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Permanent War Economy

T.N. Vance

The Permanent War Economy

Part III – Increasing State Intervention
[Section B]

THE SUMMATION OF CORPORATE AND noncorporate sales or receipts yields the gross value of production, or c plus v plus s. This magnitude, together with its components, and the average rate of profit for all industry from 1939 to 1950 are shown in Table VI.

Constant capital was derived, as explained in the footnote to column four, by subtracting net national product (which represents the sum of variable capital and surplus value) from the gross value of production. An alternative method, since the magnitude of variable capital and surplus value were previously derived, would have been to subtract surplus value from the gross value of production, thereby obtaining total capital, i.e., the summation of constant and variable capital. Then, from this last figure, variable capital could have been subtracted in order to obtain constant capital. The results would naturally be identical.

It is the relationship between the magnitude of surplus value and the magnitude of total capital that determines the rate of profit, according to Marx, and for all industry, including the portions of surplus value paid out in the form of interest, rent, etc., in addition to that which is specifically labeled profits, he is unquestionably correct. The average rate of profit, shown in column eight of Table VI, thus portrays the actual performance of American capitalism under the Permanent War Economy.

Three facts of considerable importance emerge from this analysis of the average rate of profit:

1. The level of the average rate of profit is almost three times that shown in Table IV, confirming the easily observed fact that the capitalist who obtains profit must pay substantial tribute to the more parasitic members of the capitalist class who collect interest, rent, royalties, and absurdly large salaries (of course, in many cases, the division among capitalists as to the form and method of appropriating surplus value is not nearly as clear-cut as herein suggested).
2. The Permanent War Economy not only succeeded in restoring the profitability of American capitalism, but actually managed to increase the average rate of profit until 1944, i.e., there is a definite correlation between the ratio of war outlays to total output and the average rate of profit. An increase of 30 per cent in the average rate of profit, as occurred between 1939 and 1944-1945 is, in some ways, even more significant than the fact that the true average rate of profit for all industry reached a peak of one-third, for it is conclusive evidence that state intervention has as its major objective guaranteeing the profits of the bourgeoisie.
3. The Marxian law of the falling average rate of profit reasserts itself following the end of World War II, although it is significant that the maintenance of a ten per cent ratio of war outlays to total output is sufficient, in the short run at any rate, to maintain the average rate of profit at a higher level than existed in 1939 or even in 1940.

The data contained in Table VI represent the “guts” of the economic performance of American capitalism under the Permanent War Economy. From 1939 to 1950, the mass of surplus value rose from almost $40 billion to an estimated $142 billion, a rise of 256 per cent, the largest increase of any of the components of economic performance. Virtually keeping pace was the increase in the magnitude of constant capital, which rose from $112.3 billion in 1939 to an estimated $396.8 billion in 1950, a rise of 253 per cent. The gross value of total output, as measured by gross sales or receipts, naturally comes next in rate of growth, increasing from $195.5 billion in 1939 to an estimated $653.8 billion in 1950, a rise of 234 per cent. Then follows total capital, which rose from $155.6 billion in 1939 to an estimated $511.8 billion in 1950, a rise of 229 per cent. In last place is the increase in the magnitude of variable capital, which rose from $43.3 billion in 1939 to an estimated $115 billion in 1950, a rise of but 166 per cent. All of these changes combine to yield an increase over the first twelve years of the Permanent War Economy of eight per cent in the rate of profit.

In the process of capital accumulation, it is, however, as Marx observes, “the composition of the total social capital of a country” that is crucial in understanding the economic laws of motion that prevail. The organic composition of capital relates the growth in constant capital to total capital, and it is the increasingly high organic composition of capital, as constant capital increases relative to variable capital, that threatens capitalists with self-destruction through concentration and centralization of the social means of production in fewer and fewer private hands and all the social consequences that then unfold. The trend in the organic composition of capital under the Permanent War Economy can easily be calculated from the data in Table VI, and we present below the rates for the years of significant change:

The mass of the means of production were thus 72.2 per cent of the total capital, including labor power, employed in production in 1939. The percentage rose slightly, in conformity with the generally observed tendency toward an increasingly high organic composition of capital, to 73.7 per cent in 1941. There then followed a perceptible decrease, during American participation in World War II, to a nadir of 68 per cent in 1944. A slight increase in 1945 was followed by a substantial increase in the composition of capital in 1946, as peacetime output resumed, with the upward trend continuing until a new peak of 77.6 per cent was attained in 1948. A slight slump during the recession of 1949 was only preliminary to virtual restoration of the 1948 peak in 1950. The organic composition of capital has thus increased by more than seven per mitt between 1939 and 1950, and by 14 per cent from 1944 to 1950.

