ScaNNiNg the gLoBe: PoLiticS iN euRoPe, LatiN ameRica, aNd aSia
By Jeremy Brecher, tim costello, and Brendan Smith
International Labor’s Forgotten Plan to Fight the Great Depression
In the early 1930s, as global unemployment tripled within two years and the world plunged into the Great Depression, the world’s labor movements developed a program for fighting the global crisis through international public works. It’s a little-known historical might-have-been that could have helped halt the Great Depression, the rise of Adolph Hitler, and the Second World War.
And, as the efforts of world leaders to address today’s “Great Recession” threaten to break down in nationalist rivalry and petty political bickering, it bears lessons—and perhaps an alternative vision—for today. Workers and organized labor have historically advocated government public works programs as a solution to unemployment. Not only would they provide jobs and income for those directly employed, but they would raise overall purchasing power, thereby creating demand for the products of other workers and creating a virtuous circle of economic growth. In the context of swelling unemployment in the early Depression, discussion of national public works programs developed in many countries. The proposal for international public works originated with the General German Trade Union Alliance (ADGB), which included most of Germany’s trade unions and represented the great majority of its workers. The plan won the support first of the ADGB, then of unions around the world, and finally of the League of Nations’ International Labour Organization (ILO). The plan was worked out by the head of the ADGB’s statistical department, W.S. Woytinsky. Woytinsky was a Russian émigré who had been president of the St. Petersburg Council of the
*This article has been reprinted with the permission of Global Labor Strategies.
New Labor Forum 19(1): 40-43, Winter 2010 Copyright © Joseph S. Murphy Institute, CUNY ISSN: 1095-7960/10 print, DOI: 10.4179/NLF.191.0000007
” It was up to the labor movement to “force the state and all public institutions to implement measures to revive the economy. without difficulty. he came up with the idea of using credit expansion to finance massive public works.”
why internatiOnal pUBlic wOrks?
s the International Labour Organization’s International Labour Review explained in its introduction to Woytinsky’s January 1932 article. Woytinsky proposed an international agreement that would allow the lowering of gold reserve requirements for national currencies. thereby sucking a further. Woytinsky proposed an “Action Program for Reviving the Economy.”
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.” The international agreement would provide an alternative to the rise of economic nationalism. shorter hours.” there were two problems with big public works programs to fight unemployment. Consequently. and therefore they must all concentrate their forces upon joint action to overcome the worldwide crisis.”
In the context of swelling unemployment in the early Depression. if one country goes very much ahead of other countries in its public works program [there is] danger of price inflation.
Taking a cue from recent League of Nations policy proposals. social rights. All nations are suffering because the world economy is sick. discussion of national public works programs developed in many countries.” The program would also support workers’ fight for higher wages.” Labor’s policy “must be a global economic policy. supporting
A primary objection to such a plan was that it would lead to runaway inflation like that which had been so devastating to Germany in 1922-1923. the Review noted. and the regulation of business. The funds freed up by international money-creation policies would be applied to job creation through “public works on a grand scale” for a “grand plan for European reconstruction” with “the employment of one million unemployed.” The creation of jobs would “spark a revival of the consumer goods industry. increases in production can. In a June 1931 article. “can be overcome by international cooperation. First.
“tariff reductions and European economic unification” as well as “internationalization of wage policy and social policy.Unemployed during the 1905 revolution.” Both. follow along in the wake of planned increases in purchasing power. Second. But Woytinsky argued that the conditions were entirely different.” It called for the labor movement to “assume the role of conveyor of the idea of an activist world economic policy. Observing Germany’s combination of spiraling deflation and spiraling unemployment in the early 1930s. and had organized mass action to force the city to provide public works employment. “in a worldwide depression like the present one. considerable number of unemployed back into employment. “We have a huge amount of unutilized capacity in our productive apparatus. That would let central banks create new money that could finance international public works and thereby create the purchasing power needed to reflate the economy. “International Measures to Create Employment: A Remedy for the Depression. it was hard to find enough money.
