“Those who do not learn from history are doomed to repeat it.” Finding ourselves at the beginning of a new depression, interest in the last one has increased considerably. In this in-depth study of the Great Depression, Alex Grant (editor of marxist.ca) details the crash, the response of the ruling class, and how the workers fought back.
It has been said that those who do not learn from history are doomed to repeat it. The capitalist class has not learned the correct lessons from the Great Depression and now they are repeating it. Finding ourselves at the beginning of a new depression, it is unsurprising that interest in the last one has increased considerably. Our task as Marxists is to learn the lessons of 1929-39 so we can find a way out of the present capitalist crisis.
The 1929 crash came at the end of a decade of speculative boom. Capitalism had managed to stabilize itself after surviving the First World War, a wave of revolutions, and the slump of 1920. The “Roaring Twenties” represented the last hurrah of a system heading over the cliff. All the actions the bourgeoisie took to survive the previous crisis served to exacerbate the conditions in the following crisis.
What is notable during this period of “boom” is how it was accompanied by a massive increase in inequality and speculation. Over the decade, the income share of the top 1% of Americans increased from approximately 15% to 25%. In 1929, the top 0.1% in the USA amassed 25% of all wealth. Both of these statistics fell back to about 10% in the 1960s and ’70s, only to return to similar heights in the recent period.
The inflation of stock values formed a significant part of this increase in inequality. In his classic The Great Crash, liberal economist John Kenneth Galbraith detailed how traders managed to game the system. A property bubble developed where a speculator could purchase a plot of land with only a 10% down payment, with the promise of providing the other 90% at a later date. However, our profiteer has no intention of waiting for this later date. Instead he planned on selling the land at a higher price on a rising market. There was a similar bubble-producing process on the stock market. This was known as buying “on margin”. Instead of buying a stock outright, a trader could purchase it for a 10% payment with the other 90% being borrowed from a broker. These processes allowed profiteers to access ten times the capital normally available. Various banks and finance houses were more than happy to get their cut of the action. This is all well and good when prices are rising. People buy, and that in turn leads to increased prices, which in turn causes more people to buy! A classic bubble is formed. At its height, $8.5 billion of margin loans were sloshing around the U.S. economy. This amounted to 8% of U.S. GDP and was more than the entire value of currency in circulation.
Another trick was the formation of “investment trust” corporations. These entities produced no tangible products. Instead, with a relatively small amount of seed capital, they invested in other companies. However, there was nothing to stop investment trusts from investing in other investment trusts in a circular process of creating value from nothing. Galbraith likened this to a pyramid scheme. He detailed how Goldman Sachs founded the Goldman Sachs Trading Corporation (GSTC). GSTC in turn created the Shenandoah investment trust, which then created the Blue Ridge investment trust. They all invested in each other, which caused their stock value to increase, which increased the value of their holdings, which fed back again to boost their stock price! This was an extreme example of the phenomenon of double accounting that Marx labelled as fictitious capital. However, instead of the value of a real commodity being represented first in itself, and second in a stock, here we have ten or twenty degrees of abstraction from anything that could be considered real material wealth and production. In 1929 Goldman Sachs Trading Corporation sold for 222 cents per share. After the crash, when everything fictitious was squeezed out of the market, GSTC sold for under two cents.
The British Marxist Ted Grant, who knew a little about betting on horses, was fond of quoting from The Great Crash, which said that the stock market is kind of like a horse race—with one important difference. At the races, one horse wins and all the other horses lose. However, in the stock market, all the horses win… until all the horses lose. Those buying on margin were totally uninterested in production. They were attempting to live the ultimate capitalist dream of creating money from money, without all the headaches of actually having to employ workers or do anything useful. Eventually this house of cards came crashing down.
The Great Crash
There is this idea that the stock market is totally divorced from the real economy. It is not helped by the fact that the inhabitants of Wall Street deliberately use an arcane language that is intentionally unintelligible to ordinary human beings. Sometimes one gets the impression that they do not even understand these words themselves. In 1929 only 16% of the U.S. population participated in the stock market. This even led some socialists to cheer on the crash as bringing the swindlers down to earth and having nothing to do with working class people. They could not have been more wrong, as we shall see.
While the stock market is abstracted by several degrees from the real economy which produces cars, planes, and radios, there is still a very real link. It is not well known, but it was a slump in the real economy that triggered the Wall Street Crash, not the stock market that triggered the Great Depression. In August of 1929, more than two months prior to the crash, there was a slump in steel production and sales of cars and houses declined. Consumer debt had reached unsustainable levels while construction stagnated. Marx explained that in the final analysis, the cause of every capitalist crisis is overproduction.
Bankers and politicians all repeated the same mantra, “the fundamentals of the economy are sound”, but they were not sound. In the space of a few weeks the Dow lost almost half of its value, going from a peak of 381.17 down to 198.60. Instead of making massive profits, all those who bought on margin could not sell their stocks quick enough. They did not have the money to pay the 90% owed. Mass bankruptcies ensued, and stories of stock market suicides abounded.
Dialectically, cause had become effect, and effect had become cause. The recession had burst the stock market bubble, but the bubble in turn worsened the recession. However, it is impossible to explain the Great Depression purely on the basis of the crash. There have been other bubbles and other crashes in the history of capitalism, but they have not all led to a depression or even a recession. There is no way to explain how, on its own, a crash in October of 1929 resulted in a depression lasting all the way to 1933. If the fundamentals were in fact sound the real economy would have shrugged off the crash and continued on. Similarly, COVID-19 has triggered the current slump which has been in preparation for a long time. A healthy society could weather this storm, while a sick and decrepit society will be dragged down. COVID-19 has revealed all the underlying contradictions of today’s society just like the Wall Street Crash did in 1929.
Individual and corporate bankruptcies got transferred to the balance sheets of the banks. In 1929, 650 banks went under. By the end of 1933 more than 9,000 would go under. The stock market would recover somewhat in 1930, but still at a level 30% below its peak. But then a new slide began, until in 1932 the Dow bottomed out at 41.22, an 89% loss of value. Wall Street would not recover to its 1929 peak until 1954.
|Year||US GDP||Unemployment||Bank failures||Inflation|
The above table highlights the key indicators of the Great Depression. Over four years, U.S. GDP would contract by 45%. Fifteen million would be unemployed and 2 million would be homeless in a country with approximately half today’s population. Wages slumped by 60% and 30 million people were on some form of public or private support. Food riots broke out. Nothing like it had been seen before. If someone was writing this article in 2019 they could add, “or since”. But in 2020 it only took two months for most countries to reach Depression-era levels of unemployment, and we do not know what depths GDP will plunge to.
The ‘invisible hand’
The politicians and bankers of 1929 were all adherents of the philosophy of “laissez-faire”. This was the idea that the invisible hand of the market will decide all, and it is best for the state to stay well away from the economy. Wall Street was in fact a self-governed private association with next to no government regulation. If the market says a man is bankrupt, he is bankrupt. If the invisible hand shuts down banks, that is for the best. Mainstream capitalist economists, from John Maynard Keynes to Milton Friedman, believe that this was a huge mistake.
