FDR’s Wartime Strategies Can Power a Just Transition Now – Martin Hart-Landsberg Pt. 2/2

Talia Baroncelli
Hi, I’m Talia Baroncelli, and you’re watching theAnalysis.news. This is part two of my conversation with economist Martin Hart-Landsberg. If you’ve been enjoying this content, feel free to support us by going to our website, theAnalysis.news. You can hit the donate button at the top right corner of the screen. Make sure you’re on our mailing list; that way, all of our content gets sent straight to your inbox. You can also like and subscribe to our YouTube channel, theAnalysis-news, and look out for us on podcast streaming services such as Apple or Spotify. See you in a bit with Martin Hart-Landsberg.

Joining me now is Martin Hart-Landsberg. He is a Professor Emeritus of Economics at Lewis & Clark College in Portland, Oregon. He’s an author of several books, including Capitalist Globalization: Consequences, Resistance, and Alternatives, as well as a few books on Korea. One of them is called Korea: Division, Unification, and U.S. Foreign Policy. Marty, it’s really great to have you here today. Thank you for joining.

Martin Hart-Landsberg
Oh, it’s my pleasure. Thanks for the invitation.

Talia Baroncelli
So, 2024 was the hottest year on record. The wildfires in L.A. are another reminder and example of how capitalism is actually driving climate catastrophes. You wrote an article called U.S. Economic Planning in the Second World War and the Planetary Crisis. This is a good opportunity to speak about the climate crisis now and how the Left can plan and draw on specific strategies that worked in previous contexts to actually bring about a just transition right now.

Why don’t we speak about what happened under FDR in the United States during World War II, how FDR set up various wartime production boards to shift the economy from a civilian production economy to a wartime production economy, and what was actually required to bring these changes about?

Martin Hart-Landsberg
I want to say just one thing about globalization that popped into my mind as we talked, and then I want to talk about what you had just raised. When the International Monetary Fund was first being proposed in 1944, there was a man named Harry Dexter White, who was the U.S. representative. There was a different vision. I always like to go back to history and see what the debates were at different times to see what was not chosen. He argued for a centralized body that would not strip states of power but would enhance their power to plan.

His argument was that if a government said, “We don’t want capital flight and money moved from that country to another country,” the country losing the money through the IMF could say to the country that got it, “Government, you need to go to the bank and have them return the money to us.” In other words, the government’s ability to control capital, which would mean we’re pushing higher wages, we’re planning- you can’t just leave, have safe harbor elsewhere, and undermine what we’re doing. The global International Monetary Fund would enhance that power. Of course, the banks in New York didn’t like that, and they really heavily lobbied, and Harry Dexter White withdrew that proposal. There are many ways you can imagine a central body that would enhance planning and enhance the ability of governments to actually control and direct what they want. Given this global export activity, yes, planning works, but what do we use it for?

One of the things about World War II that’s so interesting to me- I have a PhD in economics. What economists often do, is very different from my understanding, probably ignorant, but of medical science. Medical science says, “Look at cancer. It’s such an unusual, fast change. Let’s study that.” Economists say, “War years, they were so unusual. We won’t study them. This period of crisis is very unusual. We won’t study them. We want a period of calm when everything’s working, and we can study these principles.” Often, the most interesting things to learn are these periods of crisis or uncertainty.

For me, as you say, all the science is showing global warming is going up. In 2024, we passed 1.5. centigrade. We passed this Paris Agreement, a warning sign for at least a year. We have to do something. How do we do it? How do we control things? We often say to workers here in the U.S., “Look, we need to reduce fossil fuel use.” And they say, “Whoa. That means people don’t fly. What happens to Boeing workers? What about our jobs?” We say, “Oh, just transition.” Most workers, I work a lot with the labor movement and labor unions, and they say, “What is the just transition? How are you going to find us jobs? What are we going to do? We look around, and we don’t see anybody showing us the capacity to do that.” That’s where planning has to come into play. Somehow, we have to be able to plan the restructure.

Almost any way you can envision a change, you’re saying we’re cutting fossil fuel use, and we’re going to stop doing certain things we’re doing. We’re not going to be building luxury motor homes and huge mansions; we’re going to cut military spending, and we’re going to direct money into different places. How do you do all that? What does that look like? What I’ve discovered, and now I read other people’s work, is that World War II was an interesting example. When the U.S. decided it wanted to fight the war, it had a very small military sector. Military spending was like 1% of GDP. It wanted to start to plan to prepare, and then when the war started.

People often say, “Oh, we all rolled up our sleeves and worked together.” But in fact, the steel industry, the aluminum industry, and the auto industry all refused to make changes. The auto industry refused to stop producing, even though it was gobbling up resources—aluminum, steel, and oil refining. The military needed more steel and more aluminum for airships. They refused to invest. The U.S. had a situation where it didn’t have planning bodies, it had capital that was resistant, and it had to somehow convert the U.S. economy from civilian to military in four years. How did it do that?