The decline in the organic composition of capital during the war years is not surprising in view of the huge increase in the ratio of war outlays to total output, for it can be directly traced to the decline in the productivity of labor that takes place in war-time, to the physical necessity of increasing output through abnormal reliance on manpower, to the drastic decline in net private capital formation, and to the vicissitudes of the class struggle that placed the proletariat in a position to accomplish a slight reduction in the rate of surplus value. As a matter of fact, all these factors operated in the United States from 1942-1945; the only wonder is that the decline in the organic composition of capital during World War II was not greater.

Since, at an 80 per cent composition of capital, four dollars of means of production are needed to yield a wage of one dollar to the average worker, the relative diminution in the variable constituent of capital as capital accumulates makes it increasingly difficult under capitalism to employ the entire available labor force. This pressure continues to exert itself even though the Permanent War Economy has, in its own way, as previously explained, “solved” the problem of unemployment. Precisely where the breaking point is likely to be, no one can say, but it is clear that the composition of capital is already dangerously high and constitutes a sword of Damocles, hanging over the unsuspecting head of such a highly-geared capitalist economy that in a few years it is possible to produce all the automobiles, television sets, etc., that can be sold under capitalist conditions of production. If, therefore, only a very high ratio of war outlays to total output can reduce the composition of capital or, at least, arrest the tendency toward a constantly increasing composition of capital, then the economic motives for American imperialism to engage in such activities in foreign policy as warrant an increase in war outlays, even if the ultimate consequence is all-out war, are laid bare for all those with eyes to see who wish to see.
 

IT IS NOT NECESSARY TO RELY ON OUR calculations and derived figures to conclude that the Permanent War Economy has yielded an unprecedented profit bonanza for the bourgeoisie, restoring both the mass and rate of profit to record-breaking levels. We can first look at the results of a study by the Securities and Exchange Commission for manufacturing corporations listed on the stock exchange. This study, covering the years 1938 to 1947, is indicative of what has happened to the largest aggregates of capital. Its results are embodied in Table VII.

It will be seen that the rate of profit on sales is consistent with the ratios that we developed earlier in this article. Net profit before income taxes for these leading manufacturing corporations was only $1.6 billion in 1938, with net profit after taxes $1.3 billion. A spectacular rise until 1944 then took place, followed by a decline in 1945 and in 1946, and then the reaching of new heights in net profits before taxes in 1947. At more than $10 billion in 1945, these 1,306 manufacturing corporations averaged a net profit before income taxes in excess of $7.7 million, which was about four times the level of 1939. Even after income taxes, these, principal manufacturing corporations earned $6.4 billion in 1947, or almost five million dollars on the average. Despite the rise in corporation income taxes, this was three times the level of 1939! The return on net worth, which represents invested and reinvested capital, is by far the most interesting set of figures in the table as, without reference to the turnover of capital, the return on net worth indicates the expansive qualities of capital. On a before-income-tax basis, the rate of re-turn on net worth rose from 6.4 per cent in 1938 and 10.2 per cent in 1939 to a wartime peak of 27.9 per cent in 1943 and then declined to 17.6 per cent in 1946, but immediately rose again to 27.4 per cent in 1947. The confirmation of our earlier conclusions is readily apparent.

The rate of return of net profits after income taxes on net worth is the final proof that our contentions are completely accurate with respect to the impact of the Permanent War Economy on profits. From a rate of 5.1 per cent in 1938 and 8.3 per cent in 1939, the return on investments in major manufacturing corporations rose to 12 per cent in 1941, then leveled off during the war at a rate between 9.6 and 10.1 per cent, rose to 11.9 per cent in 1946 and jumped to 17.2 per cent in 1947! At the 1947 rate of return, assuming maintenance of the tax rates in existence at that time, a capitalist would receive back his entire investment in a manufacturing enterprise in less than six years. To match a performance of this kind one must return to the earlier days of capitalism when it was in its ascendancy. Such a rate of return, almost twenty years after American capitalism entered the permanent crisis of world capitalism, is a tribute not only to the effectiveness of the Permanent War Economy in preserving capitalism, but also to the enormous inner strength and productive capacity of American capitalism.

