Economic Compulsions Behind the War Drive

[p010] “ECONOMIC COMPULSIONS BEHIND THE WAR DRIVE — In addition to these political factors, the American capi- talists are being propelled along the road to a new World - - War by pressures generated within their own economy. Over the past decade American industry has almost doubled its productive capacity. At the same time that inflation and taxes are cutting purchasing power at home, the world -markets for its goods have become restricted and the out- - lets for its surplus capital reduced. The United States may be richer, but the rest of the world is much poorer and cannot get the currency to buy American goods. Our own dollar difficulties show that. One zone after another has been closed off to American trade and investment in the post-war period. Trade with the Soviet-dominated countries has slowed down to a trickle. The anti-imperialist sentiments and the expro- — _ priations of foreign enterprises have, made capitalist invest- _ ments risky and unfavourable in many colonies. _ - These difficulties were not too serious so long as the post-war boom lasted. But no sooner had the * pent-up cee demands. been filled than they asserted themselves. In _ 1949 American business began to sink. This was the first — threat of crisis. It was overcome by the Korean War. "Yet even this boom has not sufficed to keep U.S. economy on an even keel. For the past year, signs of a mew reces- _. sion have appeared in the textile and other consumer- goods industries. Since the close of the Second World War, American capitalism has been heading toward two equally distasteful alternatives: either a relapse into depression or going over to an arms economy. More and more it has had to step

[p011] up arms activity in order to avert economic decline. In 1949, 7 to 10 per cent. of the national product was in war goods. This was almost doubled after the Korean War. Despite all the official protestations of peace, arms appropriations are absolutely necessary to keep American and world capitalism operating. But what must be the inevitable outcome of such a breakneck production of armaments? It cannot continue indefinitely—and yet it cannot slacken. The rest of the capitalist world cannot stand even a moderate drop in U.S. economic activity. A general slump there would push Europe and England to the wall.* In fact, the arms budget is being constantly accelerated. U.S. military expenditures are now at the rate of 52 billion dollars a year—and will be pushed up to 66.4 billions by the end of 1952. As Aneurin Bevan himself pointed out in his recent book: ‘So much wealth is tied up in the war-machine that fears of universal deflation and consequent bankrupt- cies and unemployment will thrust us either into military action or the continuation of arms production on a self- defeating scale.”” This is precisely the danger. At a certain critical point in the rearmament drive, the mountain of weapons can no longer be piled up at the same pace. Then © comes the hour of decision. The capitalist manufacture of arms inescapably ends in the use of those arms. The N.E.C. statement says: “The Labour Party, as a democratic socialist organization, believes that interna- tional peace, like social peace, depends upon discovering - and removing the causes of conflict between men.’ We have tried to show that the root causes of the developing * The Conservative M.P., Cyril Osborne, had this to say on the “menace of peace” in the “Times”, May 7: “Peace in Korea could bring absolute chaos to the economy of the western world, and it is of the utmost urgency that thought should be given to. the grave problems that peace would bring. But even without a Korean peace, the mere threat of a slackening in rearmament could bring disaster to world markets, because the difference between slump and boom is only the marginal 10 per cent., as was proved in 1948.” mo : 8

[p012] conflict come from the appetites and operations of the profit system. If this be so, the only way to remove these causes is to get rid of the capitalist system which produces them and the owners and rulers who profit from them. These are the real motives and economic pressures behind the war drive. They explain the behaviour of Washington and provide the necessary framework for understanding its policies and aims.