I began to study how it began, and it had trial and error. It went through three different planning agencies until it developed planning. It was very interesting. Yes, we know that the government spent huge amounts of money on the military, but that doesn’t help if business isn’t expanding to produce the goods and services needed. What the government did was it created something called the Defense Production Corporation, which had unlimited borrowing capacity, and it would decide what industries were needed. Then it would go out and buy the land, build the factory, own it, and then have a private company manage it.

The Defense Production Corporation accounted for about a third of all the investment during the war, and at the end of the war, it owned about 15% of U.S. capital. That doesn’t include what the Army spent and the Navy spent producing. Overall, the federal government accounted for three-quarters of investments. Private investment fell. This was a process that was steered by the government indirectly.

It wasn’t just spending money on the military, and it wasn’t just investing, but they also had to plan. One of the reasons is that the military wanted total control to go out and say, “We want this battleship. We want this tank.” The prime contractors were bidding for those contracts, and then they wanted to get the resources. The demands far outstripped what the economy could produce. The government actually had to plan and say, “Okay. There are certain key materials: aluminum, steel, bauxite, or whatever. Every one of the prime contractors has to tell us how much of these key resources you want. We’ll study what the economy is capable of producing, then we’ll tell you how much you get, and you have to adjust your production down in line with what the resources are.”

They did the same with parts and components. They essentially forced the military to bring its demands down to what was doable within the economy. They, in fact, distributed raw materials, parts, and components based on the priorities and what was necessary to produce not only military goods, but goods for the consumer. They did lots of things beyond that. They had to say when new factories were built, “What community should we put them in? How do we guarantee housing?” They had a whole federal system of childcare that communities would come together and say, “We want a childcare system.” The federal government would provide funds to establish the childcare. 

This was a planning system that came to fruition in three or four years. Not with the support of private enterprise. Now, the government did a lot to make it profitable for private enterprise, but it was a system that can show us if we want to change the economy, not to produce military goods, but to lower our use of fossil fuels, to redirect resources into health care, new forms of housing, mass transit, distribute production, control what we do in a way that’s environmentally sustainable, humane, and solidaristic, you have to have planning. It’s not going to duplicate what World War II happened. In World War II, the military was this tight body that said, “We need tanks and this and that.” We’re going to need a community to come together and say, “What’s our vision for a new economy?” But we need the tools of planning to direct things in ways that people can see and manage and to create the economy.

For me, we have to have the confidence. It’s not just saying we need a new economy, but we need to have the skills to do it. That means studying these experiences. That’s the same for the third world. People need to see what planning looks like, we need to see what planning looks like, and we need to think about how we work together. The U.S. economy is so integrated with Mexico and Canada. How do we develop plans that are responsive to the existing production networks? It’s a big ask, but there’s a way that we can begin to see the need for capacities and support for things.

Talia Baroncelli
I just want to emphasize how important everything you’re saying is because the particular time period that you’re talking about, the World War II mobilization is incredible because FDR was really up against some of the largest monopolies that ever existed. Capitalism itself tends to form monopolies. It’s in its DNA to form monopoly capitalism. It just tends to do that. The companies or the contractors that were resisting a lot of these different procurement contracts and didn’t want to actually fall in line and have certain, I guess, production quotas. They were companies, as you mentioned, like U.S. Steel and Alcoa. These were huge monopolies. This is an incredible feat that the FDR government was able to even accomplish this and steer production in a certain direction. It’s challenging for us to think of even trying to undermine or undercut the way some of these monopolies operate, but this was actually done in that time period. I guess I just wanted to underline that because they were really up against the largest rich and elite business class within the United States.

Martin Hart-Landsberg
One reason why they were able to do it is, in some sense, the population was already suspicious from the depression about corporations, and they had some good feelings about the capacities of the state because of the New Deal. We have the opposite situation now. People celebrate Elon Musk, and they celebrate Mark Zuckerberg. Who are our heroes? They’re these corporations. We see the government, oh, it’s ineffective and inefficient. Of course, companies like us to think that the government isn’t helpful, and they’re the ones. We see that happening throughout the world.

The weakening state capacities are what’s creating these tensions, crises, and downward pressures, but this is what we have to challenge. We have to have people see that this unleashing of corporations is not an answer. You can see that with the climate crisis, where they keep saying, “We’re for solving the climate crisis, but we want 2,000 new data centers for AI that’s going to force us to open up coal mines and nuclear power plants, or we’re for finance, but we don’t want to do anything that will be supporting alternatives because it’s not profitable.” We need to renew a sense of our belief in the capacities of government.

I think, just to go back to what you’re saying, what was so striking to me is that the U.S. evolved this through trial and error, which tells us we will, too. We’ll have to do that, and we should expect resistance. They had it, and we’ll have it. One of the things that happened, though, that meant that it was so short-term is because it was a capitalist government, and it didn’t have the vision of change that we would need to really make the environmental changes we want.

