Written by Towner Phelan
Ludwig von Mises Institute
[American Affairs, 1947]
Perhaps the greatest influence of communism in the United States is upon the political thinking of the American people. Many ideas that have achieved widespread acceptance in the United States on the part of people who have no sympathy with communism are derived directly from Marxist doctrine, but most people who hold those ideas are ignorant of their source.
Marxian communism, unlike traditional liberalism, is based on a materialistic concept of life. Liberalism looks upon life primarily in moral terms. The Marxian doctrine that "economics determines all human life" assumes that men act, not on a basis of principles or any standard of morality, but that their actions are determined solely by their material wants. It assumes that man is not interested in freedom but only in a full belly.
This Marxian doctrine is implicit in the New Deal view that in an industrial age government should control and regulate every phase of our economy and that the powers of government should be greatly expanded and the rights of the individual correspondingly limited.
This view has been reiterated again and again by New Dealers in statements of which the following are representative.
"It may be necessary to make a public utility out of agriculture ... Every plowed field would have its permit sticking up on its post." (Henry Wallace)
"It has been a long fight to put the control of our economic system in the hands of the government." (Mrs. Eleanor Roosevelt)
"The Constitution is used as a holy of holies within which the ugly practices of free competition can be hid from vulgar eyes." (Rexford Guy Tugwell)
"The Government will have to enter into the direct financing of activities now supposed to be private; and ... the Government ultimately will control and own these activities." (A.A. Berle, Jr.)
This viewpoint, that modern industrialization requires government control of every human activity, clearly, is derived from the Marxian doctrine of economic determinism. It assumes that the degree of economic development of our society determines the degree of freedom the individual should retain and the degree of power the government should have.
This is in direct conflict with the views of the founders of this republic, who believed "that all men are endowed by their Creator with certain inalienable rights" and "that to secure these rights, governments are instituted among men."
These were not intended as scientific statements of fact but as a declaration of moral principles. They do not mean that all men are actually free to exercise inalienable rights, but rather that all men should be free to exercise them.
The traditional liberal does not believe that the rights of man depend upon economics. He regards human freedom, individual liberty, and the relation of man to the state as being primarily moral problems, not economic problems. He regards liberty, not as a byproduct of the "horse and buggy age," but as an inalienable human right.
In the Marxian view, all human actions are based on material wants and are determined by economic considerations. History, according to Marxian communism, is a "class struggle" based on economics. In this "class struggle," the workers are exploited by "monopoly capitalism," government is an instrument of oppression by which the dominant social class exploits other classes, laws and the courts are used to uphold the interests of the dominant class and to enslave the working class, capitalism leads to imperialism and war, and salvation can come only through a revolution which will transfer power to the working class.
All of these ideas appear in the New Deal dressed in slight changes of language to make them more palatable to the American public. These doctrines constitute both the core of Marxian communism and the intellectual foundation of the New Deal.
The doctrines of the "class struggle," of the exploitation of workers by "monopoly capitalism," and of government as constituting an instrument of oppression by which the dominant class exploits other classes, have echoed again and again in every political campaign since 1933. They may be expected to appear in future campaigns despite their recent public repudiation at the polls. The excoriation of all businessmen as ''economic royalists," "Tories," and representatives of "entrenched greed," as well as the references to the "forgotten man" and to one third of our population as being "ill-clad, ill-housed and ill-fed," express the Marxian doctrines of "class warfare" and the exploitation of workers by "monopoly capitalism." Such statements foment class hatreds and, in so doing, tend to create the class struggle which they assume to be the normal and inevitable condition of mankind.
Class warfare is an ever recurrent New Deal theme. In its crudest form the doctrine of class warfare is expressed in the recent statement of CIO president, Philip Murray, "Inflation is here because of the lust and greed of American business and industry."
The communist doctrine that government is an instrument of oppression by which the dominant class exploits the working class was expressed by the late President Roosevelt in the statement that the "new instruments of public power" which he created could be used to "provide shackles for the liberties of the people" if the government were ... "in the hands of political puppets of an economic autocracy."