Banks do not keep all their deposits in reserve. They lend them out to others and gain a share of the unpaid labour of the working class via interest payments. Banks only keep approximately 5-10% of their holdings on hand in case their customers want to make a withdrawal. If more than 10% demand their money then the bank will fail. This is normally not a problem, except when people know that there is a possibility of banks going under. If you think that your bank might collapse the logical thing to do is to withdraw your money just in case you end up losing it. When everyone does this it leads to a wave of bank failures.
The bank failures, plus the rich hoarding their wealth, led to a fall in the supply of money in circulation. The government did nothing to stop this, insisting on balanced budgets and laissez-faire policies. These policies, combined with a reduction in demand due to the slump, led to significant deflation. Deflation, the reduction of prices, is very problematic for capitalism. It means that the value of money is increasing. This causes people to stop spending, because if they wait then the thing they want to buy will be cheaper. Generalized this leads to a collapse of economic activity, leading to more deflation. It also means that debts are now more difficult to repay. A $100 debt, after 10% deflation, will now require the equivalent of $110 to repay (plus interest).
The Keynesians and the monetarists both explain how the laissez-faire approach made the crash worse, but they propose slightly different solutions. The Keynesians propose bailing out the banks, while also providing some form of support to the working class. The followers of Milton Friedman on the other hand propose state handouts to the banks and austerity for the workers. This is what was implemented in the 2008 recession, and has been labelled “socialism for the rich, capitalism for the poor.” In the current crisis there have been trillions of dollars extended to the banks and big corporations to keep them afloat, with some support for workers in some countries. But the relative expenditure is five or 10 times weighted towards the banks. We should recognize that both the Keynesians and monetarists implicitly recognize that the “invisible hand” of the capitalist market does not work and capitalism needs state intervention to survive.
Another failure of the ruling class was their turn to protectionism. In 1930, U.S. President Herbert Hoover signed the Smoot-Hawley Tariff Act, which raised tariffs on a range of imports from approximately 40% to 60%. The idea behind such tariffs is to protect your home market and preserve domestic production and employment. Today, Donald Trump seems to be increasingly in favour of such protectionism. These measures are an attempt to export unemployment. If you are the only country implementing tariffs then it just might work. But the tendency is for every other nation to implement similar tariffs and spark off a trade war.
Protectionism means buying a more expensive and less efficiently produced commodity from home rather than a cheaper and more efficiently produced item from abroad. Aggregated over the world economy this leads to a collapse in efficiency, and a reduction in wealth. You now get less wealth for more labour.
As a result U.S. exports fell from $5.2 billion to $1.7 billion and global trade slumped by 65%. North of the border, similar protectionist measures were in preparation. The British Empire Economic Conference was held in Ottawa, with representation from the major Commonwealth nations. A policy of “Imperial Preference” was enacted on the principle of home producers first, empire second, and the rest of the world third. Canada enacted import tariffs on 30% of U.S. goods. But again, this did more harm than good. At the time, Canada was responsible for the production of 40% of the world’s wheat. Protectionism led the price of wheat to slump from $1.43 to $0.60 per bushel.
Today’s capitalists know very well the negative role of protectionism, but that does not mean it cannot return. Trade barriers and competitive devaluations played an important role in prolonging the slump throughout the 1930s. But all it takes is one country to break trade agreements and attempt to export its problems for there to be a tit-for-tat ramping up of economic nationalism. The present occupant of the White House seems to be a likely candidate to set off a new trade war. The bourgeoisie know exactly where such actions lead, but they may be powerless to stop them.
FDR’s ‘New Deal’
Franklin D. Roosevelt didn’t win election on the basis of a Keynesian New Deal. Instead he ran for office on the same balanced budget laissez-faire policies as Hoover. However, the banking crisis was coming to a head just as FDR was being sworn into office in March 1933. A whole series of states had declared bank holidays to prevent people from withdrawing their funds and bringing down the banks.
Roosevelt closed down all the banks in the country on March 6 and passed the Emergency Banking Act three days later. The state gave 100% deposit insurance to the major banks, removing any of the risk which is supposed to be the justification of capitalist profit-making. They also shut down more than 4,000 of the most insolvent banks with $3.6 billion in deposits. This act appeared to stop the epidemic of bank failures and shored up the money supply. $1.1 billion of hoarded cash was subsequently returned to the banking system and re-entered into circulation. This helped to end the deflation crisis. The state subsequently stepped in to save capitalism again with the implementation of deposit insurance to stop bank runs.
Having shored up the banking system, the New Deal began providing support to the unemployed. $20 billion was expended in public works projects and 25 million Americans were put on relief. Productive infrastructure such as dams were built, but the military also got its cut and New Deal programs built warplanes, military bases, and warships, including two aircraft carriers.
This spending provided a temporary stimulus into the economy and led to a growth of GDP from 1934 to 1937. But this stimulus was merely a temporary fix, like a shot of adrenaline into a sick patient, and did not fundamentally alter the underlying contradictions.
Trotsky explained that the New Deal was the mirror image of fascism:
“Two methods for saving historically doomed capitalism are today vying with each other in the world arena – fascism and the New Deal. Fascism bases its program on the demolition of labor organizations, on the destruction of social reforms, and on the complete annihilation of democratic rights, in order to forestall a resurrection of the proletariat’s class struggle…
“The policy of the New Deal, which tries to save imperialist democracy by way of sops to the labor and farmer aristocracy, is in its broad compass accessible only to the very wealthy nations, and so in that sense it is American policy par excellence…
“But the New Deal itself was possible only because of the tremendous wealth accumulated by past generations. Only a very rich nation could indulge itself in so extravagant a policy. But even such a nation cannot indefinitely go on living at the expense of past generations. The New Deal policy with its fictitious achievements and its very real increase in the national debt, leads unavoidably to ferocious capitalist reaction and a devastating explosion of imperialism. In other words, it is directed into the same channels as the policy of fascism.”
Countries with ruined economies after the First World War, such as Germany and Italy, had no reserves with which to face down the Depression. The ruling class in those countries gambled everything on civil war against the workers, a civil war that they were never guaranteed to win. But in the wealthier imperialist nations that had built up a layer of fat they could afford to forestall such a risky maneuver, although such actions could not be sustained perpetually. The fat would eventually be burned off and debts would have to be repaid, with interest. The return to slump in 1937, with GDP 10% lower than 1929 in dollar terms, showed that the New Deal merely put off the inevitable. Those who today propose new “New Deals” fail to understand that FDR only managed to give the economy a brief jolt before returning to crisis. In an interview with an American journalist Trotsky commented:
“A program which wishes to maintain the foundations of capitalism untouched cannot offer a way out of the crisis… Mr. Roosevelt desires to ameliorate the situation of the toilers in so far as it is necessary to save the capitalist system. I see the only way out through liquidating it once and for all.”
