We desperately need an ecosocialist-inspired transformation of the U.S. economy, one that will allow us to substantially, equitably, and democratically reduce its energy and materials usage. This cannot be achieved without planning, a process that deserves more attention than it currently receives. Although most activist organizations are focused on winning changes in a single defined area of concern, thanks to their collective work, we do have a broadly shared vision of the societal transformation we seek.1 But a compilation of desired changes does not by itself promote an understanding of the likely challenges and tasks involved in achieving these goals.
Even though our loosely knit movement is nowhere near powerful enough to shape government policy, now is an appropriate time for us to deepen our knowledge about how economies are transformed, as well as develop criteria for the planning process and policies most likely to produce the outcome we desire. One certain insight is that, because of the complex nature of economic processes, a transformative change in one area cannot be achieved in isolation. This realization should encourage initiatives that strengthen ties between organizations with different issue agendas, leading to greater political coherence and visibility for our demands. In fact, it is likely that without a serious effort to chart a way forward, our organizing work will struggle to gain political traction.
Currently, some of our key demands—for example, to end fossil fuel use—leave workers fearful about their economic future. Many do not find our stated commitment to a just transition, which will ensure workers in affected industries will find employment producing different goods or in new sectors of the economy, very reassuring. They tend to view a “just transition” as more of a slogan than a policy possibility, and for good reason. They see no planning process and no political party or trade union movement with the commitment or capacity to develop such a process.
Thus, there are good reasons to seek a deeper understanding of the challenges and tasks involved in planning. One of the most productive ways is to study an actual conversion process, in particular the Second World War U.S. mobilization experience. There is much we can learn from this experience not only because the government, under wartime pressure, successfully converted the economy from civilian to military production, but also because it was forced to rely on trial and error to create needed planning infrastructure, all the while managing relations with a reluctant and powerful capitalist class. Therefore, in what follows, I first discuss some of the key lessons to be learned from that wartime conversion. I conclude by offering suggestions for strengthening our collective effort to transform radically the U.S. political economy.
A Rapid Transformation
The Second World War transformation in the United States was set in motion by an enormous increase in military spending amounting to an incredible 269.3 percent in 1941, followed by 259.7 percent in 1942, and 99.5 percent in 1943. As a result, the combined output of the war-related manufacturing, mining, and construction industries doubled between 1939 and 1944. In that final year, federal purchases of goods for the military accounted for approximately one-half of all goods produced. In 1943 and 1944 alone, the United States was responsible for some 40 percent of all munitions produced during the Second World War.2
The massive increase in military goods was not simply a “production miracle.” It was made possible by the curtailment or outright suppression of the production of many civilian industries and the rationing of limited supplies of many goods. For example, civilian automobile production was stopped, and tires and food were rationed. Thus, while overall industrial production rose over the years 1941 to 1943, nonwar industrial production actually declined. Between 1940 and 1944, the total production of nonmilitary goods and services fell by more than 10 percent.3
In short, the rapid transformation of the U.S. economy was achieved because a government-directed industrial mobilization succeeded in fully employing the country’s resources while shifting their use from civilian to military production. This accomplishment should strengthen our belief in the feasibility of a rapid, ecologically responsive conversion of the U.S. economy.
A Leading Investment Role for the Government
The government also played a leading role in securing the increase in the plants and equipment needed to meet the military’s growing demand for goods and services. It had to play that role because, in contrast to the popular myth that the entire country rallied around the war effort, the business community resisted undertaking the required new investments.
Leading firms in the auto industry refused government entreaties to give up sales or convert their facilities for military production. It took government action—in the form of an order to cease producing civilian vehicles, which came one month after the U.S. declaration of war—for the industry to agree to retool for military production. The steel industry resisted new investments throughout the war; raw steel production grew only 8 percent from 1941 to 1944, the wartime peak. Crude petroleum refining capacity grew only 12 percent over the same period. In fact, overall, private investment fell in value over the years 1941 to 1943. That last year, business investment was only 37 percent of its 1940 level.4
The creation of the Defense Production Corporation (DPC) was one of the government’s most important initiatives to ensure wartime production. In May 1940, Congress passed a series of amendments that allowed the still operating Depression-era Reconstruction Finance Corporation to create new subsidiaries “with such powers as it may deem necessary to aid the Government of the United States in its national defense program.”5 The DPC was one of those subsidiaries.