Acting upon the Marxian view of history as a class struggle and government as an instrument by which "financial and industrial groups" oppress other classes and exploit the workers, Mr. Roosevelt undertook to transfer power to the "working class" which he did not regard as predatory. This policy was implemented by legislation bestowing special privileges upon organized labor and imposing restrictions upon ordinary citizens to deprive them of rights that once had been considered inalienable. Thus, the National Labor Relations Board repeatedly tried to deny businessmen the right of free speech. The "due process clauses" of the United States Constitution were whittled away by court construction and narrowed to deprive the ordinary citizen of protection in the ownership of property. At the same time, the commerce clause was broadened to give the federal government unrestricted sway in purely local matters.
Mr. Roosevelt's statement that "financial and industrial groups" controlled the government prior to the New Deal was not true. This is clearly evidenced by the long list of measures that became law, prior to 1933, despite the opposition of business interests.
These include the establishment of the Interstate Commerce Commission in 1887, the Sherman Antitrust Law in 1890, the Pure Food and Drug Act in 1906, a statute limiting the hours of employment on railroads in 1907, the eight-hour day on public works in 1912, the Federal Income Tax Amendment in 1913, the Clayton Act exempting labor from the antitrust laws in 1914, the establishment of the Federal Trade Commission in 1914 and the Adamson Act in 1916. Although some of these measures would not be opposed by business at the present time, all were passed against the opposition of business interests. It is clearly nonsense to assert that business controlled the government.
Many groups influence government to a greater or lesser degree. In the past, business exerted far too much power but neither business, nor any other group, controlled the country. No group has ever before exerted as dominant an influence upon government as labor does today. The dominant position of labor results from the special legal privileges Mr. Roosevelt gave it. Special privilege made it a predatory class powerful enough to defy the government with impunity. Any class will become predatory if given too much power - the history of power is the history of the abuse of power. The fact that labor can and does dictate to the government has been written into the record again and again.
The recent election demonstrated that organized labor's political power is based far more upon the fears of politicians than upon its ability to deliver the votes. Its ability to defy the government rests on the solid foundation of economic monopoly conferred upon it by law. Labor's power to stop the wheels of industry, to paralyze our economy, to halt public transportation and to cut off supplies of food, fuel, and vital services, will not be changed by defeat at the polls. We need to dismantle the whole legal structure on which the irresponsible and excessive power of labor is based. Its foundation is special legal privilege and immunity from laws to which the ordinary citizen is subject.
In fairness to Mr. Roosevelt, it must be observed that he did not start the revolution by which communistic concepts have replaced the philosophy of liberty under the law. In fact, the most far-reaching step in this direction was taken under the Hoover administration by the passage of the Norris-LaGuardia Anti-Injunction Act. This act gave unions practical immunity from injunctions, greatly broadened their exemptions from the antitrust laws and relieved unions and union officials from liability for the wrongful acts of their agents.
The Marxian element in the Norris-LaGuardia Anti-Injunction Act lies in the fact that it makes employees, as a class, a proper party to a dispute involving a particular employer and his employees. Under previously established legal principles an industrial dispute was a matter between an employer and his employees and was not a conflict between employers as a class and employees as a class. There is no more reason for making employees as a class a proper party to a dispute between a particular employer and his employees than to make husbands, as a class, a proper party to a dispute between a particular husband and his wife.
Under the Norris-LaGuardia Act, however, we have written into our law the revolutionary concept that persons engaged in the same industry, trade, craft or occupation and having no relations whatsoever to a particular employer are proper parties to a dispute between that employer and his employees. This principle stems directly from Marx's doctrine of class warfare; its purpose can only be to promote class warfare. As Murray T. Quigg expresses it,
Finally, the act comes to the essence of the revolution, namely, whether industrial conflict is a matter between an employer and his employees or a matter of class warfare.
The Duplex Printing Press Company case, arising prior to the enactment of the Norris-LaGuardia Act, illustrates the principle involved. Eleven out of some two hundred machinists employed by that company at Battle Creek, Michigan, went on strike. Thereupon, machinists in New York City who were not employees of the Duplex Company, as part of a nationwide union conspiracy, warned customers of that company not to purchase or install Duplex presses and threatened them with sympathetic strikes by other unions. Truck drivers' unions were warned not to transport Duplex presses and repair shops not to repair presses. Finally, a proposed strike against an exposition company, which intended to exhibit Duplex presses, was halted by an injunction.
