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Arne Swabeck

The Passing of the NRA

(July 1935)

From New International, Vol. II No. 4, July 1935, pp. 122–125.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

IN THE NAME OF the ancient slogan of “states’ rights” the US Supreme Court by unanimous decision in the Schechter Poultry Case declared the NRA unconstitutional. The reasons set forth in the ruling are not of great significance. The Supreme Court said that “the attempt through the provisions of the code to fix hours and wages of employees of defendents in their intrastate business was not a valid exercize of federal power”. This is merely the legal way of justifying a decision to suit the requirements of the dominant sector of monopoly capital. It screened the judicial execution of a much ballyhooed measure of governmental regulation and restraint once accepted even by the large corporations as a necessary evil but now considered obnoxious by them. The general effect of this ruling, however, is bound to have far-reaching consequences. It is not at all unlikely that the collapse of the NRA will open the gates to much more terrific class conflicts over a vast area and thus help to speed the American workers in a revolutionary direction.

In essence the NRA functioned as a bridge from the lowest point of the crisis toward the upturn of the economic cycle. As the cornerstone of the New Deal structure, it represented an unusual and a daring form of interrelation between the political state and the economic organs of capitalism. A system of legislation that went beyond the traditional concepts of free and untrammeled competition existing from the time of unprecedented expansion of productive forces and accumulation of capital, it also departed widely from the traditional constitutional forms. At its inception the NRA found a general popular acclaim from the broad layers of the American population. But, once the lowest point of the crisis had been safely passed, it was subjected to an intense controversy. Hard-boiled employers and financiers denounced what they looked upon as its socialistic features which stifled free initiative. Among its most ardent champions were the leaders of the American Federation of Labor who, because of their own reactionary political concepts and their impotence in face of the task of labor organization, leaned upon the NRA as their only reed of salvation. While the Socialists were more moderate in their praise and very gentle in their criticism, the Stalinist leaders, on the other hand, incapable of a revolutionary and realistic estimate of the forces at work within class society, simply denounced it as the “Roosevelt Slave Act”. From the outset it became synonymous with the Roosevelt administration and was considered the greatest achievement of the New Deal policies. Today, its collapse is hailed by Wall Street, it is bewailed by the AF of L hierarchy and it has left the petty bourgeois liberals dazed.

An Understanding of these manifestations of contrary views in the face of such recent acclaim is necessary in order to comprehend the significance of the Supreme Court action. A series of other questions arise out of the obituary. Firstly, it would seem reasonable to expect that the collapse of the NRA, which had become synonymous with the Roosevelt regime, would also indicate that the latter has passed its peak of popular acclaim and is on the way to final eclipse. In any event, whatever measures are proposed still to maintain some of the Blue Eagle principle even if only in skeleton form, cannot have very great significance. But inherent in this whole situation is also an element of crisis in the capitalist regime, of conflicts and clashes within its dominant strata. Serious political regroupments of forces can be looked for as well as new attempts to create a third party. At this particular moment the question may not yet arise as to whether the third party attempts will follow the plane of previous populist attempts or whether the entrenched oligarchy in heavy industry and in the large financial institutions will find it necessary to seek new and stronger political weapons in the creation of a militant Fascist party. To a large extent that depends upon the development of the working class forces and the maturing of their revolutionary consciousness. The crisis has left its serious impact on these developments. But the first steps toward the revolutionary radicalization of the American workers, who were stunned by the catastrophic force of the widespread unemployment during its downward curve, could be expected to reveal itself only in the turn toward revival and upswing.