Since the Reconstruction Finance Corporation had independent borrowing authority, the DPC was able to finance the expansion of facilities deemed critical to the military buildup without needing congressional approval. The DPC kept ownership of the new facilities it financed, but planned the construction with predetermined contractors who would operate them, and to whom they then leased the facilities for a minimal fee.
The DPC alone financed and owned some one-third of all the plants and equipment built during the war. By its termination in June 1945, it “owned approximately 96 percent of the capacity of the synthetic-rubber industry, 90 percent of magnesium metal, 71 percent of aircraft and aircraft engines, and 58 percent of the aluminum metal industry. It also had sizeable investments in iron and steel, aviation gasoline, ordnance, machinery and machine tools, transportation, radio, and other miscellaneous facilities.”6
The DPC supported facilities expansion in other ways, too. Responding to shortages in machine tools and the industry’s reluctance to boost capacity to produce them, the DPC began a machine tools pool program.7 The DPC gave machine tool producers a 30 percent advance to begin production. If the producers found a private buyer, they returned the advance. If they did not find a buyer, the DPC would pay them full price and put the machine tools in storage for later sale. This program proved remarkably successful in boosting production and, with machine tools readily available, speeding up weapons production.
Despite government efforts to reassure business by, for example, letting corporations manage the new facilities created by federal investment with the option of purchasing them at discounted prices after the war, many business leaders remained critical of government actions. As economist J. W. Mason pointed out: “Even the largest recipients of military contracts regarded the wartime state with hostility. GM [chair] Alfred Sloan—referring to the danger of government enterprises operating after war—wondered if it is ‘not as essential to win the peace, in an economic sense, as it is to win the war, in a military sense,’ while GE’s Philip Reed vowed to ‘oppose any project or program that will weaken’ free enterprise.”8
If the government could not count on business investment to help the country during a time of war, it is clear that we will have no choice but to pursue an aggressive program of public investment and ownership to grow the industries we want. If business was willing to risk defeat because of its distrust of an expanding public sector, we should expect fierce opposition to our program of public expansion—especially since the climate crisis has yet to threaten private profits.
Planning Means More than Spending
The economy’s successful conversion involved more than aggressive federal spending and public investment. Planning was required. The military was responsible for developing strategies that determined product needs. Its procurement agencies then signed contracts with a core group of prime contractors for the desired production, with the federal government covering the costs. Although the plan may sound straightforward, the outcome was chaos.
The military’s demand for goods and services soon outpaced the economy’s ability to meet it. The result was a shortage of key materials and components, inflation, and disrupted production. It took the work of the War Production Board (WPB), the third and most powerful mobilization agency established by President Franklin Delano Roosevelt, to bring order and direction to the economy.9
The WPB first tried to use a priority ranking system to ensure that prime contractors received the inputs they needed. However, with military procurement agencies freely signing contracts for production and designating all output as priority, the system proved unworkable. Production plans were stymied as firms fought for limited inputs and hoarded materials, actions that only intensified shortages and set back war production.
The WPB responded by requiring some nonessential industries to stop producing, thereby freeing up resources for military use. It ordered yet others to convert from civilian to military production. While helpful, these actions were not sufficient to solve the shortage problem.
Therefore, the WPB introduced plans for the direct allocation of critical metals and components among the competing prime contractors and producers of essential civilian goods. The WPB tackled the metals shortage first. Its Controlled Materials Plan focused on a small number of metals, especially steel, aluminum, and copper, and required core claimants—such as the Army, Navy, and Maritime Commission—to provide detailed descriptions of their projected programs and a monthly production schedule showing the quantities of controlled metals needed by their respective prime contractors.
The relevant WPB industry divisions would then estimate likely supplies of the designated metals and allocate, in response to WPB policy directives, a specific share of each to the claimants. The claimants would then, after adjusting their programs accordingly, assign their metal shares to their respective prime contractors, who were responsible for assigning supplies to their subcontractors.