Such programs should be selected for their social usefulness. the Conference broke down in nationalist bickering. What is necessary is that “the plan as a whole” will reduce the resources wasted by
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lessOns fOr tOday’s “great recessiOn”?
fter the meeting of finance ministers from the world’s major economic powers in mid-March 2009. roads.” In individual countries they would be used for such purposes as land improvements. and housing. Smith
. Such works “must produce something of lasting value. the participants issued a statement saying.” Each part doesn’t need to show a profit on capital. B.” It sounds as though the lessons of the Great Depression have been learned and a plan like that advocated by the unions in the early 1930s for job creation and economic stimulus has been adopted. and failure would shake and weaken the economic system of the country.” Two or twoand-a-half billion dollars would employ four to five million workers and provide the economic stimulus the world required. but they do not need to be productive in the sense in which private enterprise employs the term and show a direct profit to meet the interest and redemption charges on the capital employed.” In fact.Woytinsky elaborated on the danger. world
J. coordinated. as one news account put it. the [1933 London Monetary and Economic] Conference broke down in nationalist bickering. not for their profitability for one or another company. [the construction] of canals to link up the most important waterways of the Continent. T. The ILO had voted to present its plan “to set on foot immediately large-scale public works” and “to coordinate these measures on an international basis” there. Costello.
Instead of developing an international strategy to solve the Depression. “We have taken decisive. The creation of credit on a large scale “represents a daring experiment for any one country. and more especially its finances.” In Europe. Hitler’s rise to power.”
the depression and “improve the conditions of life throughout the world. Brecher. and the international supply of electric power. different countries would be granted loans in proportion to their needs for the creation of employment. “From the fund thus constituted. The worldwide spread of mass unemployment. the funds would be used for “the construction of an international network of motor roads. In 1933. sixty nations sent high-level representatives to the London Monetary and Economic Conference to forge a solution to the Great Depression. the ministers “stopped short of announcing any details. But instead of developing an international strategy to solve the Depression.” An international agreement is “the only method of avoiding this danger and clearing the way for individual countries to undertake schemes of this kind.
How would such a plan work in practice? An international office would “collect the newly-created capital from every country” to create a fund for creating new purchasing power and new employment on an internationally agreed upon plan. and comprehensive action to boost demand and jobs” and “we are prepared to take whatever action is necessary until growth is restored. But. and World War II followed apace.
That core can be public works to create jobs to meet public needs.S. Expansion of SDRs.” The idea of an international public works program. the number one public need is to rebuild the world’s economy in a way that protects the Earth’s climate.. And Joseph Stiglitz has proposed that SDRs be used to create an international fund for supporting projects for “public purposes” in poorer countries. Countries can hold SDRs in their treasuries and release other currencies they are holding there—creating new money in very much the same way that Woytinsky’s proposals for lowering gold reserve requirements did.” to develop an “activist world economic policy” to confront today’s “Great Recession”? Conditions are different. recently forced Barack Obama to give assurances that the U. who hold much of the U. and it looks like the same is true of today’s leaders in the face of the “Great Recession. and many other countries are calling for an expansion of SDRs to help poorer countries get through the current economic crisis. or some other form of internationally agreed upon global credit expansion. it is likely to face rebound effects from the international economy.”
There are ways to provide international credit expansion today that didn't exist in the 1930s.
There are ways to provide international credit expansion today that didn’t exist in the 1930s.” that allows countries to create new currency reserves through the International Monetary Fund. and the broader community of allies often known as the “Global Justice Movement. So a global jobs program today means primarily a program for global green jobs. if any country expands credit too much by itself. financed through a global agreement to expand credit. The primary one is via a kind of international monetary unit.leaders are facing the same paralysis in the face of the “Great Recession” that they did in the face of the Great Depression eighty years ago. In today’s world. known as a “Special Drawing Right” (SDR). Britain.S. or “paper gold. Second. Such a program needs to be global for the same reasons that it did in the 1930s. George Soros has called for the issuing of trillions of dollars worth of SDRs to counteract the downturn. what has recently been dubbed a “Global Green New Deal. would not inflate its currency. (Think about the way the Chinese. and therefore require a global solution.
World leaders didn’t face up to their responsibility of countering the Great Depression.S. What would it mean for the world’s labor movement. but in many ways the core of such a program can be the same. threatened as it is by global warming. can be the basis for a new era of global green public works.
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. First.) Such measures by one country alone also lead to loss of trade. could provide a global program around which labor and popular organizations across the world could unify to “force the state and all public institutions to implement measures to revive the economy. debt. the problems are global.