In the United States the tremendous economic crisis struck with a terrific force and with all the characteristics of a social crisis. Due to the high development of its national economy, the contradictions involved in the accumulation of capital and the falling rate of profit had reached ever more acute forms. Out of the total capital which was set into motion in the process of capitalist production there was a relatively much more rapid growth of the proportion of constant capital when compared to variable capital. In other language, with the increased mechanization of industry the relative proportion of labor employed diminished. And since labor power is the source of all surplus value it follows that with its relative decrease there was a fall in the rate of profit on the total capital invested. At the moment when the overproduction of capital in the means of production – to the extent that it served as capital, or served for the exploitation of labor – and when the rate of profit fell below the point at which accumulation of capital was advantageous to the capitalist class as a whole, the crisis occurred. This presented the problem for American capitalism of finding compensation for the falling rate of profit by increasing the total mass of capital upon which profit is made. It had to be accomplished at the expense of the workers’ wages since that was the only way in which profits could be restored. Concretely it was carried out by the so-called measures of crisis readjustment. They proceeded from the already drastically reduced general wage level to a raising of the intensity of exploitation of labor. Then followed the measures to expand credits and to provide liquid capital by heavy governmental expenditures together with efforts to raise the commodity price level. Inflation resulted. Primarily these measures served the purpose of restoring confidence within capitalism in the continuity of the process of reproduction. On the whole, however, the NRA scheme fitted admirably into this process of capitalist restoration. It became a strong-arm method to save the tottering banking system, forestall bankruptcies of the large corporations and to set capitalism going once more on the road forward to new profits. Roosevelt asserted very clearly from the outset that his aim was to restore the profitability of industry. This sums up the significance of the NRA in its general economic aspect.

But the political implications of the NRA were no less important. Essentially it consisted of two distinct parts: Firstly, its code regulation features to secure what was called “fair competition”, by the elimination of “destructive price cutting”, the regulation of trade practises, etc. Secondly, its social relations feature of labor provisions with its regulation of minimum wages and maximum hours, and above all the famous Section 7a covering the “rights of collective bargaining”. Each of these parts operated under close governmental supervision. While both were economic in their nature they had far-reaching political implications. In every respect the code regulations favored the larger corporations which were also the dominant force in the code authority bodies. They operated in the direction of a greater concentration of industry, a greater centralization of finance together with a strengthening of monopoly capital against the weaker competitors. In its real essence this served as a preparation of the internal market to stand the strain of new imperialist expansion. The NRA social relations feature, however, was yet more fundamental in character. For the authors of the New Deal policies it meant the establishment of a new social equation in which capital and labor were to cooperate under governmental regulation and supervision. The reasons for this conception were obvious and clear. Capitalism had plunged into its crises. A large unemployed army had shown its temper in restlessness, creating possibilities of greater convulsions ensuing from its desperate position. A resurgence of labor militancy could certainly be expected with a turn in the business cycle. The conservative unions had disintegrated and had become reduced to a narrow shell. Would they be sufficient in that form for capitalism to rely upon to stem a possible tide toward more militant organization and action? This was the crucial problem and the aim of this social relations feature was therefore pictured as an aid to labor organization. Recognition of the “right to collective bargaining” held the center of the stage in all the general ballyhoo for the “forgotten man”. In reality it meant very little, except in the sense that it did become a stimulus to the powerful stream of proletarians, which at the turn of the business cycle, gravitated to the trade unions. Workers joined the conservative unions in large numbers. The AF of L experienced a revival and growth fully in accord with the NRA. scheme of preventing more militant organization and action. The AF of L officials in turn accepted the mission laid out for them as salesmen of the New Deal, encouraging labor to look to Roosevelt to usher in the new age of “fullness of life” for all, and to enable the salesmen to call upon him or the established labor boards to put the governmental stamp of approval alongside of the union label of their betrayals in strike settlements.

Thus the actual chief purposes of the NRA labor provisions were clearly established. The recovery efforts in their early stages needed the unified support of all classes of the population. In harmony therewith, the labor provisions were designed to prevent independent class activities, to prevent militant action by the workers and to turn their struggles away from the basic reliance on their own organized power and into governmental channels where they could be tied up in the complicated system of labor boards. But the large masses, who began action on their own account, streamed into the conservative trade unions for entirely different purposes. They proceeded in efforts to turn these unions into weapons of battle against the employers for the right of organization, to make collective bargaining real and in order to regain a higher standard of living. Militant struggle by the workers could not be prevented altogether – far from it – as the history of this period shows.