As the metal shortage became less urgent, the WPB turned to components. A special committee was established with representatives from every military procurement agency. It received monthly production schedules from each agency, which it reviewed for availability of facilities and critical component needs. It then used an allocation system similar to the Controlled Materials Plan to assign the supply of thirty-four key components to the selected priority producers.
The WPB’s struggles to manage resource allocation and production scheduling were intensified by the military’s refusal to adjust its demands to the productive capacity of the economy. While the policies highlighted above were helpful, it was ultimately the ability of the WPB to force the military to recognize production limits that allowed them to succeed. The battle between the WPB and military over this issue became known as the “feasibility dispute.”
The WPB’s Planning Committee concluded, after careful estimation, that the military’s spending projections, especially for 1943, were well beyond what the economy could satisfy given the needs of the civilian sector and allied nations. It therefore pressed the military to rein in its demand. As the head of the Planning Commission said, “any attempt to attain objectives which are far out of line with what is feasible will result in the construction of new plants without materials to keep them operating; vast quantities of semi-fabricated items which cannot be completed; production without adequate storage facilities; idle existing plants due to lack of materials; and similar disrupting situations.”10
For months, the military rejected any consideration of cutbacks. The Army was the most aggressive, arguing that the WPB had no authority over its spending decisions; rather, the board’s sole job was to ensure the economy satisfied Army needs. But finally, after a tumultuous three-hour meeting of WPB officials and military leaders in October 1942, the military capitulated. It agreed to adjust its spending downward in line with Planning Commission recommendations, ensuring the success of the mobilization effort.11
Our own desired transformation will, by design, require changes to our system of energy generation, patterns of living and working, modes of transportation, and the list goes on. New industries will have to be built, some existing industries will have to be shuttered or converted, and still others expanded. The wartime experience makes clear that any attempt to pursue changes on such a scale will result in chaos without empowered planning/mobilization agencies overseeing and directing economic activity.
Community Participation Has a Role
Many national initiatives required local community participation for their success. The fight against inflation is perhaps the most dramatic example.12 One consequence of the rapid increase in military spending was inflation, which soon became a threat to the war effort. Escalating prices raised the cost of financing the war and, more importantly, triggered strikes by workers seeking offsetting wage increases.
The government’s response included placing limits on wage increases and a series of ever-more complicated price control policies. Wage increases were generally kept in check by National War Labor Board rulings. Price control efforts did not fare so well.
The Office of Price Administration (OPA), the agency responsible for price stability, issued its General Maximum Price Regulation in April 1942. This called for the prices of most consumer goods to be frozen starting May 15 of that year, at their highest level as of March 1942. But while appearing straightforward, the regulation proved difficult to administer as well as enforce.
Businesses were constantly modifying products and introducing new ones. When that happened, the regulation allowed firms to sell their products at prices comparable to similar products sold in March. However, if a business felt this procedure was unworkable, the OPA offered other methods for calculating acceptable prices. If the business was a wholesaler or retailer, it was allowed to take its “highest March percentage mark-up on the line of commodities to which the new item belonged, using current replacement costs and March ceilings to calculate the mark-up.” If the business was a manufacturer, it “was to apply to the OPA for a ceiling before selling the new item.”
Not surprisingly, firms had little trouble justifying ever-higher prices. In response, over 2 million workers went out on strike in 1943. Approximately 13 million days of labor were lost, more than three times the number in 1942.
Desperate to control inflation, the OPA radically changed policy mid-1943 in two important ways. First, it introduced a new system of price controls that involved setting actual dollars-and-cents ceiling prices on most consumer goods. It took an especially aggressive stance toward food prices. Some food prices, such as for meat, were set by the national office. The great majority—a community price list of three hundred designated grocery products—were set by district offices using local production costs.
All grocery stores were divided into one of four categories based on their size and service, and each was assigned its own nationally determined percentage markup. To calculate community price ceilings, OPA district offices first calculated the local production costs of each product on the list using information from local suppliers. They then applied the appropriate national markup to the local costs. The result was a dollars-and-cents ceiling price for each commodity that varied by type of store and community and was regularly adjusted by district offices. Grocery stores were required to display a poster showing their category designation, as well as signs near each product on the community price list showing its selling price.
