limited by the discredited theory of priming the industrial pump. Public works can "prime the pump" in the sense that so long as they are continued they cause an increase in private business and private employment. The ratio, I believe, is two and one-half men employed in subsidiary private industries for every one engaged upon the public project. After the stimulus of public works is withdrawn, however, private industry cannot continue at the pace that it has artificially acquired. Even if the government were to put into operation a program of public works so large that all the unemployed found either public or private jobs, private industry alone would not be able to continue this happy condition. Private industry would be unable to continue with full operation and full employment. The reason is to be found in the bad distribution, in the fact that the owners of capital still would receive more than they could spend and that labor would obtain less than it would like to spend. In other words, the industrial pump would not stay primed, unless capital received less and labor more than under the present distribution. ("Can Unemployment Be Ended", p. 12)
To be sure, when and if private industry brings about a better distribution of purchasing power than any that we have known under the "free enterprise" system; when and if the masters of our industrial system come to realize that full employment cannot be maintained unless more of the national income is spent for consumption goods and less of it saved for unprofitable or impossible investment; when and if they reach the conclusion that capital must be content with less, while labor and the farmers receive more, of the national product than has been the case in the past,—then public spending to employ the unemployed can safely be brought to an end. Until this remote and improbable contingency arrives, government will have to maintain a public works program of sufficient magnitude to provide a job for every person who cannot find a remunerative place in private industry.
If the foregoing policy should be put into operation in the period of post-war economic reconstruction, obviously it would be of great benefit to labor. Full employment wouldmean good wages and, therefore, adequate opportunity for labor organization. The possibility that Congress might wipe out labor's recent legislative gains, or in any other way unduly restrict the activities of the unions, would be negligible. Such an attitude toward labor could not exist side by side with the economic and political philosophy implied in a program of federal spending to provide full employment, any more than a generous attitude toward labor and labor unions is compatible with the economic and political theories cherished by the champions of "free enterprise". The two attitudes and the two philosophies are mutually exclusive.
My own opinion of the merits, feasibility, and necessity of large public spending in the period of post-war economic reconstruction is in line with that of Professor Alvin E. Hansen and his colleagues on the National Resources Planning Board. Here are three pertinent paragraphs from their pamphlet entitled, "After the War — Full Employment," issued in January, 1942.
We have to make up our minds as a Nation that we will not permit a post-war depression to overwhelm us. We do not have to take economic defeat after the military victory is won. We can, if we will, maintain business prosperity. We can sustain a continuing demand for goods. We can keep industry going at high levels. We can maintain substantially full employment. We can achieve a society in which everyone capable of and willing to work can find an opportunity to earn a living, to make his contribution, to play his part as a citizen of a progressive, democratic country.
If purchasing power is maintained at a high level, we need have no fears that private manufacturers, retailers, wholesalers, and farmers will not come forward and supply the market with the goods demanded by the public—a rich variety of goods at reasonable prices. Private business can and will do the job of production. It is the responsibility of Government to do its part to insure a sustained demand. We know from past experience that private enterprise has done this for limited periods only. It has not been able to insure a continuous and sustained demand.
When the war is over the Government cannot just disband the army, close down munition factories, stop building ships, and remove all economic controls. We want an orderly program of demobilization and reconstruction. The Government cannot escape responsibility.
To fulfill its responsibility it needs the hearty cooperation of business, labor, farmers, and the professions in the great task of developing a vigorous, expanding and prosperous society.
Which of the two possibilities that I have tried to describe is the more likely to be realized? I have no confident answer. If I were required to lay a bet on the question I should offer even money on either side, but I should determine my choice by the toss of a coin. When I reflect upon the insidious and enormous power of American plutocracy and its retainers and satellites in politics, in journalism and in the professions, I am inclined to be pessimistic. On the other, when I recall the education which the people have received from economic events and political personages during the last decade and a half, I have some hope that by 1944 the majority will be able to see through the fog of shams and shows which now surrounds them, and that they will choose for their rulers men who believe in labor organization and social justice.
About two future contingencies I can speak confidently. First, the millions of returning soldiers and sailors will not be satisfied or fooled by the old clap trap concerning "rugged individualism", "American opportunity" or "American equality". With their knowledge of the almost unlimited productive capacity of our industries, as shown during the war, they will demand the opportunity to earn by honest labor a decent amount of that enormous potential product. And they will demand that their share of the potential product be made actual. They will not be lulled to sleep by commonplaces about the limitations and difficulties of distribution, nor by promises of "prosperity just around the corner". They will demand jobs here and now. I do not believe that an economy dominated by the philosophy of "free enterprise" will be able to meet that demand.
The second positive statement that I can make with some confidence is this: unless the middle classes, that is, the comfortable farmers, the members of the professions, the small businessmen, the holders of executive and directive positions in the great corporations and, indeed, the majority of the "white collar" classes—cease to get their opinions, directly or indirectly, from the daily papers and strive to acquire a greater amount of realistic economic intelligence than they now possess, they may exercise sufficient voting power to place the champions of "free enterprise" in control of economic reconstruction after the war. From such a calamity may the good Lord deliver us.