Twin Crises: the balance of class forces at the opening of the war

Neither ruling class, nor working class, had a workable strategy for ordering society in 1939.

A. THE WORKING CLASS

1. The Communist Parties

The militant minority in the working class were demoralised by the reaction, and were isolated from the masses. Ghettoised in the communist parties, they were prey to the vicissitudes of Moscow's policy, primarily because they had lost the ability to formulate their own. The insurrections of the early twenties had failed to take account of the distance from the wider working class. After 1923 a conservative strategy of making alliances and seeking refuge was disguised by a mechanistic belief in the automatic advance towards socialism. This was actually a kind of fatalism, that at its most destructive, lead militants to welcome the rise of the Nazis as a sharpening of the class struggle ('after Hitler, us'). Conversely, the militants' isolation continued to be disguised by adventurism and sectarian tactics, such as the formation of breakaway, 'red' unions. Such strategies could not disguise the way that the militants had lost the initiative. In the brief boom years after the First World War, the militants lost their audience. But then when recession returned at the end of the 1920s, mass unemployment depressed militancy, leaving the Communists agitating amongst the jobless more than organising the working class.

2. Socialists

Post war stabilisation had the effect of tying the Socialist parties closer to the state. In power, their authoritarian instincts and social conservatism were on display. Before the 'Anschluss' uniting Austria and Germany, in Red Vienna 'Marxist councillors offered a "social contract" with parents … offering assistance in return for their commitment to responsible parenting', but where this was lacking 'social workers were on hand to remove children to the municipal child observation centres' (Mazower, 1998: 90). In Belgium, Workers Party leader Henrik de Man's 'Plan of Works' caused a stir across the Socialist Parties for its strident economic nationalism, and later de Man would embrace Nazism as 'the German form of socialism' (Mazower, 1998: 138). In France the 'Popular Front' government enjoyed the support of the Communists for its denunciations of the top '200 families' while the Socialist president assured critics that the economy remained capitalistic (ICC, July 1936, Vol.2 No. 8: 4). Austerity, not prosperity, though was what the Socialists had to offer - 'more apartments were obtained by Nazi Aryanization policies in the Austrian capital in three years than had been built by the Social Democrats in the 1920s' (Mazower, 1998: 101).

3. Working class in the dictatorships

Without independent organisations, and with their leaders in concentration camps, the German working classes were prey to extreme exploitation. Though Alan Milward argues that consumption levels under fascism remained high (Milward, 1965: 28), wages in 1937 were lower than they had been in 1929, despite full employment (Black, 1975: 988). At the same time hours rose dramatically so that the profits of large companies quadrupled between 1932 and 1936 (Alvater et al, 1974: 7). In 1932, 60 per cent of the national income fell to labour, 19 per cent to capital; after four years of Nazi rule, labour's share had fallen to 52 per cent, while capital's had risen to 28 per cent (Black, 1975: 989). Mark Mazower's assessment is that 'in industrial relations, fascist relations clearly lent towards the bosses' and that 'Fascism remained a low-wage economy' (Mazower, 1998: 134). But disciplining labour was not coincidental; it was the role that fascism played, and the reason that big business and the establishment supported the Nazi party.

With $475 million invested in German industry, American capitalists participated in the Nazi-policed exploitation of German workers. IBM's German subsidiary paid $4.5 million in dividends to its US parent company, as its profits doubled to four million Reich Marks (RM) in 1939. Fordwerke's assets mushroomed from RM 25.8 million to RM 60.4 million between 1934 and 1939. In the same year General Motors subsidiary Opel earned RM 35 million. Coca-Cola's German subsidiary increased sales from 243 000 cases in 1934 to 4.5 million in 1939 - an alternative to beer for German workers who were being driven to 'work harder [and] faster' according to manager Max Keith. (Pauwels, 2002: 30-32).

Even in the face of savage repression German workers did on occasions react against Nazi policies. Between February 1936 and July 1937 the government recorded 197 strikes. Ordinary Germans protested vehemently at the euthansia programme against the mentally ill and disabled, and succeeded in stopping the policy. When their Jewish husbands were imprisoned, German women massed in Berlin in protests over three days, and won the release of 6000 men (Goldhagen, 1997: 118-9). Daniel Goldhagen rejects the explanation for German acquiescence to the holocaust, the argument that they were uniquely obedient to the state, pointing out that these 'were the same people, Germans, who had battled in the streets of Weimar in defiance of existing state authority' (Goldhagen, 1997: 381-2). But obedience was the result of the conflicts of the twenties: the left had been crushed, and the Nazis were now the state authority (and even that required an internal massacre of Nazi militants of the SA in the 'night of the long knives').