The Crash in Canada
Canada faced almost as deep a crisis as the United States. Between 1929 and 1933 Gross National Expenditure slumped 42%. Average income plummeted to 50% below the poverty line. And unemployment shot up to 30%.
Combined with the general capitalist crisis was a specific disaster in the Western provinces. Another accident, just like COVID, exacerbated the underlying weaknesses. A drought hit the prairies and decimated the agricultural economy. Again, a healthy and stable society could have managed such an accidental challenge, and invest in the application of science to agriculture and irrigation. But Canadian capitalism was neither healthy nor stable.
The drought on the prairies triggered swarms of millions of grasshoppers that would block out the sun and eat any vegetation that survived the lack of water. Cars would overheat because the insects would clog the radiators. The only plant that survived was a tumbleweed known as Russian Thistle, that provided almost no sustenance to livestock. Fertile soil would dry up and be blown away as huge clouds of dust that invaded houses and could not be cleaned off.
Drought, hunger, and plagues of locusts contributed to what must have felt like a crisis of biblical proportions. 66% of the population of Saskatchewan were forced onto relief, and the province lost 90% of its income. There are stories of families only being able to send one child to school because they could only afford one dress for the children. Things were not much better in the east either. Unemployment in Ontario shot up from 2% to 36%.
“Not a five cent piece!”
The Liberals under Prime Minister William Lyon Mackenzie King were in power in 1929. Mackenzie King was the grandson of William Mackenzie, the revolutionary leader of the Upper Canada Rebellion, Canada’s abortive attempt at a bourgeois revolution in 1837. However, apart from his name, Mackenzie King had nothing in common with his firebrand of a grandfather. The Liberals downplayed and ignored the effects of the depression. King even said he wouldn’t give “a five cent piece” to Conservative led western provinces coping with unemployment. This led to the election of the Conservatives under R.B. Bennett in 1930.
While Bennett said he would do whatever is necessary to end the depression, both the Liberals and Conservatives were committed to balanced budgets, laissez-faire economics, and a refusal to give support to the unemployed. Both parties rejected New Deal Keynesianism.
From an international perspective, Canada has rather an odd constitutional makeup. Canada is a true federation where the national (“federal”) government has relatively few powers. The federal government looks after foreign affairs, the military, and immigration, while the provinces and municipalities govern healthcare, education, roads, and welfare.
The question of jurisdiction is a common trick of Canadian politicians trying to disenfranchise the working class. When faced with the just demands of workers an elected official will respond, “of course I am sympathetic to your plight, but you need to talk to another level of government.” But when faced with other jurisdictions the workers will get the same response until they get lost in a Kafkaesque nightmare of bureaucratic buck-passing.
One shocking statistic is that over the period of the Depression the federal government under both Liberals and Conservatives spent more money servicing the debt on the Canadian National Railway than it did on support for the unemployed.
In addition to passing the buck to the provinces, there was a massive ideological offensive demonizing the unemployed and blaming them for unemployment. These Victorian ideas continue to this day, trying to paint unemployed workers as “lazy” and “lacking moral fibre”. Such moralism completely fails to explain how in the space of a year or two the proportion of society lacking moral fibre can jump from 2% to 36%. Let us for a minute accept the dubious notion that this 36% represents the 36 laziest individuals in every 100. Let us also accept that with enough measures to kick them out of their indolent ways they can be promoted out of the bottom 36 and displace 36 previously employed individuals from their jobs. How many out of 100 are now unemployed?
Bennett summed up the government’s punitive attitude in a response to a question in Vancouver, which had 8,000 on relief and more that 40,000 on the verge of bankruptcy:
“If you want to know who is responsible for all this debt, look at yourself in the mirror when you are shaving tomorrow. There are people who say let’s spend more money, well and good, but where is the money coming from? Where is the spirit of our pioneers who tilled our soil and worked in your forests? Did they go to the government whenever they wanted anything? They did not ask governments to be a wet nurse to every derelict”.
These attitudes fostered from the ruling class had real material effects. Canadian historian Pierre Berton detailed the human side of the Great Depression in Canada. Many were forced into suicide rather than face the stigma of going on welfare. Berton tells the story of a young couple from Saskatchewan with a nine year old son. They ran a butcher shop in a small town that failed in the early 1930s. They moved to Vancouver to see if they could succeed there, but their business also failed within a few months. Now they were stuck in the cold hearted bureaucratic insanity of the Canadian constitution. Welfare was a municipal responsibility and they did not have the residency requirements to be given support in Vancouver. But they also did not have the funds to travel back to their home town in Saskatchewan. Eventually a charity gave them enough to buy a one-way ticket, but by then they were completely demoralized.
Instead of coming home as failures they rented a car and gave their boy some comics to read in the back seat. They ran a tube from the exhaust and waited for the gas to do its work. But poverty saved the couple. They woke up in the morning after the car ran out of gas. But it was too late for their son. Distraught, they tried to beat and cut each other, but were too weak to finish the job. Eventually they were found and tried for murder. But the jury refused to convict. The boy’s death was declared “a direct result of the Depression”.
It is easy to forget the human side behind the numbers of unemployed and those in poverty. Each number is a real set of people with real lives. Stalin once cynically commented that “a single death is a tragedy, a million deaths are a statistic”. But he had a point. In fighting the system as a whole it is necessary not to forget the human effects of capitalism. Engels referred to this as “social murder” by the capitalist system. There are people who needlessly die because the general economic system throws them into poverty and unsanitary conditions, while others live in riches. But there are also others who die because of the callous policies of the ruling class – whether it be the victimization of the unemployed, underfunding old-folks homes, or reopening profit making before the pandemic is over. This unending violence of the capitalists is what we fight against and struggle to overcome.
Hobo life and slave camps
Millions in the US and Canada found themselves homeless. In every major town and city “hobo jungles” would pop up as those on the edge attempted some form of mutual aid. In the evening everyone would bring whatever they had managed to beg, borrow, or steal and throw it into a big pot. This “Mulligan stew” would then be shared out amongst the denizens of the jungle. If one looks to the major cities of today, one will see similar developments of homeless encampments facing down attacks from local authorities.
In order to escape the conditions of their hometown, many unemployed young men opted to “ride the rails” by jumping on a freight train and travelling the country. At its height in Canada, over 100,000 were engaged in this lifestyle. But the dangers were significant. A rider on the top of the car could get knocked off going through a tunnel. In winter riders froze to death in unheated cars. Those standing between carriages could get crushed due to unexpected braking. And sometimes people starved to death after being padlocked in by a transport cop. Despite all this, people still took to the rails. The possibility of a better life elsewhere was preferable to the guaranteed worse life where you were born. There might be better opportunities begging in a different town, or perhaps even some seasonal work picking fruit.