The Supreme Court sustained the injunction on appeal and held that the Clayton Act did not authorize unlawful activities by a union or an illegal conspiracy in restraint of trade. The case turned upon the definition of "employees and employers" in the act, and the court held that the "employees" referred to the employees of the particular company involved in the dispute and not employees as a general class. The court said, "The Congress had in mind particular industrial controversies, not a general class war." This principle was abandoned by the passage of the Norris-LaGuardia Act which was construed to mean that employees as a class are proper parties to an industrial dispute. This act writes into our law the Marxian communist doctrine of class warfare.
The consequences of our widespread acceptance of the Marxian view of the class struggle are extremely serious. What men do depends upon what men think and believe. If the majority of our citizens come to believe that life is a struggle between hostile and warring classes, democratic government cannot long endure.
Democratic government depends upon the consent of the governed. It presupposes a willingness of both sides to abide by the verdict of the polls. Class warfare has destroyed democracy in Spain, Greece, and other countries and has seriously undermined it in France.
In the United States the current wave of wildcat strikes, strikes over trivial matters, slowdown strikes, and the general low productivity of labor are the natural fruit of the class hatreds engendered by thirteen long years of propaganda fomenting class warfare. They are not the result of low wages and bad working conditions, because labor in America, today, is enjoying a degree of prosperity far exceeding that of the best prewar years. In fact, Senator Briggs boasts that American wage earners have gained more since 1933 "than in all the previous history of the nation." Present labor unrest is ideological and is an ominous portent for the future.
Before the popularization of the Marxian doctrine of the class struggle, we had in the United States a classless society in the best sense of the term. It was not a classless society in the Marxian sense of regimented equality of possessions.
The Marxian type of classless society would reduce all men to a common level of mediocrity. It ignores differences in ability, industry, and intellect. Our pre-New Deal society was classless in the sense that there were no artificial class distinctions based upon status or accident of birth. Classes were fluid. People could and did move freely from one class to another.
The phrase "shirt sleeves to shirt sleeves in three generations" epitomizes our type of classless society. We had this type of society because we thought of ourselves as American citizens, equal under the law, and regarded it as normal and natural for a man to rise from the humblest beginnings to become a president of the United States, a justice of the United States Supreme Court, an outstanding scientist or a Henry Ford.
Today all this is changing. We are developing class consciousness - the first long step in the building of a class society. We have gone back to the reactionary principle of status. That was the principle of the medieval world with one law for the nobility, another law for the clergy and a third law for the peasants. We are on the way to a stratified class society.
Both Marxian communism and the New Deal have elements of religious evangelism in their doctrines of salvation through revolution. Marx teaches that salvation will come in the form of a millennium here on earth as a result of the "proletarian revolution." In the New Deal, the "proletarian revolution" that is to bring salvation is renamed the "people's revolution" (a term more acceptable to American ears). Henry Wallace expresses it as follows:
The people's revolution is on the march, and the devil and all his angels cannot prevail against it. Those of us who realize the inevitability of revolution are anxious that it be bloodless and gradual, instead of bloody and sudden.
As Mrs. Eleanor Roosevelt phrases it,
The war is but a step in the revolution. After the war must come the realization of the things for which we have fought - the dream of a new world.
The Marxian doctrine that capitalism inevitably leads to war finds expression in the statements of many of our neoliberals and New Dealers who condemn British, French, Dutch and American imperialism, while, at one and the same time, they passionately defend the far more ruthless imperialism of Soviet Russia.
Condemnation is not based upon what is done, or upon why it is done, but simply on a basis of who does it. Thus, imperialism is bad if practiced by a western democracy. It is good if practiced by the Soviet Union. The only reasonable basis for such a view is found in the Marxian assumption that capitalism (western democracy) leads to war while the dictatorship of the proletariat leads to peace.
The doctrine that political freedom (freedom under the law) is not freedom is common both to communism and to the New Deal. Communism teaches that man cannot be free until a class revolution brings the workers to power and a classless society is established resulting in the brotherhood of man in a society so perfect that "government will wither away" and will be no longer needed. Molotov tells us that our conception of freedom is not freedom. In his recent attack on Baruch he said,
his [Bernard Baruch's] conception of freedom is far removed from the real aspirations of common people for freedom.... He would like to see all people satisfied with the freedom under which only the lucky ones can enjoy the benefits of life.