Second, and equally important, the OPA used a volunteer-run system to ensure business compliance with its ceiling prices. It added Price Panels to its already operational volunteer-run Rationing Boards, staffing them using recommendations from community and farmer organizations as well as labor unions. It then trained and deputized tens of thousands of volunteer Price Assistants who were sent to visit stores to check price compliance—most often grocery stores, but also restaurants at least once every two months, the outlets of one major service trade at least once a month, and every consumer durable goods dealer at least once a month.
Managers were warned if violations were found, and if not corrected quickly, Price Assistants reported the stores to their local Price Panels, which were empowered to issue fines paid to the U.S. Treasury. Consumers were also encouraged to report violators. If a Price Panel determined a violation had taken place, the consumer had the right to collect any overcharge or sue in court for three times the overcharge, or $50, whichever was larger.
Needless to say, businesses hated this system, especially the OPA’s use of volunteers directly to monitor business practices. But because it proved effective, the government reluctantly maintained it until the last days of the war. From spring of 1943 to April 1945, the consumer price index rose less than 2 percent. Food prices actually fell by more than 4 percent. This record is especially noteworthy because it occurred during the last two years of the war, a time when employment was at a maximum and consumer goods production tightly restricted.
We will not only need to implement national policies that require local participation, but look for ways to craft policies that encourage it. The experience of volunteers organizing and running a complex price control system during the war demonstrates that planning does not have to be a top-down affair. In fact, quite the opposite was true: price control efforts failed until the system was restructured to make popular participation possible. Promoting meaningful community involvement in policy implementation also offers one of the best ways to ensure that our transition will be both democratic and solidaristic.
Planning Is Political
Class politics greatly influenced the organizational structure and policies of the wartime mobilization agencies. Not long after the First World War, the U.S. Army’s Planning Branch began developing plans for a future wartime mobilization.13 It openly consulted with trade association officials, some of whom were made reserve officers in the Planning Branch in order to help with the work. The plans changed over time, but all called for a mobilization agency led by an appointed business leader who would oversee the work of self-organized trade associations. The military would determine its needs, and trade associations would decide how their member companies could best satisfy them.
Labor, in contrast, was to be managed. If war was declared, some in the military advocated drafting all eligible males and then furloughing those needed to work for private industry at a soldier’s pay. Others just called for a suspension of the Eight-Hour Act, modification of the National Labor Relations Act to prioritize production, “work-or-fight” regulations, and the direct assignment of workers to defense plants.
President Roosevelt was critical of the military’s plans and determined not to allow a military-corporate alliance to control wartime economic policy. The underlying structure of the three mobilization agencies he created proved to be only marginally different from what the alliance partners desired. Each agency, including the WPB, oversaw the work of a number of divisions with broad areas of responsibility, such as materials or military production, each of which was subdivided into numerous industry sections. While Roosevelt refused to allow trade associations to direct the work of the different divisions and industry sections, almost all were led by appointed so-called dollar-a-year executives who came from among the very corporations they were supposed to supervise. As the labor historian Nelson Lichtenstein explained, “almost 800 posts were held by dollar-a-year executives on loan from their corporations. Along with like-minded procurement officers in the military, the men who staffed the industrial divisions soon presided over a virtual command economy. They decided distribution of contracts, allocation of scarce resources, general coordination of industrial capacity and military requirements.”14
Not surprisingly, big business was the main beneficiary of this arrangement. Of the $175 billion in prime contracts awarded between June 1940 and September 1944, over one half went to the top thirty-three corporations.15 This arrangement also allowed big business to shape the WPB’s postwar reconversion planning to its advantage. Roosevelt’s acceptance of this “behind the scenes” takeover of the mobilization process by corporate executives, despite his critical perspective, reflects the powerful leverage corporations enjoy in a capitalist economy, especially during wartime. As Roosevelt’s Secretary of War, Henry Stimson, commented, “If you are going to try and go to war, or to prepare for war, in a capitalist country, you have to let business make money out of the process or business won’t work.”16
CIO leaders, aware of the antiworker sentiments of both the military and corporate community, had proposed a different mobilization plan, but Roosevelt rejected it. Their plan called for the creation of a National Defense Board composed of representatives from labor and industry and chaired by a presidential appointee who would oversee the work of Industry Councils. The councils would be staffed by an equal number of representatives from management, labor, and government in all major industries.