But the Bennett government became increasingly paranoid about thousands and thousands of young men with nothing to do and nothing to lose. They saw them as posing a threat of revolution. General McNaughton, a supposed hero of Vimy Ridge during WW1, proposed an idea to the government. The military would set up work camps so that the threat of revolution could be quarantined outside the major cities and contained under armed surveillance.
Government propaganda presented the work camps as a great opportunity for youth to get out into the country and better themselves. The reality was somewhat different. While FDR’s New Deal work projects were far from idyllic, the workers were given $1 per day, had recreational opportunities, and were actually involved in productive endeavors. Conversely, the Canadian camps were imbued with a Calvinist punitive attitude. Conditions were cut to the bone with poor food and 88 men cramped in a hut with one toilet. The stench was unbelievable. Workers received 20 cents a day, which was insulting even by 1930s standards. Additionally, the work was demeaning, not much better than digging holes one day and filling them back in the next. The purpose of what had now become known as “slave camps” was to send the unemployed away and forget about them.
Technically, enrollment in McNaughton’s camps was voluntary. However, anybody leaving a camp was automatically blacklisted from work and ineligible for relief. That left no alternative other than begging, which was liable to get you jailed for vagrancy. Camp workers were effectively denied the right to vote by being directed to vote in their home constituency, which they were not allowed to attend. Free speech was also violated as any worker speaking up about the conditions, presenting a petition, or organizing their fellow workers in any way, was immediately expelled.
Ironically, the slave camps which were built in order to forestall revolution actually became a focal point of revolutionary struggle-as we shall see.
Crisis of leadership
The main organization of the working class in 1929 was the American Federation of Labor, which had affiliates in both the US and Canada. The AFL under its founding president Samuel Gompers was explicitly anti-socialist, and insisted on organizing only the more skilled workers on a “craft” basis. The union federation was even opposed to unemployment insurance, saying it would foster idleness and retard economic recovery! Instead they proposed racist anti-immigrant policies in order to maintain employment. They held this position into the 1930s until it became untenable due to mass pressure from below.
After Gompers’ death in 1924 the AFL turned even further right, if that was possible. The new president William Green explicitly promoted class collaborationist cooperation with management against the limited forms of confrontation before. He said that the boss and the worker had a mutual self interest and workers should take voluntary pay cuts when profits were down.
Thus at the start of the Great Depression the majority of workers were kept passive by the organizations that were supposed to defend their interests. We saw a similar development in 2009 after the last slump. Union bureaucrats opposed strikes and recommended two-tier pensions and other rollbacks supposedly to save jobs. But the jobs were not saved, such as at GM Oshawa. In the current pandemic we have witnessed near total paralysis of the official mass organizations in the face of the need to refuse unsafe work and secure personal protective equipment.
Third Period Stalinism
As a mirror image to the betrayal of reformism was the ultra-leftism of the Stalinized Communist Parties. The Depression struck in the time of the “third period” stage of the Communist International. During this “third” period revolution was supposedly imminent, and all non-communists were therefore equivalent to fascists. Conservatives were conservative-fascist, Liberals were liberal-fascist, and Socialists were social-fascist! In practice this led to a total refusal to form united fronts with workers in social democratic parties and unions against actual fascists.
The third period was also combined with the “theory of the offensive”. Communist Parties were instructed to “seize the streets” and engage in direct battles with the state regardless of the balance of forces. This was tried in Toronto and many Communists were beaten up and arrested. When reformists offered solidarity to the beaten Communists they were rejected and told that they were responsible for the state violence!
Section 98 of the criminal code was used to effectively illegalize the Communist Party of Canada. This law was enacted after the 1919 Winnipeg general strike, and criminalized any association that “teaches, advocates, advises or defends the use of force” in order to make change. Penalties extended to up to 20 years in prison. This blatantly anti-democratic law was widely unpopular, and was so vague as to give police the arbitrary ability to victimize anybody they chose. But the ultra-left antics of the CP left it powerless to build a united front against this dictatorial policy.
People like to think of Canada as peaceful and progressive, but the reality is quite different. In 1931 Section 98 was used to arrest eight leaders of the Communist Party and sentence them to up to five years in prison. CP leader Tim Buck narrowly escaped assassination in Kingston jail when guards shot up his cell during a provoked riot. At a different occasion RB Bennett said that socialism and communism should be put under an, “iron heel of ruthlessness”. This earned him the moniker, “Iron Heel Bennett”.
Foreign born radicals were arrested in the middle of the night and sent by midnight train to the port of Halifax on the east coast. This is the same port where Trotsky was arrested in 1917 on his way to join the revolution. Without any due process, those who could not prove their citizenship were expelled to the country of their birth. We should not forget that large portions of the Canadian population were born abroad. This was an effective death sentence for jewish communists deported to Hitler’s Germany. Later in the 1930s, refugee ships of European jews were also turned away to their deaths.
To top off the ultra-left policies of the third period, the Comintern advocated splitting away from the AFL unions and forming pure “Red” unions. This directly contradicted Lenin’s advice in Left Wing Communism: an Infantile Disorder, where he explained that Communists must stay and fight to win a majority in unions with a reactionary leadership. Splitting away the “left” minority merely leaves the mass of the workers under the sway of the right wing bureaucracy with no organized opposition to the reformist betrayals. In this way an ultra-left policy of splitting away actually serves to strengthen the right wing.
In Canada, the CP set up the Workers Unity League (WUL) as a red union independent from the AFL. This was a mistake, and the WUL was engaged in a number of failed adventures in its founding period. Sectarianism left the WUL isolated, and defeats further demoralized the ranks of the AFL unions. However, it is important to delineate between the policies of the Stalinist leadership and the heroic actions of the Workers Unity League rank-and-file. For all their mistakes, they were the only people actually fighting. The AFL leadership refused to fight, and therefore many of the best working class fighters were naturally attracted to the WUL.
Relief Camp Workers’ Union
The military-run work camps were meant to stop revolution, but they actually had the opposite effect. Normally the unemployed are atomized and isolated, making them difficult for socialists to organize. The camps brought the unemployed together and gave them common grievances. This is a warning to right wing politicians attempting to set up reactionary policies like workfare, where the unemployed are forced to do menial tasks to receive support. If a job needs to be done then it should be done by hiring the unemployed as public sector workers at union rates and conditions. Alternatively, those on relief are given pointless and demeaning tasks that serve no purpose. Either way, workfare and work camps are not that much better than forced slave labour.
The WUL set up the Relief Camp Workers’ Union (RCWU) which attracted some capable working class fighters. One such militant was a former member of the Industrial Workers of the World, Arthur “Slim” Evans, who was regarded as a brilliant speaker and organizer, if a bit reckless. The RCWU set itself the task of organizing the camps and, in addition to addressing local grievances, they advanced the slogan “Work and Wages”, plus the need for unemployment insurance (which did not exist in the 1930s).