The most powerful corporations which, pressed by necessity at the time and due to their fear of independent class activity by the workers, had accepted the NRA, once its machinery was in operation, drove headlong for company unionism and resisted actual union organization with the most violent means. Aided by the otherwise incompetent trade union bureaucrats, whom they themselves held in contempt, and aided by the cunning devices of the labor provisions, further by the sheer force of the political state, they managed to check two strike waves and to keep these developing struggles from reaching maturity. Whatever concessions were gained by the workers in these strikes, accrued to them, with but few exceptions, by virtue of their militancy in organization and militant fighting for their demands. With particular clarity this period demonstrated the contrast of gains made by turning the unions into actual instruments of struggle and the futility or defeat in relying solely on the governmental agencies of the NRA. The latter course, if not enforcing an outright sell-out, usually wound up in the courts to meet defeat for the workers or to remain on the calendar indefinitely. Not less than 411 such labor cases were pending in the courts when the code regulations were found to be unconstitutional. This lesson will not have been in vain so far as the workers are concerned. They learn essentially by their own experiences. And no doubt, these bitter experiences did more than any other factor to discredit the NRA in their estimation even before it actually went out of existence.

Aided by a partial “natural” upswing, the NRA had done its work, and a division of opinion regarding its future set in among the various sections of the ruling class. In the upper circles of the trade union bureaucracy this has been interpreted as a division between the exploiters who were motivated by particular greed and avarice and those harboring views friendly to labor. That is not at all the case. The real situation stands quite differently. Capitalism had been relieved, during the course of the NRA, of its main worry in two directions. Profits began to return and the initiative for independent class activity was checked for the time being. These tasks accomplished, the big bankers and the owners of the large industrial corporations became more violently articulate in their protests against “governmental interference in business”. Some of the employers, notably the retail traders, favored the continuation of the code regulations, but their opinions weighed less in the scale. The NRA was no longer necessary to the real plutocrats. Their smaller competitors had been weakened and they felt confident again of their power to deal new and smashing blows to the workers in the field of the class struggle. American capitalism does not yet need the regimentation or the governmental supervision typified by the NRA as a “permanent” system. It has obtained the breathing space that it sought and which Roosevelt so accomodatingly helped to provide. Hence, there should be no illusions of any serious differentiation between Roosevelt and the dominant capitalist forces. It is true that he had to speak harsh words to them and chide them as money-changers motivated by selfish interests at the time when they were stranded on the dangerous reefs of the crisis; but that was done essentially in order to lend to it the coloring of an all-American team pulling together for the NRA. Now its mission has been performed and some of the vital pillars supporting the capitalist economic structure that were at the point of crumbling have been reenforced. The structure emerges stronger than before. The rule of the entrenched oligarchy continues through the traditional, even if stiffened forms of bourgeois democracy. In the breathing space it has obtained it can be counted upon to proceed with absolute unrestraint, wielding fire and sword against the working class. But in this breathing space the historical contradictions will ripen further.

Has the profitability of industry been restored? Here are some indications. As a matter of fact, profits have boomed amazingly. For instance, a report of the National Emergency Council, which was the coordinating body of all the administration’s recovery agencies, cites figures of the Federal Reserve Bank of New York to show that 290 companies which made a profit of $100,000 during the first nine months of 1932 increased this to $430,600,000 during the same period in 1934. And what happened to wages during that period is shown by figures from the US Bureau of Labor Statistics. The average per capita weekly wage in all manufacturing industries was $18.50 during the first nine months of 1932. It was $19.11 during the same period in 1934. In other words, while the firms listed above boosted their profits more than 4,300%, labor’s wage was raised 61 cents a week. In view of the rise in the commodity price level, this latter figure tells its own authentic story from real life in contrast to the pretended aim of the NRA. of restoring the purchasing power to the masses of the people. A similar story can be related by facts and figures also from real life, concerning its second pretended aim of spreading employment through the limitation of working hours. In most cases, the code regulations provided for a maximum work week of 40 hours, though in some cases a much higher maximum was permitted. If compared to the 1929 average work week of 48 hours these regulations would be of some significance; but when compared to the crisis period, very little indeed. Thus during the first five months of 1933, just prior to the time the code regulations went into effect, the average work week in manufacturing industry for full time and part time workers put together were 34.7 hours.