Unfortunately, the SEC study does not go beyond 1947. We can, however, turn to the annual study of National City Bank of New York to obtain a reliable picture of current profits of leading corporations. To facilitate examination, we have divided the data contained in the National City Bank’s Monthly Letter of April 1951 into two tables. In Table VIII-A, we present the data comparing profits after taxes and book net assets (net worth) in 1950 with 1949.

AS MEMORANDA ITEMS, WE HAVE selected the four manufacturing industries that show the greatest net profit after taxes. These are the pillars of heavy industry. Their performance in 1949 is clearly comparable to 1947 (and 1948 was even a better profits year than 1947 or 1949), but in 1950 it is breathtaking. Forty-five petroleum companies increased their net profits after taxes from $1,413,000,000 in 1949 to $1,730,000,000 in 1950, an increase of 22 per cent. Fifty-five iron and steel corporations increased their net profits after taxes from $555,000,000 in 1949 to $786,000,000 in 1950, an increase of 41 per cent. Sixty-five chemical concerns increased their net profits after taxes from $543,000,000 in 1949 to $743,000,000 in 1950, an increase of 37 per cent. Twenty-six automobile companies increased their net profits after taxes from $857,000,000 in 1949 to $1,054,000,000 in 1950, an increase of 23 per cent.

For 1,693 leading manufacturing corporations, net profits after taxes increased from $7,046,000,000 in 1949 to $9,288,000,000 in 1952, an increase of 32 per cent. No wonder, then, that a special joint study of the SEC and Federal Trade Commission (summarized in The New York Times of April 27, 1951) reports that:

“Profits of manufacturing corporations touched the highest point in history during 1950 ... The report disclosed that the 1950 net income of the corporations before payment of Federal taxes was 61 per cent higher than in 1949, or $23,200,000,000, compared with 1949’s total of $14,400,000,000. Net income after taxes of manufacturing corporations in 1950 was estimated at about $12,00,000,000, or 43 per cent more than in 1949.”

The study shows that this phenomenal profit performance occurred despite an increase of almost 100 per cent in provision for Federal taxes.

The joint study also shows that the larger the assets, the smaller the rate of increase in net profits after taxes, again confirming the Marxian analysis of the results of capital accumulation. Those companies “with assets of $750,000 or less allowed an average profit increase in 1950 over 1949 of 106 per cent.” At the other end of the scale, “those of $100,000,000 and over averaged 32 per cent (increase in net profits after taxes in 1950 compared with 1949).” The previous record year of 1948 was exceeded by 11 per cent. Returning to the National City Bank study, the percentage increase in net income after taxes in 1950 over 1949 for leading corporations ranges all the way from eight per cent for 695 finance companies to 73 per cent for 248 firms engaged in transportation. Thus, for the grand total of 3,304 companies included in the study, net profits after taxes rose from $10,468,000,000 in 1949 to $13,563,000,000 in 1950, an increase of 30 per cent. The book net assets of these same corporations rose from $95.4 billion in 1949 to $101.9 billion in 1950, with manufacturing representing about half the number of companies and an equivalent portion of total capital investment.

The rate of profit for these same companies in the National City Bank Study is shown in Table VIII-B.

Impressive as is the percentage margin on sales, even more spectacular is the return on net assets. While the performance for leading manufacturing corporations as a whole confirms the results of the SEC study previously cited in Table VII, with an increase in return on net assets from 13.9 per cent in 1949 to 17.1 per cent in 1950, it is interesting to note that the 65 chemical companies increased their return on net assets from 17.1 to 21.3 per cent, and the 26 auto and truck companies went from 30.2 to 32.3 per cent. Thus, for a corporation like General Motors, the most terrific profit-maker in the history of American capitalism, invested capital is paid for every three yearsl

In every category except finance the return on net assets rose from 1949 to 1950, with the grand total for the entire 3,304 leading corporations rising from 11.0 per cent to 13.3 per cent, which is an increase of over 20 per cent in the rate of return, despite an increase of $6.5 billion in net assets.