The depth of discontent, combined with the sacrifices of the organizers, led to rapid success for the RCWU. Every camp in British Columbia, Canada’s westernmost province, was organized within the year 1934. This was no small task as any organizer who was discovered was immediately expelled and blacklisted. Sometimes they would be given a beating and abandoned far from civilization. When this happened, they merely chose a random name from the phone book and headed back into a different camp. The union produced a paper, the Relief camp worker, which was smuggled into the camps. Anybody found with it was also expelled, but it was still hugely popular. Hundreds of disturbances, riots, and strikes were recorded as the union gained influence.
Slim Evans and the RCWU leadership decided to organize a mass strike, a walkout of every camp. This commenced in April 1935 and 1,500 strikers converged on Vancouver by hitchhiking or riding the rails. This was a huge logistical feat as the workers had to be fed, housed, and cared for. It is a testament to the support from the wider working class that this was achieved.
In Vancouver the strikers maintained discipline in order not to alienate the local population. They were split into different divisions and bunked in labour halls and sympathetic churches. Resources were pooled and members were given tickets exchangeable for a cheap meal at chinese restaurants.
Regular demonstrations were held calling for work and wages, unemployment insurance, and an end to the slave camps. The support from the local working class was shown by one protest attracting 14,000 participants. The RCWU organized “snake marches” where participants would parade in twos drifting from one side of the street to the next until the road was blocked by a massive human “snake”. This helped keep the march mobile and easy to disperse in the event of police attack. A mothers’ council was formed that advocated for “our boys” and in one demonstration thousands of mothers circled the strikers in a massive heart-shaped crowd.
The Liberal Vancouver council was stuck between the strikers and the Conservative government. They were eager to get rid of the mass of unemployed on their streets and appealed to the Bennett government for support. But Iron Heel Bennett refused to give anything to “Communists” and insisted that welfare was a municipal responsibility.
The police held firm to the opinion that the strike was all due to “outside agitators” who were using the unemployed as a pretext to organize a general strike and declare soviet power. They were apparently totally unaware that thousands of non communist relief camp workers had joined the struggle, not to mention massive support from the broader working class who were appalled at the slave conditions and lack of support for the unemployed. Here we see that nothing in history really changes, after Trump declared the 2020 mass protests against police brutality the fault of “antifa” and outsiders.
Supplies for the strikers were running low so they occupied the library at Main and Hastings, an architecturally significant building that still stands to this day. In exchange for a few days support from the city council they ceased the occupation. But after six weeks of constant struggle elements of tiredness were seeping in.
Slim Evans put forward the idea of a march on Ottawa to press their case. This was apparently done without informing Tim Buck and the Communist leadership in Ontario. The CP executive opposed the Trek, but it was already underway before they could do anything about it.
The Vancouver council was quite happy to get the camp workers out of their backyard and even got local police to slow down freight trains to help the 1,500 workers jump onboard. The Mothers’ council made thousands of sandwiches to help the boys on their way. Within a short while the Trek had crossed the Rocky mountains and reached Calgary. In the meantime Slim Evans was called back to Vancouver for a dressing down from the Communist Party executive committee. He came back a few days later after persuading the Stalinist leadership to let him return, but according to reports he “looked like a living skeleton”.
In Calgary the Trekkers were bolstered by an additional thousand strikers who had walked out of Alberta camps. The movement was building momentum and was able to feed itself from the support of local workers. They kept going and reached Regina, Saskatchewan on June 14th.
The Bennett government began to become increasingly concerned about the growing movement. It could not be allowed to reach Winnipeg, the home of the 1919 general strike, and then on to Ontario. The Tories decided to try and tire out the movement and agreed to talks. But this was just a delaying tactic to halt the momentum of the RCWU. It took a few days for the leaders to get to Ottawa, at which time Bennett refused to bend to any of their demands for work and wages. Bennett insisted that the camps were voluntary and the workers should be grateful for the support. Not only that, but he called Evans an embezzler who in return called the Prime Minister a liar. It was a total waste of time.
The state used the time to build up its forces in Saskatchewan. The provincial government wanted the Trekkers to leave as soon as possible without incident, and was willing to use its police force to assist them on their way. But the federal government had other plans and stole the police away from the province, even though their paycheques were signed in Regina. Trains were blocked from heading east, and a provocation was prepared.
The Regina Police Riot
On July 1st, Dominion Day, now called Canada Day, the strikers organized a mass rally in Regina’s Exhibition grounds. Around 1,500 were present to hear speeches from the RCWU leadership, but this was mostly locals as the members were instead watching a baseball game. Police vans encircled the surrounding streets and waited for a time to attack. At the appointed hour, squads moved in to arrest the leadership under Section 98, while legions of cops laid into attendees with lead tipped batons and sawed off baseball bats.
The “Regina Riot” lasted well into the following morning, and by the time it was over 5 people were shot, 39 cops were hospitalized, and 2 were dead. The On-to-Ottawa trek was defeated by state repression. However, the struggle wasn’t for nothing as the movement played a role in the defeat of “Iron Heel” Bennett in the October 1935 election. The incoming Liberals under William Lyon Mackenzie King were forced to repeal Section 98 and shut down the slave camps in 1936.
This was an inspiring movement that was sparked off by a small number of dedicated communist organizers. The Communist party of Canada only had about 1,300 members at the start of the 1930s, so it shows what can be achieved by a relatively small group with a spirit of sacrifice. The best elements of the working class were attracted to this movement. But they also made mistakes that we can learn from today. Some of their mistakes were of an ultra-left character, and some were opportunist.
As part of the Workers’ Unity League, the Relief Camp Workers’ Union saw itself as independent from the “social-fascist” AFL unions and did not demand that the AFL leadership support the struggle. This served to isolate the walkout and let the AFL bureaucracy off the hook from the obligation to support a popular mass movement. The massive support from the wider working class was kept passive and only allowed in organizations under Communist Party control.
The RCWU should have actively worked to broaden the struggle to encompass employed and organized workers, rather than only giving the unemployed an active role. It was entirely possible to achieve such a linking up, as the very day after the Trekkers left Vancouver, the longshoremen began a bitter strike on the docks. In such a situation the issue of union rights for the employed, and decent work for the unemployed, could have united into a general strike with the correct leadership.
But in addition to the sectarian policy towards the rest of the labour movement, the slogans of the RCWU were opportunist. “Work and wages”, and unemployment insurance (UI), are slogans that do not go beyond the capitalist status quo, as shown by the universal implementation of UI in the post-war period. Most importantly their slogans did not unite the unemployed with employed workers.
Instead of work and wages, Trotsky proposed a sliding scale of wages and a sliding scale of hours.
“Against unemployment, 'structural' as well as 'conjunctural,' the time is ripe to advance along with the slogan of public works, the slogan of a sliding scale of working hours. Trade unions and other mass organizations should bind the workers and the unemployed together in the solidarity of mutual responsibility. On this basis all the work on hand would then be divided among all existing workers in accordance with how the extent of the working week is defined. The average wage of every worker remains the same as it was under the old working week. Wages, under a strictly guaranteed minimum, would follow the movement of prices. It is impossible to accept any other program for the present catastrophic period.”