4. The Soviet Union

Soviet vacillation played a uniquely destructive role in the lead-up to war because of the identification of the militant workers with the USSR. But the mainstay of the Soviet policy of peaceful coexistence arose naturally out of the leadership's claims to 'build socialism in one country'. It only remained to be decided, with which foreign authorities the Soviets would ally themselves. Those Communist Parties that followed Soviet policy were saddled with grotesque alliances. During the General Strike of 1926 the British Communist Party was persuaded to adopt the slogan of 'all power to the general council' of the Trade Union Congress, while it sold out the miners; the Chinese Communists were persuaded to give up their considerable influence in Shanghai and Hong Kong to Kuomintang leaders who then massacred them. To a German Communist leader, Stalin wondered 'Don't you think … that if the nationalists came to power in Germany, they would be so tied up with the West that we could build socialism peacefully' (Black, 1975: 769). But when the Nazis came to power, he was alarmed enough to build bridges with the Entente powers, being rewarded for his opposition to world revolution with membership of the League of Nations in 1935.

In 1936 the Axis powers concluded an anti-Soviet pact, but in 1939 foreign minister Molotov shocked communists across the world by concluding a mutual defence pact with Germany's foreign minister Joachim von Ribbentrop. The treaty handed Western Poland, along with its Jewish population, to the Nazis, and reduced eastern Poland to Soviet rule. Stalin even went so far as to hand German communists who had been imprisoned in the USSR over to the Nazis (Black, 1975: 1038). The treaty was supposed to meet Russia's security needs by creating buffer states. It also included an agreement to exchange Russian raw materials for German technology. 'First we'll pump oil out of Russia', German officers told Ilya Ehrenburg in 1940, 'then blood' (Ehrenburg, 1966: 496).

B. THE RULING CLASSES

1. Unbalanced world

USA - 28.7

USSR - 17.6

Germany - 13.2

UK - 9.2

France - 4.5

Japan - 3.8

Italy - 2.9

Source: Kennedy, 1988: 426

These percentage shares in world manufacturing output in 1938 illustrate the disproportion between economic strength on the one hand, and territorial and political influence on the other. Germany, America and Japan were all constrained by an international system where Britain was the hegemonic power. For Britain and France, however, the problem was that they were punching above their weight. Through the course of the war, and again in the post-war reconstruction, a different equilibrium would be established. But the fundamental problem was the capitalist classes' relationship with the working class. That, too, would be changed, through a restructuring of industry under the pressure of war production.

2. Germany's gambit

Hitler's expansion of production heightened the need to conquer markets for exports, and secure territory for supplies. Eastern expansion was essential for securing oil and wheat. On 4 March, 1940, James D. Mooney, a vice president of General Motors, was sent by president Roosevelt to plead for peace in Western Europe and added 'that Americans had understanding for Germany's need with respect to the question of living space' (Pauwels, 2002: 49). But Germany also needed to knock out its European rivals to secure economic expansion. Without the long-term commitment to armaments expansion of the British Empire (Milward, 1965: 6) Germany took advantage of its motorised army to invade first Poland, then Belgium, France, and the Netherlands. In the East, Germany had concluded treaties with Romania, Hungary and Yugoslavia. But this last was overthrown by an anti-Nazi coup on 27 March 1941 incurring Hitler's 'merciless severity'. A bombardment of Belgrade left 17 000 dead, and the German army occupied Yugoslavia (Davidson, 1981: 61).

3. The British ruling class

In 1940 JM Keynes told Duff Cooper that Nazi economic strategist Walther Funk's plan was 'excellent and just what we ourselves ought to be thinking of doing' (Maclaine, 1979: 149). Between 1932 and 1938 state spending on arms rose from £100m to £800m, 'the greatest public works programme ever' (Economist, 22 April 1939), and an attempt to boost a moribund British economy. Indebtedness followed, particularly to the USA. Another way of arresting decline was to lock the colonies into a 'Sterling Area', making Britain dependent on trade with its colonies.

