Carroll Quigley - Tragedy and Hope - A History of the World in Our Time

Much of the improvement in financing World War II in comparison with World War I arose from the fact that attention was concentrated on real resources rather than on money. This was reflected both in the way in which each country managed its domestic economy and in the relationships between countries. The latter can be seen in the use of Lend-Lease rather than commercial exchange as in World War I to provide America’s allies with combat supplies. The use of commercial exchange and orthodox financing in the First World War had left a terrible burden of intergovernmental debts and ill-feeling in the postwar period. In World War II the United States provided Great Britain under Lend-Lease with $27,000 million in supplies, received $6,000 million in return, and wrote off the account with a payment of about $800 million in the postwar settlement.

In domestic economies even more revolutionary techniques were developed under the general category of centralized planning. This went much further in Great Britain than in the United States or Germany, and was chiefly remarkable for the fact that it applied to real resources and not to money flows. The chief of these controls were over manpower and materials. Both of these were allotted where they seemed to be needed, and were not permitted, as in World War I, to be drawn here and there in response to rising wages or prices. Rises in prices were controlled by sopping up excess purchasing power by compulsory or semi-compulsory saving and by rationing of specific necessities. Above all, price rises in such necessities were prevented by subsidies to producers, which gave them more payment for production without any increase in the final selling price. As a result, in Britain the cost of living rose from 100 in 1939 to 126 in 1941, but rose no more than to 129 by the war’s end in 1945. In the United States wholesale prices of all commodities rose only 26 percent from 1940 to 1945, but were twice as high as in 1940 in 1947. Most of this increase in the United States came after the war’s end, and may be attributed to the refusal of the Republican-controlled Congress, led by Senator Taft, to profit from the errors of 1918-1920. As a result, most of the mistakes of that earlier period, such as the ending of price controls and rationing and the delays in reconversion to peacetime production, were repeated, but only after the war itself had been won.

Outside the United States, many of the wartime control mechanisms were continued into the postwar period, and contributed substantially to the creation of a new kind of economic system which we might call the “pluralist economy” because it operates from the shifting alignments of a number of organized interest blocs, such as labor, farmers, heavy industry, consumers, financial groups, and, above all, government. This will be analyzed later. At this point we need only say that the postwar economy was entirely different in character from that of the 1920’s following World War I. This was most notable in the absence of a postwar depression, which was widely expected, but which did not arrive because there was no effort to stabilize on a gold standard. The major difference was the eclipse of the bankers, who have been largely reduced in status from the masters to the servants of the economic system. This has been brought about by the new concern with real economic factors instead of with financial counters, as previously. As part of this process, there has been a great reduction in the economic role of gold. From this has flowed two persistent postwar problems which would have been avoided by the gold standard. There are (1) slow worldwide inflation arising from the competing demands for economic resources by consumers, by investors, and by defense and government needs; and (2) the constant recurrence of acute exchange difficulties, such as the “dollar shortage” in world trade, arising from the inability of gold shipments or foreign demand to influence domestic prices sufficiently to reverse these foreign movements. But these inconveniences, associated with the absence of a gold standard and the inadequacies of the financial arrangements in substitute for it, were generally regarded as a small price to pay for the full employment and rising standards of living which advanced industrial countries were able to obtain under planning in the postwar era.

VIII INTERNATIONAL SOCIALISM AND THE SOVIET CHALLENGE

The International Socialist Movement

The Bolshevik Revolution to 1924

Stalinism, 1924-1939

The International Socialist Movement

The international Socialist movement was both a product of the nineteenth century and a revulsion against it. It was rooted in some of the characteristics of the century, such as its industrialism, its optimism, its belief in progress, its humanitarianism, its scientific materialism, and its democracy, but it was in revolt against its laissez faire, its middle-class domination, its nationalism, its urban slums, and its emphasis on the price-profit system as the dominant factor in all human values. This does not mean that all Socialists had the same beliefs or that these beliefs did not change with the passing years. On the contrary, there were almost as many different kinds of Socialism as there were Socialists, and the beliefs categorized under this term changed from year to year and from country to country.

Industrialism, especially in its early years, brought with it social and economic conditions which were admittedly horrible. Human beings were brought together around factories to form great new cities which were sordid and unsanitary. In many cases, these persons were reduced to conditions of animality which shock the imagination. Crowded together in want and disease, with no leisure and no security, completely dependent on a weekly wage which was less than a pittance, they worked twelve to fifteen hours a day for six days in the week among dusty and dangerous machines with no protection against inevitable accidents, disease, or old age, and returned at night to crowded rooms without adequate food and lacking light, fresh air, heat, pure water, or sanitation. These conditions have been described for us in the writings of novelists such as Dickens in England, Hugo or Zola in France, in the reports of parliamentary committees such as the Sadler Committee of 1832 or Lord Ashley’s Committee in 1842, and in numerous private studies like In Darkest England by General William Booth of the Salvation Army. Just at the end of the century, private scientific studies of these conditions began to appear in England, led by Charles Booth’s Life and Labour of the People in London or B. Seebohm Rowntree’s Poverty, a Study of Town Life.

The Socialist movement was a reaction against these deplorable conditions of the working masses. It has been customary to divide this movement into two parts at the year 1848, the earlier part being called “the period of the Utopian Socialists” while the later part has been called “the period of scientific Socialism.” The dividing line between the two parts is marked by the publication in 1848 of The Communist Manifesto of Karl Marx and Friedrich Engels. This work, which began with the ominous sentence, “A spectre is haunting Europe—the spectre of Communism,” and ended with the trumpet blast, “Workers of the world, unite!” is generally regarded as the seed from which developed, in the twentieth century, Russian Bolshevism and Stalinism. Such a view is undoubtedly an oversimplification, for the development of Socialist ideology is full of twists and turns and might well have grown along quite different paths if the history of the movement itself had been different.

The history of the Socialist movement may be divided into three periods associated with the three Socialist Internationals. The First International lasted from 1864 to 1876 and was as much anarchistic as Socialistic. It was finally disrupted by the controversies of these two groups. The Second International was the Socialist International, founded in 1889. This became increasingly conservative and was disrupted by the Communists during World War I. The Third, or Communist, International was organized in 1919 by dissident elements from the Second International. As a result of the controversies of these three movements, the whole anti-capitalist ideology, which began as a confused revolt against the economic and social conditions of industrialism in 1848, became sorted out into four chief schools. These schools became increasingly doctrinaire and increasingly bitter in their relationships.