Such transitional demands organically link together the workers and unemployed in order to broaden the struggle to the maximum degree possible. However, despite these weaknesses, the On-to-Ottawa Trek goes down as a seminal event in Canadian working class history that deserves to be remembered and studied by future generations of fighters.
New Parties: The CCF
Forces of nature, like volcanoes, are both a destructive and a creative force. The same is true for economic and social upheavals like the Great Depression. Political parties and movements are both created and destroyed in such contexts.
The new formation that came out of the Depression with the most important legacy was the Cooperative Commonwealth Federation (CCF). The CCF went on to unite with the Canadian Labour Congress in 1961 to form the New Democratic Party, Canada’s labour party. It was not an accident that the CCF was founded on the prairies which were hit hardest by the crisis. In Calgary in 1932 they brought together agrarian populists, socialist intellectuals, left parliamentarians, trade unionists, supporters of the British Labour Party, and even some Marxists.
The founding manifesto of the CCF was adopted in Regina in 1933. It opened with the statement:
“The CCF is a federation of organizations whose purpose is the establishment in Canada of a Co-operative Commonwealth in which the principle regulating production, distribution and exchange will be the supplying of human needs and not the making of profits.
“WE AIM TO REPLACE the present capitalist system, with its inherent injustice and inhumanity, by a social order from which the domination and exploitation of one class by another will be eliminated, in which economic planning will supersede unregulated private enterprise and competition, and in which genuine democratic self-government, based upon economic equality will be possible. The present order is marked by glaring inequalities of wealth and opportunity, by chaotic waste and instability; and in an age of plenty it condemns the great mass of the people to poverty and insecurity. Power has become more and more concentrated into the hands of a small irresponsible minority of financiers and industrialists and to their predatory interests the majority are habitually sacrificed. When private profit is the main stimulus to economic effort, our society oscillates between periods of feverish prosperity in which the main benefits go to speculators and profiteers, and of catastrophic depression, in which the common man’s normal state of insecurity and hardship is accentuated. We believe that these evils can be removed only in a planned and socialized economy in which our natural resources and principal means of production and distribution are owned, controlled and operated by the people.”
However, these strident words were then tempered in the central portion of the Manifesto which expressed an inherent reformist contradiction:
“The CCF aims at political power in order to put an end to this capitalist domination of our political life. It is a democratic movement, a federation of farmer, labour and socialist organizations, financed by its own members and seeking to achieve its ends solely by constitutional methods.”[emphasis added]
But what if the capitalist courts, the capitalist law, the capitalist police, and the capitalist state, disallow ending capitalist domination, as they are guaranteed to do? We should not forget that as these lines were being written Section 98 was being used to crush the rights of socialists under an “iron heel of ruthlessness”, while jewish communists were being deported to Hitler’s death camps.
A socialist who genuinely believes in the emancipation of the working class cannot submit to the rules written by the boss class, any more than the slave uprisings in ancient Rome could submit to the law that declared them property instead of people. The Manifesto eschewed “violence”, but what are we to do when faced by the violence of the state as seen in the Regina Police Riot, or today with the police murder of black people and suppression of protest? A genuine socialist organizes defence of the oppressed against state and fascist violence.
The Regina Manifesto contained many good reforms, such as the socialization of the banks. The Marxist wing of the party also fought for the inclusion of the following closing statement:
“Emergency measures, however, are of only temporary value, for the present depression is a sign of the mortal sickness of the whole capitalist system, and this sickness cannot be cured by the application of salves. These leave untouched the cancer which is eating at the heart of our society, namely, the economic system in which our natural resources and our principal means of production and distribution are owned, controlled and operated for the private profit of a small proportion of our population.
“No C.C.F. Government will rest content until it has eradicated capitalism and put into operation the full programme of socialized planning which will lead to the establishment in Canada of the Cooperative Commonwealth.”
Such words make the Regina Manifesto an important point of reference for Canadian socialists, despite its constitutional confusions. It is definitely a hundred times better than the current NDP constitution that removed all references to social ownership and the implementation of socialism. The current NDP constitution also removed the possibility of winning the 2015 federal election.
The CCF achieved modest growth through the Depression, but most notably won the 1944 Saskatchewan election, allowing Tommy Douglas to implement universal healthcare. Eventually the example of “socialist” Saskatchewan led to the implementation of healthcare nationwide. For this, Tommy Douglas was voted the “Greatest Canadian” in 2004.
But in the main the reformist wing of the CCF dominated, and the modest reforms in the Manifesto were the only ones taken seriously, while the socialist appeals to eradicate capitalism were ignored by the party hierarchy.
While being a significant development, the foundation of the CCF was actually an historical step backwards. The Communist Party of Canada, founded in 1921, was the first pan-Canadian workers’ party. All the best working class fighters flocked to the CP, which was the organizational culmination of the struggles around the 1919 Winnipeg general strike. If the CP had remained on a healthy basis, instead of degenerating into Stalinism, it could have become the dominant force during the Depression and helped provoke revolutionary upheavals. Only the crazy ultra-left policies of the third period isolated the CP and left room for the formation of the CCF.
New Parties: Social Credit
In addition to the CCF, other parties were formed and destroyed by the Depression. One such peculiar formation was that of “Social Credit”, which destroyed the cross-class agrarian party the United Farmers of Alberta.
Social Credit was an odd populist formation that came out of the western Canadian provinces. Their root came from a theory, tenuously related to a part of Marxist economic analysis. The social crediters observed that workers are not paid the full value of their labour. This is the Marxist concept of surplus value. Workers are not paid for the work that they do, they are instead paid for their ability to work. Workers are paid for their labour power, which is the value of the necessities of life, education of the worker, reproduction of the family, plus a moral social component that varies in each society. But the value of labour power, the hours of labour needed to reproduce the worker, is typically lower than the hours a worker works in a day. Such surplus labour is expropriated by the capitalist and is turned into profit.
Marxists resolve the contradiction of unpaid labour by expropriating the capitalist class and replacing production for profit with production for need. Social Credit on the other hand tried to put forward a series of weird and wonderful formulas by which the worker could be compensated. They railed against bankers and financiers who stole the labour of the workers, but they did nothing to replace private ownership which was the source of the unpaid labour.
Social Credit theories suggested that workers could receive “social” credit from the government in order to make up for the lost labour. Some theories suggest various “in kind” gifts. Others had complex schemes to generate value out of nothing. But in the end, the Alberta Social Credit movement boiled it all down to a $25 monthly handout.
To go along with the magical monetary theories came an equally mesmerizing political leader. William “Bible Bill” Aberhart preached a combination of Baptist fundamentalism, and social credit ideology, on the newly popular mass media of radio. In the conditions of depression and drought, the idea of money from nothing gained a mass following of fervent converts.
