Basis of the Economic System or the United States

The distinguishing feature of American economic management for a long time has been the enormous productivity of labour. Unfortunately we are not in a position to cite any statistical data which would confirm the fact, but it is well known and widely accepted. Another equally well-known fact is that the American workers of the white race enjoy a higher degree of material prosperity than any others in the world.

The great productivity of labour in America is called forth by the following three chief factors:

1. The favourable natural conditions may be summarised thus: a large area of fertile land in comparison with the population; in view of the favourable climatic conditions all the European as well as the most important tropical plants may be cultivated, and first of all – cotton. Colossal underground riches, such as coal, oil, iron, copper, lighting gas, etc. Large navigable rivers and a country which is most convenient for the construction of railways and which is able to find within the limits of its territory all the most important kinds of raw materials which a cultured people needs.

2. The proportion of constant capital to the total capital is very high in the United States. In other words the worker in America sets in motion a much greater mass of machinery than his fellow in Europe: This fact may be observed most in the agricultural industry, in which all the work is done by machinery (the agricultural machines employed in Russia are mostly of American invention); in the mining industry where the use of machines is much more considerable than in Europe: finally, in the process of industrial production itself, as well as in transport (the number of automobiles constructed in the United States is increasing with a furious rapidity. The Times of October 20th. 1920, says that by 1922 this number will amount to 12 millions). To the above must be added that as a general rule the machines in the United States are not subject to “moral wearing out,” as Marx says; while in Europe people are very careful of their machines. Constantly repairing them, endeavouring as far as possible to prolong the time of their functioning, in America it is the custom to give up a worn-out machine to be demobilised, replacing it by a more modern one. Therefore in the United States industry is using the latest and best technical methods.

3. Work is more rational in the United States than in Europe, and this circumstance is closely connected with the social development of America. The latter’s population, not counting the coloured races, consists of the best elements from the population of Europe. Only people who are least conservative resolve to emigrate, who have known how to break with tradition, family ties, the mother country. In a word, the most advanced people of a given period. Owing to this circumstance, the whole intellectual life of America is much less conservative than that of Europe. America has never known feudalism, or nobility, titles, honorary posts or functions. The chasm dividing intellectual and physical labour is far less deep in America than in Europe. In America there is no backward illiterate peasantry like that of Eastern Europe – a peasantry which stubbornly repudiates all reasonable improvements in agriculture. Nor is there any of the guild standoffishness of the intellectual classes. Factory workers become intellectual workers while the students of the higher educational institutions work when necessary in factories, like ordinary factory hands. The result of such conditions is the rule of rationalism in production, unrestrained by conservatism, which greatly increases productivity of labour.

In examining the results of this productivity in pre-war times, we find that up to the end of last century the influence of the first of the three factors mentioned by us, namely, that of the favourable natural conditions was particularly felt. The United States was a country exporting an enormous quantity of raw materials, chiefly grain, wool and kerosene, and importing factory products. The centre of gravity of the public economy was agriculture. The cultivated area of land increased from 536 million acres in 1880 to 839 millions in 1900 (and 878 million acres in 1910), while the value of the agricultural products increased from 22 million dollars to 47 million dollars in 1900 and to 86 millions in 1910. A colossal quantity of grain was thrown on the European market: Europe was then passing through an “agrarian crisis.” In 1905, with a general export to the amount of 1718 million dollars, the value of manufactured articles exported was only 160 million dollars: half-products 226 millions, foodstuffs and raw materials over 1000 million dollars, out of which were 401 million dollars of cotton, 4186 dollars crops, 211 million dollars foodstuffs (bread, meat, etc.). We see that in spite of the rapid industrialisation (to which we shall again refer) we have a characteristic picture of a colonial country. It must be added that a considerable share of European capital has been invested in American industry: that the steamship traffic was wholly in the hands of England and Germany, that the United States had no colonies and were not engaged in world politics: the basis for the foreign policy being the American continental doctrine of Monroe.

Meanwhile, however, the process of industrialisation of America had progressed with great rapidity, as the following figures will show:

Industrial statistics according to the data of American census:

In Millions

An extraordinarily rapid rate of development of the mining and other industries may be observed. It is clear that the time is not far off when the United States will become transformed from a debtor country, exporting raw materials, into an Imperialist capitalist Power. Even though these figures are of a too general character, they nevertheless show that while in 1880 the share of each worker was 1000 dollars of capital and 2000 dollars of worked product per annum, in 1915 the capital expended, was already 3000 dollars, and the cost of the manufactured products also 3000 dollars. While in 1880 the value of the products manufactured per annum constituted a figure which was double the amount of capital, both figures are almost equal in 1915. The turnover capacity of capital is slowing down its organic accumulation is rapidly increasing, serving as a typical illustration of Marx’s doctrine.