On the assumption that all capital invested and reinvested is employed in production, the comparison between the return on sales with the return on net assets indicates the turnover of capital and its different rates among major industries. “The shorter the period of turnover,” says Marx (Capital, Vol. III, Kerr ed., p.85), “the smaller is the fallow portion of capital as compared with the whole, and the larger will be the appropriated surplus value, other conditions remaining the same.” Although it would be preferable to obtain the rate of turnover on capital by dividing total sales by total invested capital, the same result can be obtained by dividing the percentage return on net assets by percentage margin on sales. Inasmuch as the difference between capital turnover in 1950 and in 1949 is negligible, we present below merely the turnover times for major industrial categories, based on Table VIII-B, in 1950:

In other words, for the companies contained in the National City Bank study as a whole, capital was turned over 1.7 times in 1950, or about every seven months. The variation among industrial groups is extreme, ranging all the way from the slow turnover time of 0.7 in such heavy fixed capital industries as transportation and public utilities to the very rapid turnover of 3.9 in retail and wholesale trade, where a tremendous volume of business can be done with a relatively small capital investment as capital turns over once in almost every three months. This, of course, is another reason why calculating the rate of profit solely with reference to sales is completely misleading. For total manufacturing, the turnover is 2.2, but for autos and trucks the turnover time is 3.6, indicating why the automobile industry is so profitable.
 

THE BOURGEOISIE AS A CLASS recognizes, although with considerable reluctance, that government planning and state intervention and compulsory controls are necessary as a matter of survival if the aims of the Permanent War Economy are to be fulfilled. As Truman stated in the President’s Economic Message to Congress of January 12, 1951:

“A defense emergency requires far more planning than is customary or desirable in normal peacetime. The military build-up is a planned effort. The mobilization of industrial support for this military build-up is a planned effort. The industrial cutbacks and civilian restraints, necessary to achieve military and economic mobilization, are planned efforts ... In these critical times, it is recognized that Government must assume leadership in this planning. It has the prime responsibility for national security. It has access to the basic information. The most important operation toward this end is the broad programming of various major requirements; the balancing of these requirements against supply; and the development of policies to satisfy needs according to priority of purpose.”

These are the functions that under capitalist theory are normally reserved for prices and the market economy. That the market increasingly atrophies as a regulator of production or allocator of resources compelling increasing state intervention is the most distinctive change in the modus operandi of capitalism as the war economy develops. The question logically arises: why cannot voluntary controls work? Charles E. Wilson, defense mobilization director, gave a brief and direct answer to this question in a speech reported in The New York Times of January 18, 1951:

“What about our economy in the face of such expansion, such expenditures, such use of materials? How do we keep it from running away? There is only one answer – controls. I hate the word – so do you. But there is no other way. Voluntary methods will not work. That has been proven.” (Italics mine – T.N.V.)

In other words, experience has shown that appeals to loyalty, patriotism, etc., are no substitute for the state power of coercion. Practical experience has thus gone a long way toward reconciling the bourgeoisie to increasing state intervention, especially when the ratio of war outlays to total production exceeds ten per cent. As that arch exponent of laissez-faire capitalism, Ludwig von Mises, expresses the alternative (Economic Planning, 1945, p.13): “If the market is not allowed to steer the whole economic apparatus, the government must do it.” To be sure, von Mises argues that even in wartime, if the “right methods” are used, controls are unnecessary (Bureaucracy, 1944, pp.30-31):

It has been objected that the market system is at any rate quite inappropriate under the conditions brought, about by a great war. If the market mechanism were to be left alone, it would be impossible for the government to get all the equipment needed. The scarce factors of production required for the production of armaments would be wasted for civilian uses which, in a war, are to be considered as less important, even as luxury and waste. Thus it was imperative to resort to the system of government-established priorities and to create the necessary bureaucratic apparatus.

The error of this reasoning is that it does not realize that the necessity for giving the government full power to determine for what kinds of production the various raw materials should be used is not an outcome of the war but of the methods applied in financing the war expenditure.

If the whole amount of money needed for the conduct of the war had been collected by taxes and by borrowing from the public, everybody would have been forced to restrict his consumption drastically. With a money income (after taxes) much lower than before, the consumers would have stopped buying many goods they used to buy before the war. The manufacturers, precisely because they are driven by the profit motive, would have discontinued producing such civilian goods and would have shifted to the production of those goods which the government, now by virtue of the inflow of taxes the biggest buyer oh the market, would be ready to buy.