Such a mass populist formation, with both progressive and reactionary features, has few modern precedents. Perhaps the closest analogy is the “Five Star” movement in Italy. The nearest analogy to Social Credit ideology is probably that of the supporters of “Modern Monetary Theory” who believe you can print money with no consequence to give reforms to workers. Such schemes end up as inflationary, and the workers lose the value of reforms to the expense of high prices. All of these movements ignore the question of who owns the means of production, which cannot be avoided. We also see how things labelled as “Modern” have in fact been tried and failed before.
The United Farmers of Alberta (UFA) were a cross-class formation with both socialist and conservative wings. This mirrors the nature of farmers and peasants who are not a homogenous class. Agrarian labour extends all the way from landless farm labourers, to family farmers, to large landholders exploiting many farm hands. Forming government in 1921 they instituted some progressive reforms, such as the cooperative wheat pool, but later the conservative wing became dominant as they implemented cuts in services, staff and wages. This undermined their support amongst impoverished farming communities.
In 1935 the UFA was swept away by Social Credit in a landslide. The CCF’s equivocation could not fill the vacuum left by UFA. Instead, Bible Bill Aberhart’s populist mass movement surged forward. The UFA quickly split into its component parts. Eight of their federal MPs jumped ship to the CCF, while one other joined the Conservatives.
In power, ephemeral Social Credit theories crashed against the solid rock of reality. Aberhart tried to take over the provincial banks but was overruled by the Lieutenant Governor who refused to sign the laws. Showing an authoritarian bent, he also tried to control critical liberal newspapers, which was found unconstitutional. Having no jurisdiction over banking, the Social Credit government resorted to producing “prosperity certificates”, a failed parallel currency that was labelled “funny money”. The Lieutenant Governor, provincial representative of the Queen of England, even threatened to dismiss the Alberta government, showing the anti-democratic nature of the British-Canadian colonial constitution.
Aberhart died in 1944 and Social Credit dropped its monetary ideas to become a right wing bourgeois party. They ruled Alberta until 1971, before entering into decline and effective dissolution in the 1990s.
After four years of workers keeping their heads down and being held back by the AFL bureaucracy, signs of life in the labour movement began to re-emerge in 1934. It is not an accident that this occurred during a period of recovery after the steep crash of 1929-1933.
Trotsky explained that there is not a linear relationship between economic conditions and class struggle. Slump does not necessarily mean class war, and boom does not always mean class peace. A slump can demoralize workers, who are afraid of losing their jobs. This can be exacerbated especially following a defeat or if there is poor leadership. During the slump workers learn lessons about the true nature of capitalism, but they do not always have the confidence to put them into action until the economy improves.
Another important aspect of the strikes of 1934 was that they were led by revolutionaries. Three main struggles blew apart the previous silence. First, the Toledo Auto-Lite strike, led by the American Workers Party. Second, the West Coast longshoremen strike, led by the CPUSA. And third, the Minneapolis Teamsters’ strike was led by the American Trotskyists.
These three strikes used industrial methods to organize all the workers and not just elite craft workers. They were largely victorious and managed to win union recognition and other gains. It is significant that at this very moment Minneapolis is writing another important chapter in working class history with the insurrectionary uprisings following the police murder of George Floyd.
Founding of the CIO
The 1934, strikes were organized via AFL unions using industrial methods. This sparked a conflict at the 1935 convention of the American Federation of Labor. A resolution stating that “in the great mass production industries … industrial organization is the only solution” was defeated, prompting the split away of eight unions and the formation of the Committee for Industrial Organization (later known as the Congress of Industrial Organizations, CIO).
The CIO reflected the pressure from below to fight back and reject class collaboration. However, it was still led by old bureaucrats from the AFL who supported FDR and the Democrats. The CIO’s first president John L. Lewis was actually complicit in expelling communists from the mineworkers’ union in 1928. But under the CIO he actively encouraged communists to join as organizers. When questioned about this he replied, “Who gets the bird, the hunter or the dog?”
In 1936, the CIO led an important struggle, the Flint sit-down strike. The United Automobile Workers (UAW) had made several failed attempts to organize the auto industry but were faced down by armed guards on the door of the factories. In Flint Michigan in 1936 they adopted a new tactic to organize General Motors. Instead of forming picket lines outside the factory, they “sat down” inside the plant and occupied the machinery! How are scabs going to run the machines with strikers right next to them? How are cops going to attack the picketers when they are barricaded inside the property?
Police tried to enter but were pushed back under a hail of hinges, bottles and bolts. After 44 days, the Flint strike was victorious. This led to a wave of unionization in the auto sector. Within a year, UAW membership had grown from 30,000 to 500,000. This goes to show that there is no power that can defeat the united working class. No repression, no cop, can stop the workers if they are willing to fight.
The victory in Flint spread north of the border in 1937. The UAW used the momentum to organize the GM plant in Oshawa, Ontario. The Liberal premier of Ontario Mitch Hepburn denounced the industrial organizing drive as an American Communist plot! Hepburn vowed that industrial unionism would never come to Canada, and formed a special band of strikebreaking thugs who became known as “Sons-of-Mitches”.
The Oshawa workers did not organize a sit-down strike like Flint, but after two weeks on a picket line they were victorious. Industrial unionism had broken into Canada. This victory set the stage for significant advances for the working class and the development of the post-war social contract.
Tragically, 80 years later, after a series of concessions by their union leadership, GM closed its Oshawa plant. The workers moved to wildcat and occupy, but the union bureaucracy did everything possible to divert the movement into ineffective negotiations. The birthplace of industrial unionism in Canada has been destroyed.
Again, it is important to understand that areas that appear progressive can become reactionary, and reactionary areas can move forward. In the post-war period most like to think of Canada as more progressive than the USA, but prior to World War II the exact opposite was true. Canada was settled by the reactionaries defeated in the American Revolution, and English Canada was dominated by reactionary Protestantism and the Orange Order. Communism and trade unionism were seen as an American disease! The Canadian ruling class wished to keep the workforce unorganized, ignorant – and cheap.
The working-class movement is internationalist or it is nothing. Without the example and assistance of American communist UAW organizers, industrial unionization would not have come to Canada and in turn laid the basis of the Canadian welfare state. Sometimes we hear the American left bemoaning how much better things are in Canada, but which country currently has the highest level of struggle? The fantastic movement against racism is the best answer to all the cynics and sceptics. As the Bible says, the last shall be first, and the first shall be last.
1937: year of struggle
The gathering storm of working-class discontent with Depression conditions unleashed its fury in 1937. There were 4,740 strikes, with 1,860,621 strikers, encompassing 20% of organized workers. These struggles often involved armed conflicts with scabs, fascists and cops. It was the greatest year of strikes in U.S. history up to that date.
However, an important element was missing, the subjective factor. The Communist parties in the U.S. and Canada had a fantastic advance in their healthy period in the 1920s. When they were founded in 1919 and 1921 they were small and inexperienced. But with the education of the Comintern led by Lenin and Trotsky they absorbed great lessons. The third congress of the Comintern was known as the school of revolutionary strategy. During this time Lenin wrote “Left-Wing” Communism: An Infantile Disorder and the young Communist parties learned the importance of the united front when in a minority. Thousands of cadres were educated in the 1920s and a firm foundation was built in preparation for a return to mass revolutionary struggles.