What happened is that when the Defense Production Corporation built all these factories but allowed the auto industry to run them and different industries. Those industry heads would pay for newspaper people to go around, and they would proudly say, “Oh, Ford is winning the war. Alcoa is winning the war.” They wouldn’t say, “This factory was built by the government because we wouldn’t. These workers were trained by the government, and their social infrastructure was built by the government because we wouldn’t. We’re producing what the government says.” It was like, “No, it’s private enterprises doing it.” When the war was over, they were embedded sufficiently for them to unravel all these controls and all these things and for people to ideologically think, “Oh, it’s a private enterprise, so we’re moving back to the normal.” 

I think it’s that class understandings that really need to be strengthened for us to understand what we’re up against and the kind of power we’re going to need. That’s going to mean planning, but planning that comes from a vision, organization, and preparation for struggle.

Talia Baroncelli
Just one final question, a really quick one, because I think this gets towards how people can actually participate in a lot of this planning. One historical point that you make in one of your articles, you were writing about how the Office of Price Administration issued a general maximum price regulation in April 1942. There were certain caps placed on how prices could be raised on certain goods. People could actually report if a certain department store was raising the prices beyond this threshold. They could even report that particular department store to the government, and there would be a penalty for that. There was democratic participation involved in this. What would that look like today? How do you see this planning involving everyday people in the current context?

Martin Hart-Landsberg
Well, that’s the challenge. Certainly, one of the things that’s much easier to understand is the way the government funded childcare centers and required canteens to produce food or communal kitchens for workers. Every community that wanted to could come together, create a center, ask for federal funds, and establish it, but they ran it. These were community-controlled and run centers. What you described with the price control was really important and heartening. The U.S. government tried to control prices and couldn’t, and workers started striking because they didn’t have the funds. They were losing real earnings.

The government was worried that the strikes would undermine the war effort. Even though they didn’t want to, they finally set up a system of dollars and cents price controls that were mostly for 300 food items, but also dealt with clothing and other items. They set up all volunteer price control panels with one paid person to take notes. Then they deputized volunteer price assistants who would go out. A lot of these were women who were staying home with children, returning veterans, or older people. They would go out into stores, and the stores had to show the prices. If they found violations, they would order them to change them. If they wouldn’t, these price assistants who would go on a monthly cycle but change the dates would report them to the boards, the boards could fine these companies, and the fines would then go to the federal government.

Each month, the Office of Price Control would reestablish the prices to take into account different changes. What’s so amazing is that in the last two years of the war, prices only increased 2% during a time when there was full employment, minimal consumer production, and maximum war. They ensured price stability. Why? Because people went out and were encouraged to know how the business worked. In fact, when this started, John Kenneth Galbraith, who was a very important person, had done a lot of work; he was a central player, and he was against it. He said, “I don’t want to have a Gestapo of housewives going into businesses.” But in fact, it was popular participation in this program that made it work.

The lesson really is, how do we develop the policies we want? Maybe it’s measuring pollution. Maybe it’s overseeing the production process. Maybe it’s having federal support for community production of childcare centers, communal kitchens, parks, or who knows what, but these are the lessons. These are experiences, and they hold models for us. Not to duplicate, but to inspire us and to think about it. I think the more we have them in our toolkit, the more open we are to being alert to possibilities and to envision something new. Not just a highly centralized planning body that works for corporations but something that we can reach and control. For me, this history is very rich. I think the more our movements talk about it ideologically about the need to strengthen public capacities and community relations, the more insights and ideas we’ll have.

One last thing is that if the economy is going to be as continually poor as we think it will be, I’m not talking about a crisis, but poor. There’s going to be plant closures. There’s all sorts of things happening. These are the moments that if we had public authorities that could work with unions and say, “What can workers do? What are their capacities? What have they been trained for? How could their skills be used to do something else?” If the companies are going to want to close down because it’s more profitable to produce environmentally damaging things elsewhere or we don’t want it, we want to have plans where a public authority in the local area can say, “We want to support workers in taking ownership, or we’ll own it, but work with you in producing goods and services that relate to the community.”

We need communities to say, “What are our priorities? What do we need? What skills exist in the community? How could community colleges train workers to know about these things? How do we study other examples of the conversion process when we were trying to convert from military to consumer goods? How do we prepare plans that workers can see and have ownership over and, therefore, imagine we can do this? We don’t have to have unemployment. We can be producing what we want and what’s helpful to us.” I think this is community colleges, unions, scholars, community activists, housing people, transportation people, all of us coming together and building a vision like that.

Talia Baroncelli
Right. I think the history here really plays a huge role because this history is incredibly empowering. If we studied a bit more, then we could probably figure out how to better work with one another to enact this change and challenge corporations and monopoly capitalism.

Martin Hart-Landsberg
Yup, I certainly agree with that.

Talia Baroncelli
Martin Hart-Landsberg, it’s been great speaking to you. Thank you so much for joining theAnalysis. It’s been really great to talk about these things.

Martin Hart-Landsberg
My pleasure. Thank you.

Talia Baroncelli
Thank you for watching theAnalysis.news. See you next time.