Labor was to pay a high price for its exclusion from leading planning bodies. It was left largely powerless to resist a relentless corporate attack on workers’ rights. With unions hampered by a no-strike pledge made under threat of government action, management freely ignored worker objections to decisions that violated union contracts, created unsafe working conditions, and produced new wage inequities. Local unions could only file grievances with the National War Labor Board, but with little hope of a timely and positive decision.
The Second World War experience shows that planning is more than a technical challenge, best left to government officials assisted by corporate leaders disguised as objective production experts. Rather, all relevant decisions, including the structure, membership, and authority of planning agencies, are first and foremost political ones, with the choices made determining whose interest will be best served by the process of change. If we are successful enough to create political conditions supportive of decisive public action to transform our economy, business leaders can be expected to step forward with their own preferred plan for change. We need to be ready to challenge it.
So what can be done to advance an ecosocialist inspired transformation of the U.S. political-economy? To start, we should create space in our organizations for study of the Second World War conversion experience, especially the lessons highlighted above, to prepare us for some of the challenges and tasks we will likely face. Organizational demands and organizing practices should also be evaluated to ensure they contribute to building community support and capacities for the desired transformation.
Given the critical role workers must play in the conversion process, we should also work to overcome the reluctance of unions to encourage their members to challenge managerial prerogatives, especially over production planning.17 Workers worry, for good reason, about job security. There is the ever-present danger of layoffs and closures. There is the fear of job loss from policies designed to close businesses producing products harmful to the planet. In response, we should help unions create opportunities for their members to study examples of worker-led conversion planning in order to demonstrate the potential of the strategy to protect both jobs and the environment.
One worthy example is the Green Locomotive Project. Several United Electrical, Radio and Machine Workers of America (UE) locals, working with environmental activists and government officials, are leading an effort to get their employer, Wabtec, to build low-emission locomotives, instead of ones that use diesel, and to get the railroads to commit to purchase them.18
Two larger unsuccessful efforts also deserve study. In 1976, workers at Lucas Aerospace in the United Kingdom fought to save their jobs during a period of defense cuts by developing an alternative “corporate plan” that would transform their company from a weapons-maker into an ecomanufacturer of products such as wind turbines and hybrid cars.19 In 2019, worker and community activists, under the banner of Green Jobs Oshawa, tried to gain Canadian government support for the takeover and conversion of a closed GM plan in order to produce electric vehicles for use by government agencies.20
One important reason for the failure of many conversion attempts is the reluctance of government agencies to provide workers with needed technical and financial support. Therefore, we should consider campaigning for the establishment of state conversion agencies. These agencies would be tasked with providing technical assistance to help workers develop alternative production plans, as well as financial assistance for a worker or public sector purchase of facilities when appropriate. Lessons learned could guide the development of more expansive state planning and production initiatives.
We should also pursue the convening of regional activists for conversations about planning. Regional efforts at planning are likely to prove especially fruitful for several reasons. Many of the consequences of climate change are experienced differently depending on region, which makes it far more effective to plan regional responses. In addition, many of the energy and natural resources to be managed during a period of transformation are shared by neighboring states. Moreover, state governments, unions, and community organizations are likely to have established relationships with their regional counterparts, making conversation and coordination easier to achieve.
One issue that needs to be on the agenda of such gatherings is the appropriate form of our planning and mobilization agencies. During the war, the military decided what needed to be produced, and the mobilization agencies took these demands as marching orders. Such top-down planning for the production of a relatively narrow range of goods is a nonstarter given our aims. Therefore, we must encourage exploration of ways to structure a community-centered planning process capable of prioritizing our many demands and build mobilization agencies open to community participation in policy development and implementation.
