The publishing house of the Austrian T.U.C. has recently launched a paperback series entitled ‘European Perspectives’. The editors’ aim is ‘to demolish walls the creation of which has become fashionable in our time’. One of the first walls they have demolished is that of the intellectual ghetto to which the Austrian Establishment had hitherto confined the Communists. For the Europa Verlag has brought out an analysis of post-war expansionist capitalism by the Marxist economist Dr. Theodor Prager.
What has produced the impressive post-war growth of capitalist economies. which contrasts so sharply with the stagnation and decline of the inter-war years? Not, according to Prager, any intrinsic general change in the nature and functioning of the capitalist system, nor the high level of military expenditure, which tends rathter to produce creeping stagnation. The answer, it is suggested, lies in the field of ‘political economy’ rather than in that of pure economics.
The Great Depression of 1929/32 had produced numerous practical suggestions as to how expansion and full employment could be achieved on a capitalist basis. Prager shows that he Austrian Social Democrat Otto Bauer anticipated a good deal of Keynes’ ‘General Theory’ in proposals submitted to a Trade Union conference in 1933, which were designed to create 200,000 jobs. The material effect of all these proposals was, however, very limited. The Nazis, with the full support of German capital, applied Keynsian methods almost exclusively to preparations of war, while Roosevelt’s attempt at genuine economic expansion was sabotaged by a strike of American capital, until in the U.S.A., too, war created full employment.
It was the situation created by World War II which, according to Prager, compelled the capitalists in the Western European countries to carry out or submit to the policies advocated by Otto Bauer and J. M. Keynes in the Thirties. Their class and their system on the Continent was gravely weakened and compromised by association with fascism. The labour movement was strong, and the prestige of its left wing higher than ever before because of its association with the anti-fascist resistance. The rival socialist system with its expanding, full employment economy had grown in power and prestige. For the first time in its history, the capitalist system had to provide proof of its justification or accept notice to quit. And nothing less than full employment and a rate of growth comparable to that of the Soviet Union was likely to be accepted as proof of jusitification.
Prager quotes numerous books and articles which show that politicians and business men in Western Europe were consciously thinking in these terms in the post-war years. He also argues—and this seems to me the most significant part of his work—that the extent to which such thoughts were reflected in the actual policies of the capitalist countries, depended directly on the strength and militancy of the labour movement. This thesis, frequently stated in general terms, is supported in detail mainly by evidence from Italy. The remarkable growth of the Italian economy since 1945 is ascribed to the refusal of the Italian labour movement to submit to police terror, to its insistence on keeping open factories and shipyards written off by big business, to the success of the crisis-proof nationalized industries such as ENI,footnote1 and generally to the fact that Italian big business and the Italian government have had at all times to take into account the ‘presenza’ of the Italian labour movement. Corroborating evidence is adduced from the economies of Austria and Japan.
Despite the evident success of the new policies, their maintenance requires unrelenting political and trade union struggles, and this for two main reasons: 1. The natural tendency is still for the share of wages and salaries in the national product to decline, which makes for recession. This tendency must be countered by wage and salary increases. Prager argues convincingly that high rather than low wages favour productivity and expansion, as indeed they had done in the United States in the 19th century. Right wing
2. Business men and conservative politicians have not yet overcome the influence of traditional economic orthodoxies and their deep-rooted objections to Keynsian policies. They continue to be over-sensitive to the risks and dangers of full employment, and they regard successful nationalized industries with ill-concealed hostility. They have a sub-conscious conviction that sooner or later the situation will occur in which the well-tried remedies of deflation and labour discipline will have to be resorted to. There is reason to believe that one motive behind the establishment of the Common Market was to facilitate the application of these remedies in the appropriate circumstances.