Official history sees Britain betrayed by the (Tory) appeasers, and rescued by a combination of Winston Churchill's patriotism and Labour's anti-fascists. Revisionists have tried to show that appeasement was a necessary breathing space to build up the military means to defeat Hitler. But the interaction between appeasement and confrontation arises out of the needs of capitalist development.

Like much of the European ruling class, British leaders sympathised with Hitler's goal of crushing working class militancy, both in Germany and elsewhere. That was what Churchill admired in Mussolini and Hitler. But where German territorial expansion threatened British markets in Europe, and territory in the colonies, they opposed it. In fact they welcomed conflict as a means to eliminate a rival. 'The opportunity is being taken to replace Germany in markets into which she has crept by methods often closely related to the unscrupulous and unfair practices now exhibited in the more deathly struggle' (BBC Journal, April 1940).

4. The occupied powers

'Better Hitler than Blum', was a slogan commonly heard from the French employers, and the principle reason why the French establishment failed to put up more than token resistance to the German invasion in 1940 (Clinton, 2002: 65). They hoped the Nazis would provide the force that would crush organised labour, removing the need to accommodate the 'Popular Front'. Vice Premier and First World War leader Marshal Petain signed the armistice that divided the country between the occupied north and the 'French State' based at Vichy, after the French deputies voted him extraordinary powers. Strikes were banned and Jews subject to 'special status'. Forty-nine year-old War minister De Gaulle's flight to London to found the 'Free French' was the only sign of dissent amongst the elite.

In the Netherlands, Denmark and Belgium, the collapse before superior forces led to elite collaboration. Communist parties were banned, and anti-Semitic laws imposed. According to Mark Mazower, these ruling groups, along with the Vichy French were disappointed that Germany refused to negotiate peace, but continued to rule by appointing military commanders, giving orders directly to local civil servants (1998: 148-9). While collaborators dreamed of a united Europe of Fascist states, Germany was only interested in exploiting the occupied powers, appropriating in 1943 40-50 per cent of French industrial output, for example (Mazower, 1998: 160). German also took Europeans by force as war workers.

5. The Italian end of the axis

As another late entrant to the imperialist club, Italy had enjoyed support from the allies in 1911, when it occupied Libya, and in 1936, when France and Britain secretly endorsed the occupation of Abyssinia (under the Hoare-Laval pact). Italy invaded Greece in December 1940 because Mussolini feared the enlargement of German influence in the Balkans, but when the Metaxas' army fought back, it was Germany that had to save its ally (Mazower, 2001: 15).

6. America, the 'arsenal of democracy'

Between the wars, America was already the guarantor of the world financial system, but its political reach was limited, primarily by the European imperial system. As the most rapidly growing economy, America wanted to break into the colonies through its 'Open Door' free trade policy, and was especially concerned to secure raw materials in the colonised areas (Kolko, 1984: 201-6). The Atlantic Charter between Churchill and Roosevelt of July 1941 contained proposed 'access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity'. American surplus capital, loaned to Europe was already making a nonsense of the policy of isolation. Diplomatically, America fell behind British policy in Europe, first supporting appeasement, then confrontation with the Axis. The fact that Nazi protectionism had reduced the German share of US exports from 8.4 to 3.4 billion between 1933 and 1938, as those to Britain helped Roosevelt to decide which side to support (Pauwels, 2002: 57). Even then Senator Harry S. Truman said of the German invasion of the USSR, 'if we see that Germany is winning, we should help Russia, and if Russia is winning, we should help Germany, so that as many as possible perish on both sides' (Pauwels, 2002: 64). In the end, though, it was Germany that brought matters to a head, declaring war on the US on 11 December 1941, four days after Japan attacked the US fleet at Pearl Harbour.

Roosevelt had succeeded in persuading Congress to vote first one billion, then three billion dollars for defence after the German offensive of 1940 (Monnet, 1978: 151). In December, Roosevelt persuaded Congress to extend loans and armaments to Britain as 'lend-lease' to support the war effort. 'These orders are an important factor in United States economic activity in general, and in developing the aircraft industry in particular,' Roosevelt said, adding 'they mean prosperity as well as security' (Monnet, 1978: 135). Absorbing America's excess capacity was an essential means of raising her out of the persisting recession, with unemployment climbing back up to ten million in 1937 (Mattick: 1978: 139). US exports to Britain rose from $505 million in 1939 to $5.2 billion in 1944 (Pauwels, 2002: 54). Until 1944, the Americans remained preoccupied primarily with defeating Japan.