Henry Wallace expresses the same view.
We can, if we choose, look backward with longing to the old kind of liberty, which was more often license for the few and economic serfdom for the many .... Things that are happening now ... may be the beginning of a new epoch, in which democracy, embracing the economic as well as the political field, becomes for the first time reality.
We have outlined the principal doctrines that constitute both the Marxian creed and the intellectual foundation of the New Deal. To state this is not to brand the New Deal as communistic. The New Deal is a product not only of Marxian doctrine but also of native American traditions.
Here in the United States, ideas of communist origin collide with powerful traditions representing the heritage of three hundred years of liberal thought. Our pattern of thinking is derived from many sources, of which communism certainly is not predominant. The contradictions and mental confusion that characterize the New Deal and neo-liberalism arise from their attempt to harmonize traditional liberalism with the doctrines of Karl Marx.
The result is neither liberalism nor communism but moral stultification and mental confusion. This is the explanation of those anomalies which arise when individuals and publications, posing as champions of civil liberties, refer to governments behind the iron curtain, where civil liberties do not exist, as "democracies."
The New Deal is not communistic; it is merely the ill-begotten offspring of an attempt to mate communist doctrines with American traditions. Neoliberalism and the New Deal accept and expound Americanized versions of those Marxian doctrines which constitute the Marxian diagnosis of the ills of society.
They part company with Marx when it comes to the cure for these ills. The Marxian cure is violent revolution and totalitarian dictatorship. As Stalin expressed it, "The dictatorship of the proletariat is the domination of the proletariat over the bourgeoisie, unobstructed by law and based upon violence." The neoliberal, New Deal cure is a peaceful revolution followed, not by totalitarian dictatorship, but by a curious blend of totalitarianism with liberty.
Under the New Deal cure, civil liberties are to be retained, but on a selective basis. They will depend, not upon the nature of the liberties, but upon whose liberty.
Laws will be applied more and more on a selective basis -the important question being the status of the individual involved. Thus, a union man has a right to strike but a nonunion man does not have a right to work. He cannot cross a picket line or remain out of a union if the closed shop is imposed upon his employer. A corporation is liable for the wrongful acts of its agent, but a union is relieved of such liability under the Norris-LaGuardia Act. The law is based, not on what is done, but upon who does it.
Under New Deal theory, government will control all aspects of economic life but the outward forms of capitalism will be retained. The national income will be allocated very largely through government controls of prices, wages, interest rates, etc., but business, nominally, will remain in private hands.
As Ludwig von Mises points out, this solution, advocated by Professor Hansen and other New Deal economists,
is very old indeed ... all the essential ideas of present-day interventionist progressivism were neatly expounded by the supreme brain trusters of imperial Germany, Professors Schmoller and Wagner.
Dr. von Mises refers to the clash between New Deal economics and classical economics as "the clash of two orthodoxies; the Bismarck orthodoxy versus the Jefferson orthodoxy."
The fundamental assumption underlying the neoliberal, New Deal cure for the ills of society is that it is possible to make the government virtually an economic dictator and still have our citizens retain a substantial portion of their individual liberties. It represents the ancient fallacy of those who are unwilling to face the facts-the fallacy that you can "eat your cake and have it too." In the words of Henry Wallace, "America must choose." It must choose dictatorship or liberty - it cannot have both.
Many people will conclude from the recent election returns that America has chosen. No assumption can be more dangerous. The New Deal is the American manifestation of the worldwide trend which produced fascism, communism and British socialism. It results from the desire of man to escape individual responsibility, to lean upon the all-powerful state and to trade his freedom for the politician's promise of security.
The recent election may conceivably mark the first step in the reversal of this worldwide trend. But, it may represent merely the desire to change the personnel of those administering centralized authority, or at most, a temporary reversal in the long-term trend.
Towner Phelan, the St. Louis Union Trust Company's vice president for advertising in the 1940s, produced a monthly newsletter on the premise that the prosperity of the company's clients depended on the maintenance of the private enterprise system and the rejection of socialism. See Towner Phelan's article archives.
This article appeared in American Affairs, Vol. 9, No. 2 (1947), pp. 108-112