Manifesto of the Farmer Labor Association, Part One

web_farmer_labor_associationBY ED FELIEN

“Capitalism has failed and should be abolished!”
“We mean to establish a Cooperative Commonwealth!”
That’s the Preamble to the 1934 Farmer Labor Party Platform, and the party that believed in those principles went on to elect Floyd B. Olson governor and win a majority in the Minnesota State House of Representatives.
Do those ideas have any resonance or meaning today? What does it mean to say, “Capitalism has failed and should be abolished?”
First of all, what is capitalism?
Capitalism has been a revolutionary force. It transformed feudal society, eliminating kings and royal prerogatives. Americans like to believe that the U.S. Constitution was the first document to organize a government along democratic principles, but, of course, that’s not true. Jefferson, Madison and others had a deep appreciation for the democratic experiments in Greece and Ancient Rome. They understood the efforts of the doges of Venice and the burgers of Holland to organize their society in a more fair and equitable manner. They paid particular attention to the English Commonwealth revolution from 1640 to 1660. In 1660, Charles II was returned to an empty throne. The power to organize the English state now rested in the capitalist class and its representatives in Parliament. The divine right of kings was overthrown and the inalienable rights of individuals were now guaranteed. Political power had shifted from feudal aristocracy to the capitalist class.
It is possible to see three historic phases of capitalism.
Mercantile capitalism developed out of the growth of small shops and towns that grew up originally to supply the king with things like candles and new shoes. Gradually the small shop owners and tradespeople sold to other customers and eventually became rich and more powerful than the king. The merchants of Venice, Holland and Spain traded with the world and amassed large fortunes. If the Puritan Commonwealth of 1640 was the first revolution of this new class overthrowing feudalism, then the American Revolution became the more permanent model for the modern state.
But almost at the same precise historic moment of the triumph of the mercantile capitalist state, a new development was happening. In 1781, James Watt patented a steam engine that produced a continuous rotating motion. The English passed enclosure acts, laws that drove peasants off their lands and into the cities. When the peasants lived in the country they raised sheep and spun wool. Now they lived in the city and operated machines driven by steam engines that spun cotton. These machines created the Industrial Revolution, and industrial capitalism created a new class called the proletariat.
After World War I there was hardly a crowned head anywhere in Europe. Feudalism had been swept away in Western Europe and had been replaced in the most part by parliamentary democracies controlled by the capitalist class. But the Great War had opened other possibilities. Almost every country in Eastern Europe elected socialist governments, and Russia established a Socialist Soviet Republic. The West (mainly Britain, France and the U.S.) intervened and by 1923 had replaced socialist democracies with military crypto-fascist states in all of Eastern Europe and had invaded Russia on four fronts. The war against Russia sputtered and stalled, but the buffer states of pro-Western military dictatorships became the cordon sanitaire protecting the West from the contagion of communism.
If capitalism won the First World War, then it probably could be said that American industrial capitalism won the Second, notwithstanding the fact that it was the Soviet Army that had defeated the German Wehrmacht at the cost of 20 million Russian lives. Eastern Europe left the Western orbit and became the satellites of the Soviet Union, and China joined the socialist bloc. In the years following World War II, America became the strongest country in the world, but by the time of its greatest triumph, in 1989 when the Berlin Wall fell, a curious thing had happened in America. America had stopped producing anything. Most major industries had been exported to other countries where there was easier access to raw materials and cheaper labor. Just when America had triumphed as the leading industrial power in the world it closed down its industries and became the world’s leading financial center.
This seems almost to be an inevitable historical progression. Venice, then Holland, then Spain, then Britain were all leading mercantile and industrial powers, but then money managers took over and it became cheaper to farm out businesses and industries to the colonies, and, inevitably, the Venetian, Dutch, Spanish and British Empires declined.
In America, after World War II, the political power that Wall Street commanded was sufficient to free it of all restrictions and oversight until the financial crisis of 2008. Then, through the combination of clever packaging of worthless mortgages, an overpriced housing market and the unrestrained greed of mortgage brokers, inevitably, the housing market and the stock market collapsed. Banks and brokerage houses went out of business, but the largest of them were considered too big to fail and were bailed out by the federal government. The Dodd-Frank Act of 2010 was a puny attempt to re-impose regulations on the financial industry. Most critics agree it was more of a public relations gimmick to restore confidence in the markets than a serious attempt to reform financial capitalism. Commercial banks would still be able to wildly speculate and require trillion dollar bailouts, and homeowners could still see the possibility of their mortgages exceeding the value of their homes.
American capitalists were no longer investing in the machinery of production. They were developing schemes to make money out of money without making anything of value. American capitalism failed because it succeeded. As a productive force creating goods and services, it was no longer essential. New industries were being created in foreign countries, and even old industries were sending customer service calls abroad.
It is important to note that small businesses are not capitalist. Capitalist businesses own their means of production; they own banks and means of financing; and they own and control the government. Small businesses are generally dependent on credit from banks and fight onerous regulations and bureaucracy in government. The Farmer Labor Association should support state programs to help small businesses: a State Worker’s Compensation Insurance; State Health Insurance for all citizens; elimination of the employer contribution to State Unemployment Insurance; etc. These programs would make it easier for people to start businesses and make them profitable. Small businesses produce the most jobs; they are the most efficient; and they make the greatest contribution to the economy. Unfortunately, many small businesses are confused about their relationship to the means of production, and they believe their interests are the same as those of the capitalist class. A plumber or carpenter is not a capitalist even though they may own a pickup truck and some tools. A teacher or university professor is not a capitalist even though they may have specific knowledge about a given subject and own a lot of books. They are dependent on the market for customers and students; on the banks for credit; and on the government for regulations and employment.
[Next month, Part Two, “We mean to establish a Cooperative Commonwealth”]

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