For those unfamiliar the formal position of the Chinese Communist Party is that China is currently under a system of economic and political control formally known as “Socialism with Chinese characteristics” and is the inspiration for today’s historical opinion piece. This piece was inspired by two recent articles run on Communism versus Capitalism with a focus on its potential impact in the United States (here) and some proposed economic reforms the millennial generation should support, which also smacks of Socialism (here). Although this is an opinion piece I think I can prove solid ground that during World War II, specifically between 1942 to 1945, the United States undertook a series of economic reforms that can be categorized as how the United States might look under its own form of Communist economic management.
My first point of proof was the 1942 creation by executive order of the Office of Price Administration (OPA), an organization of the federal government charged with imposing fixed price ceilings on nearly every good on the consumer market, with the exception of raw agricultural produce. (So finished food products sold in stores were subject to price control, just not the raw ingredients that flowed into them.) The OPA also imposed a strict rationing system to ensure that all consumers in a time of scarcity were ensured of a certain minimum standard of food no matter demand and, in turn, limiting consumer choice and the ability to freely exercise their own will in relation to the market.
Now some consumer choice remained, how you spent some classes of ration tickets were up to you, you could buy more lard or less butter with the same coupons, but overall that was picking how you spent a fixed allocation of resources. What you could not do under this system was decide “this week I want to spend all my money on butter and become the BUTTER LORD!” No matter how much cash you had in hand, that simply was not an option open to you because of the strict ration limitations.
The War Production Board (WPB) covered the other end of the economy, taking control of raw materials distribution to United States industry, coordinating raw materials and production capacity, and imposing strict limitations on consumer good production. The two entities combined forces on some consumer goods, including a system of rationing on items like typewriters that required those who wished to purchase one to file for a special permit to allow its acquisition. The WPB wielded considerable authority over the United States economy, complete with the ability to grant exceptions to allocation allotments (Hershey’s) and starve other industries considered non-essential to the war.
Combine these two factors with high-employment on federally provided war contracts, a combination of restrictions on labor agitation and alliances with unions to prevent work stoppages, and sharp income taxes that compressed income inequality, and I would argue you have the combination of forces that worked together to create a distinctively North American form of Communism.
It even captured the odd balance in the United States between federal, state, and local authority – rationing limitations were handled by local ration boards – filled with state appointed local leaders who could adjust rations limits within broader guidelines and issue exceptions. Even excess economic capacity in the form of high wages was slurped up by aggressive patriotic bond drives that pulled spare unused economic buying power out of the economy and into low interest paying federal debt.
So the question that then comes up is – did this experiment in Socialism with American Characteristics work economically? Well that really depends on how you define “work” – it did succeed in the overall goal of producing a vast array of military hardware that effectively armed many other nations and allowed the United States to successfully conduct a two front war for three years. But it was undermined by economic waste, specifically caused by black markets and efforts to duck production limitations, price schedules, and supply restrictions.
Even gas rationing was a general failure in the sense of limiting gas allocation to conserve rubber, history shows people defying gas rations on both a local and regional level throughout the war. As well enforcement of these restrictions was often quasi-legal, heavy-handed, and handled mainly on a local level, leaving the federal government’s metaphorical hands clean. It was a voluntary effort, for example, not to drive on the weekend for pleasure – failure to comply would often lead to the driver risking being stopped and harassed or beaten by local police for their lack of patriotic fervor.
I would also argue it failed because, although austerity was something the United States public embraced for the war effort, as quickly as possible post-war this was rejected for a consumer binge that rocketed the United States economy upwards, as well as the demand for raw materials, with the 1950s post-war consumer boom.
Could Socialism with American Characteristics work again, as the two articles at the start of this piece seem to think? I believe it could, history shows it can, but I would argue not in the long term. Both systems rely to heavily upon humans putting material demands aside for either nobler purpose or more leisure time, forces that history shows do not hold well over a long enough period of time.