The study of wartime regional organizing efforts by the leadership of District 8 of the UE can illuminate both challenges and possibilities. These include a multistate, prewar effort at conversion planning, regional conferences near the end of the war to educate workers about postwar planning possibilities, and a postwar campaign to establish a Missouri Valley regional planning authority. The union continues to support this planning, recently advocating for “a network of regional Just Transition Authorities, publicly owned and accountable to communities and workers…to address the specific carbon-reduction and employment needs of different regions of the country.” 21
The aim of these suggestions is not to draw energy away from ongoing organizing activity. Rather, it is to help participants more clearly visualize new possibilities for living and working and develop the confidence, knowledge, and organizational relationships needed to advance the movement required to realize them.
- ↩ For example, see Michael Löwy, Bengi Akbulut, Sabrina Fernandes, and Giorgos Kallis, “For an Ecosocialist Degrowth,” Monthly Review, 73, no. 11 (April 2022): 56–58.
- ↩ Christopher J. Tassava, “The American Economy during World War II,” EH.Net Encyclopedia, ed. Robert Whaples, February 10, 2008.
- ↩ Hugh Rockoff, “The United States: From Ploughshares to Swords,” in The Economics of World War II: Six Great Powers in International Comparison, ed. Mark Harrison (New York: Cambridge University Press, 1998), 83.
- ↩ Harold G. Vatter, The U.S. Economy in World War II (New York: Columbia University Press, 1985), 28.
- ↩ Quoted in Gerald T. White, “Financing Industrial Expansion for War: The Origin of the Defense Plant Corporation Leases,” Journal of Economic History 9, no. 2 (November 1949): 161.
- ↩ White, “Financing Industrial Expansion for War,” 158.
- ↩ Andrew Bossie and J. W. Mason, “The Public Role in Economic Transformation: Lessons from World War II,” Working Paper, The Roosevelt Institute, 2020, 9–10.
- ↩ W. Mason, “The Economy During Wartime,” Dissent Magazine, Fall 2017.
- ↩ For a discussion of the evolution and operation of U.S. mobilization agencies and their policies, see Paul A. C. Koistinen, Arsenal of World War II: The Political Economy of American Warfare 1940–1945 (Lawrence, Kansas: University of Kansas Press, 2004) and Martin Hart-Landsberg, “Realizing A Green New Deal: Lessons From World War II,” Class, Race and Corporate Power 9, no. 2 (2021).
- ↩ Quoted in Maury Klein, A Call to Arms: Mobilizing America for World War II (New York: Bloomsbury Press, 2013), 380.
- ↩ The military did take its revenge. Months later, under different WPA leadership, it forced the downgrading of the Planning Commission. In response, the members of the Planning Commission resigned en masse.
- ↩ For a detailed discussion of the price control experience described here, see Martin Hart-Landsberg, “Popular Mobilization and Progressive Policy Making: Lessons from World War II Price Control Struggles in the United States,” Science & Society 67, no. 4 (2003). Another example of the importance of community participation involves the organization of the wartime federally funded network of community-run child care centers. See Martin Hart-Landsberg, “Learning from History: Community-Run Child-Care Centers during World War II,” Reports from the Economic Front, June 9, 2021.
- ↩ For more on the political struggle over control of the wartime planning process and mobilization agencies, see Martin Hart-Landsberg, “U.S. Economic Planning in the Second World War and the Planetary Crisis,” Monthly Review 74, no. 9 (February 2023): 25–40.
- ↩ Nelson Lichtenstein, Labor’s War at Home: The CIO in World War II (Cambridge: Cambridge University Press, 1982), 83.
- ↩ Vatter, The U.S. Economy in World War II, 60.
- ↩ As quoted in Lichtenstein, Labor’s War at Home, 39.
- ↩ For a discussion of the importance of this task, see Simon Black and Sam Gindin, “Swords into Ploughshares,” The Bullet, December 21, 2021.
- ↩ See the UE Newsletter, “A Green New Deal for People and the Planet,” n.d.
- ↩ Adrian Smith, “The Lucas Plan: What Can It Tell Us About Democratizing Technology Today?,” Guardian, January 22, 2014.
- ↩ See Sam Gindin, “Realizing ‘Just Transitions’: The Struggle for Plant Conversion at GM Oshawa,” The Bullet, February 3, 2020.
- ↩ For more on these initiatives see Martin Hart-Landsberg, “Lessons from World War II: The Green New Deal and the State,” Against the Current, no. 207 (July–August 2020).