However, a great part of the war expenditure is financed by an increase of currency in circulation and by borrowing from the commercial banks. On the other hand, under price control, it is illegal to raise commodity prices. With higher money incomes and with unchanged commodity prices people would not only not have restricted but have increased their buying of goods for their own consumption. To avoid this, it was necessary to take recourse to rationing and to government-imposed priorities. These measures were needed because previous government interference that paralyzed the operation of the market resulted in paradoxical and highly unsatisfactory conditions. Not the insufficiency of the market mechanism but the inadequacy of previous government meddling with market phenomena made the priority system unavoidable. In this as in many other instances the bureaucrats see in the failure of their preceding measures a proof that further inroads into the market system are necessary.

We may not be pardoned for reproducing at length the views of one of the last living theoreticians of nineteenth century capitalism, but his views are unique and the subject is important. Among the factors that von Mises conveniently overlooks are the political impossibility of curtailing consumption so drastically by reliance on fiscal policy alone, the fact that government competition with private industry for scarce materials would accelerate the inflation that is inevitable once a sizable portion of production is devoted to war purposes, that confiscatory taxation (probably including a capital levy) undermining the very foundations of capitalism would be required, that Draconian fiscal controls are themselves inconsistent with the “automatic” theory of the market and would undoubtedly require implementation through forced savings and direct exercise of the police power of the state to ensure compliance, and that even if it were prudent for the bourgeoisie to ignore the lessons of history and accept the advice of von Mises, the time required to enable the state to direct production through indirect controls would unquestionably be fatal.
 

THE TIME ELEMENT, ESPECIALLY, IS recognized by the authors of the only comprehensive analysis of production controls in the war economy (Wartime Production Controls by David Novick, Melvin Anshen and W.C. Truppner, Columbia University Press, 1949, p.16):

In peace the major influence upon economic activity is profit. The ultimate measure of the desirability of undertaking certain industrial activities or carrying them out in certain ways is the anticipated effect of the final result on the individual enterprise’s profit and loss statement. Since the peacetime economy is made up of a multitude of individual enterprises, it is important to each one, but not to the nation, whether its particular choice of policy or method is profitable or not. The classic justification for non-interference by government in business is that the accidents of individual choice result in the greatest possible production from the national resources. In time of war, however, the nation cannot wait for each of these individual experiments to produce the desired result. An over-all control of economic activity must be substituted for individual planning under the profit motive. And not only must the control agency make the industrial decisions; it must do its job without either the profit and loss test of the wisdom of its policies and the efficiency of its methods, or the time required to apply any other test. (Italics mine – T.N.V.)

In other words, when it is a question of survival, neither price nor profit can guide the allocation of resources. Nor, for that matter, can the state as a general rule be expected to operate in response to such motives. After flirting with the reasons for this fact for three pages, the authors finally come sufficiently close to hitting the nail on the head (p.18): “Because the effect of price is random and non-selective, in time of war price manipulation cannot be used as the major tool for directing the use of the nation’s resources.” (Italics mine – T.N.V.) It therefore follows that: “As the volume of military requirements increases, the area of control must grow. Ultimately, in the total war economy there must be total industrial control.” (Italics mine – T.N.V.)

Not only is controlling production for specific objectives through the price mechanism like scattering seeds tp the four winds to plant a kernel of wheat in a particular spot, but it places the various sections of the capitalist class in an untenable position with respect to their fellow capitalist competitors. As Novick et al. put it, citing the experience of 1942, pp.67-68:

“Caught in the competitive forces of the free market, no single producer of refrigerators or passenger automobiles could contemplate closing his doors in the face of eager crowds of customers (and endangering the continuance of his carefully nurtured distributor organization) in order to prepare his production lines to make machine guns, tanks, guns, and airplane subassemblies. Such decisions could be made only on an industry-wide basis, and this could be brought about swiftly only through government direction.” (Italics mine – T.N.V.)

Moreover, in many cases, as previously mentioned, it would be impossible to induce the desired capital investment solely by appealing to the profit instincts of individual capitalists. As a matter of record, the Federal government financed in the neighborhood of $35 billion of industrial, military and housing facilities during World War II. Almost half of this total was for the creation of new manufacturing facilities, the vast majority of which private capital could not have undertaken even if it possessed the necessary accumulations of capital for the simple reason that, without substantial state aid, the prospects of profits would be far too remote. To be sure, many of these facilities were subsequently sold to private capital at a fraction of their cost, so that those whose products had peacetime uses could be operated by private industry at a profit. Nevertheless, the fact remains that exclusive reliance on the immediate profit motive to direct investment into desired channels during a major war (and even during a minor war as at present) would markedly reduce the military effectiveness of any industrialized nation.