However, with th’e upward change of the business cycle the accumulation of capital proceeds apace. Its organic composition has risen to higher levels. The relative growth of the proportion of constant capital as compared to variable capital continues to increase. A concrete example in this respect also will prove illuminating. This is taken from the steel industry, the giant amongst the basic industries. The several large corporations have recently installed in several of the important plants high speed modern steel mills costing upward of twelve million dollars and capable, through continuous operation, of producing 2,240 tons of 75-inch sheet steel in 24 hours, or 680,000 tons a year. What an industrial advance is here presented over the ordinary hot sheet mills of eight plants rated at 60,000 tons a year capacity! In effect this means greater mechanization of industry with a diminishing proportion of labor employed. Surplus capital will again exist in greater abundance alongside of a surplus population, and the existence of the one will be the condition of the other. The very same law which drove the fall of the rate of profit down to the point of crisis, operates again, laying the basis for new and enlarged contradictions in American national economy and heralding deeper plunges into more turbulent crises. In the light of the experience of the NRA. what will then follow? Certainly then, if not sooner, we will be face to face with a capitalist regime seeking a stronger political weapon and carrying the coat of arms of Fascism.

The business cycles which in former decades reflected the fluctuations of a process of capitalist growth have now become a mechanism of its general decay. As the United States in the postwar period firmly established its dominant position in world economy, the changes in the cycle began to have a much more profound effect on the consciousness of its working masses. The misery and destitution of the crisis engendered a seething discontent; but it was held in check largely by the frightful scourge of unemployment or the fear of unemployment. However, with the first signs of an upswing the enormous mass vitality, formerly held back, found an outlet in powerful strikes, practically engulfing the whole country during the life of the NRA. The economic changes gave this vitality redoubled force. Union consciousness was displayed in instance after instance, in general strikes or threats of general strikes in protest against police or military intervention. Because of the general situation of American capitalism it is not now in a position to give the concessions it could give during past decades. Even the concessions implied in the NRA. were considered too great. In the course of further developments the violent resistance to the most elementary rights of working class organization and to its most elementary demands is due to reach monstrous proportions. But this will find its counterpart in a stormy revival penetrating much deeper into every fibre of the trade union movement. No doubt the despicable bureaucracy of Green and Co. will endeavor to tighten its claws but only to find itself confronted with a greater explosive force. This does not mean that these struggles can be confined within the framework of the trade unions. On the contrary, they will be only the beginnings of the political consciousness of the working class.

Alongside of these developments, American capitalism is driven inexorably to greater world conquests. A real economic upswing cannot be based merely on the internal market. It will have for its objective the most aggressive intervention in the present chaos of world economy. Uninterrupted growth of armaments and military conflicts stand already on the agenda, to be followed by the final capitalist “solution” – Fascism. It knows no other solution and it will in the final analysis stop at nothing short of that if it has its way. Such are the perspectives after the end of the NRA.

Henceforth all depends on the conscious role that the working class will play. Its crucial force was held in check during the crisis. It is now entering upon a new road. Released from the entanglements of the complicated NRA provisions, its own independent class activity becomes so much more decisive. That alone will avail. Defense of its rights in militant struggles is now imperative. The change in the business cycle affords grandiose possibilities. But the fundamental lesson to be learned from the events so far is: Against the proposed capitalist solution it is necessary to develop these struggles toward the working class solution – socialism.


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