But this firm foundation of Marxism and Leninism was blown apart by the Stalinist degeneration of the Third International. The founding leaders of the Communist movement, like James Cannon in the USA and Maurice Spector in Canada, were expelled for “Trotskyism”. A general purge of experienced militants occurred and the ranks of the party were seriously depleted. Then the Communist parties adopted the sectarian “Third Period” policy of rejecting the united front and attacking socialists as fascists.
In the years after 1917 the best fighters for the working class flocked to the clean banner of the Communist International. Supporters of the One Big Union in Canada and the Industrial Workers of the World went over en masse. IWW leader Big Bill Haywood joined the CP and to this day his ashes are interred in the Kremlin Wall. But during the Third Period many were repelled by the Stalinists. Therefore, during the 1930s the Communist parties were relegated to a secondary role.
The Third Period insanity allowed other forces to fill the vacuum: the CCF in Canada, and the CIO in the USA. The leaders of the CIO, who supported FDR and the Democrats, were allowed to act as hunters holding the communist dogs on a leash. Later under McCarthyism, the CIO bureaucracy again moved to kick out the communist dogs, and turned to the right to reunite with the AFL. The Stalinists also did a policy somersault, switching from ultra-leftism to extreme opportunism in the “Popular Front” period. They even supported Mitch Hepburn’s Ontario Liberals against the CCF, despite fighting him a few years previously in the Oshawa strike.
The American Trotskyists made impressive advances from a few hundred to more than 1,000. They led the Minneapolis Teamsters’ strike, and subsequently united with the American Workers Party that led the Toledo Auto-Lite strike. But they were too small to take advantage of the revolutionary potential of the period.
Instead of the Teamster Rebellion occurring just in Minneapolis, imagine similar movements led by committed revolutionaries in every major city in the U.S. and Canada. Instead of the heroic defeat of the On-to-Ottawa Trek, imagine if the movement of the unemployed had been linked with organized workers. Instead of the pro-Democrat bureaucrats of the CIO leading the 1937 strike wave, imagine this struggle being generalized by a healthy mass communist party untouched by Stalinist degeneration. If not for the degeneration of the Comintern, the conditions of the 1930s were ripe for the development of mass revolutionary parties capable of contending for power.
New Deal failure
The New Deal handouts to big business restored profits from 1934 to 1937, but it was a fictitious growth that could not be sustained when the corporate welfare was withdrawn.
“The short-lived New Deal recovery proved an illusion. The Roosevelt Administration spent $20,000,000,000 trying to pull capitalism up by its bootstraps.
“‘It has actually spent more money in five years,’ moans the New York Times, ‘than was spent in the aggregate by all the administrations that have governed this country from the days of George Washington to the days of Woodrow Wilson ... Yet the business of the country has been subnormal three-fourths of the time.’
“‘The fact of the matter is that there never was any recovery in the sense of an expansion of capital. There was a restoration of profits and a temporary stabilization at a lower level… But when government expenditures were cut in the hope of balancing the budget, the upswing stopped dead. Private capital failed to ‘take up the slack’... when the Roosevelt recession set in, production was still ten per cent short of the 1929 level.”
Roosevelt had tried to save capitalism from the executioner, but he had only won a temporary reprieve at the cost of doubling the national debt. Keynesian “pump priming” ended up being all pump and no prime. Unemployment jumped back up from 15% in 1936 to 20% in 1938. Industrial production plunged 37%, echoing the 1929-33 fall.
The above reality is a lesson to all those who wish to pick the New Deal out of the dustbin of history. New New Deals are merely an old and failed method of trying to save capitalism. The question of ownership of the productive forces cannot be avoided. Either the means of production are privately owned by the capitalists and the crisis of the profit motive continues, or they are taken over by the working class to implement socialist planning for human need.
Lessons of the Great Depression
It was not the New Deal that ended the Great Depression, it was the Second World War. Initially, debt-fuelled war production gave a stimulus to industry while the unemployed were given a regular paycheque in the army.
After the war, the extreme crisis of overproduction exacerbated by protectionism was resolved for a period. Instead of overproduction, in Europe there was underproduction as industry had been smashed by waves of bombing. Post-war reconstruction funded by aid from the U.S. Marshall Plan boosted growth rates all the way to 1958. The dominance of U.S. imperialism led to a beating town of protectionist tariff barriers and a massive growth of world trade.
Ted Grant explained the preconditions for the post-war boom in his classic essay Will There Be a Slump? But it should not be forgotten that, in order to get out of the Depression, the capitalists had to kill 55 million people, and came close to exterminating the human race in a nuclear holocaust. Ted Grant also explained that the conditions that allowed for the post-war growth would turn to their opposite and a new Depression would be prepared. Today, Ted Grant’s predictions have been proven 100% correct.
We look to the past to understand the present and the future. The Great Depression saw the failure of free market capitalism, and New Deal Keynesianism. It saw workers struggling to survive, and learning how to fight back. It saw the rise of new movements, and the death of old ones.
But no historical analogy is absolute, no precedent is directly predictive. In truth, there is no precedent for our current capitalist crisis of overproduction, exacerbated by debt, and triggered by a pandemic. Mass consciousness does not just perceive the situation in 2020, but is conditioned by the previous period. After the 2008 slump people had already begun to reject capitalism and support socialism. There was a global wave of uprisings in the fall of 2019. And now the mass movement has spread to the belly of the beast of capitalism, the USA.
We have certain advantages and disadvantages compared with the revolutionaries of the pre-war period. Our numbers are small compared with the Communist parties, and there is less experience of working-class struggle and socialism amongst the masses. However, in the USA and Canada, the forces of the International Marxist Tendency are stronger than those of the American and Canadian Trotskyists in 1929. We also do not have to contend with the degenerated monolith of Stalinism that repelled workers and youth, and led the movement to defeat after defeat.
We have the clean banner of socialist revolution, and the ideas of Marxism to offer a way out to the workers of the world. In ideas we have the overwhelming advantage over our forebears of being able to learn from their victories and learn from their mistakes. We stand on the shoulders of giants.
We do not know how the ruling class will get out of the current crisis, and the bourgeois do not know either. Last time they killed millions. We do not want to find out how many they are willing to kill to save private property and the profit motive.
We appeal to all who are disgusted by the racism of the capitalist state, the fact that the bosses are prepared to sacrifice poor and racialized workers to make profits in the pandemic; and to those who will not lie down in the face of a new Depression. We appeal to you to join the International Marxist Tendency to learn the lessons of past struggles, like the struggles of the 1930s, so we can put those lessons into practice in bringing down this rotten system. Now is the time when revolutionary ideas can become mass ideas in the population. But those ideas need an organization to promote them. We are entering the period when historic victories are possible. We have no time to lose.