The preeminent role played by state capital accumulations during World War II occurred, it must be emphasized, despite the huge aggregations of private capital that existed and which received the overwhelming portion of war contracts.

“Analysis ... indicated that in the third quarter of 1942 the 100 largest company consumers of each basic metal used the following percentages of the metal consumed by all manufacturing companies: carbon steel, 49 per cent; alloy steel, 70 per cent; copper, 79 per cent; copper-base alloy, 66 per cent; and aluminum, 81 per cent. A combined listing (eliminating duplications) yielded a total of 391 different companies (approximately 2,000 plants). In the third quarter of 1942 these 391 companies used 56 per cent of the carbon steel consumed by all manufacturing companies; 75 per cent of the alloy steel; 82 per cent of copper; 71 per cent of copper-base alloy; and 85 per cent of aluminum ... The same 391 companies shipped more than three-fourths of the total dollar value of all direct military-type products.” (Wartime Production Controls, p.346.)
 

ASIDE FROM THE PROBLEM OF PRODUCTION, which requires direct state controls, such as priorities, allocations and the over-riding directive power of the state, the state, representing the interests of the bourgeoisie as a whole, must try to keep the inflation within tolerable limits. Naturally, inflation is so managed as to place the main burden on the backs of the working classes and many individual capitalists amass huge and quick profits. Still, an unbridled inflation can interfere with production and disrupt the plans of the military and civilian state bureaucracies. Accordingly, state intervention is extended wherever necessary, without any objections from contemporary American financiers, further circumscribing the area within which private capital is permitted by its own state to function. An excellent example is the recent decision to make the government the sole importer of rubber and tin. As Wilson’s first quarterly report states (The New York Times, April 2, 1951):

“By designating Government agencies to act as exclusive importers of commodities, such as rubber and tin, and by working in international commodity committees to allocate scarce materials among free countries, we are helping to end the current scramble for these materials which has forced their prices unnecessarily high.”

The international aspects of the Permanent War Economy are yet another reason why increasing state intervention is mandatory for the American bourgeoisie as a matter of self-preservation, but we must leave to another article treatment of its implications.

We shall also leave for subsequent analysis consideration of the implications of the various techniques used to try to “freeze” the class struggle and of the increasingly obvious Bonapartist tendencies that may be discerned as a result of what amounts to an “interlocking directorate” between the military bureaucracy and big business.

The virtual guarantee of profits by the state is the sine qua non of increasing state intervention under the Permanent War Economy. The scandals in the letting of war contracts never seem to deter repetition of the most unsavory performances of the past, even when the cast of characters is changed. “By far the most important lesson,” state the authors of Wartime Production Controls (p.382), “is that the power to contract is the power to control.”

While the very mechanism of price control, based on perpetuating a rate of profit representing an all-time modern historical peak, is balm for the wounds of the more individualistically-minded members of the bourgeoisie, at least the larger ones, the forces that constantly work toward a transformation of traditional capitalism proceed with a logic of their own. The Office of Price Stabilization issues various types of “mark-up” regulations that result in the fixing of price ceilings at levels guaranteed to maintain super-profits, but along comes its boss, Eric Johnston, Economic Stabilization Administrator, to announce (April 21, 1945) that “no industry will be permitted to raise prices if its dollar profits amount to 85 per cent of the average of its three best years during the 1946-49 period, inclusive.”

Whether this policy will be implemented remains to be seen. And, as we have demonstrated, profits in 1946 to 1949 were so high that 85 per cent of this level hardly represents impoverishment. The significant point, however, is that it is difficult to foresee the limits of state intervention, assuming that the Permanent War Economy continues for an indefinite number of years. The promulgation of a profit-limiting policy, even if strictly confined to paper as was the case with OPA during World War II, would horrify the rugged individualists of the pre-1941 era but today is a necessary genuflection to the exigencies of the class struggle.

The all-pervading character of state intervention, with its modifications of the nature and laws of capitalism, should not come as a surprise to any Marxist, for more than 70 years ago Engels wrote (Origin of Family, p.207):

“But it (the state power of coercion) increases in the same ratio in which the class antagonisms become more pronounced, and in which neighboring states become larger and more populous. A conspicuous example is modern Europe, where the class struggles and wars of conquest have nursed the public power to such a size that it threatens to swallow the whole society and the state itself.”

 
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Permanent War Economy

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