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BORN JACOB LIEBSTEIN, he immigrated with his parents to the Lower East Side of New York City from Lithuania at age 10. At City College of New York, he was a student activist and a member of the Communist Party USA (CPUSA) from its inception in 1919. He was close to party leader Charles Ruthenberg and took over leadership of the party after Ruthenberg died. As leader of the CPUSA, he purged the Trotskyite followers of J.P. Cannon, who advocated a more “federal” communism, with autonomous national workers' movements rather than the centralized, Soviet-focused movement of the Leninist-Stalinist wing. Then in 1929, Lovestone himself was purged because he supported Nikolai Bukharin and the right-wing opposition, which wanted collectivization of industry and agriculture to progress more slowly in the Soviet Union.

The Lovestoneites were heretic communists because they called for collaboration among the classes, at least in the United States. They regarded America as an exceptional case, exempt from the capitalist economic laws that applied to the rest of the industrial world and the rest of the Communist Party. Their right-wing deviancy led to their expulsion in 1929. Ousted, the Lovestonites founded the Communist Party Opposition (CPO), which disappointed their expectations when it failed to draw more than a few hundred members. The CPO became the Independent Communist Labor League in 1939 and dissolved in 1941.

Lovestone turned to anti-communism, perhaps as early as the late 1930s but clearly by the end of World War II. He was a cofounder with Irving Brown of the Free Trade Union Commission (FTUC), also known as the American Institute for Free Labor Development (AIFLD), under the auspices of the American Federation of Labor (AFL). As head of the AFL-CIO Free Trade Union Committee, he was, in essence, foreign policy adviser to union president George Meany.

To an extent, the AFL-CIO was a covert arm of the U.S. foreign policy establishment through the AIFLD. The AIFLD operated from the position that the best way for working people to improve their lives was through collective bargaining, strong anti-communism, and cooperation with government and management. Irving Brown and Lovestone used the AIFLD to suppress the leftist unions in France and Italy after World War II. The need for funds to undermine the communist-led unions in Europe meant that Lovestone and Brown worked with gangsters and socialist and Catholic unionists.

The organization worked in Europe and Latin America to organize unions free of communist control. This occurred even before the establishment of the Central Intelligence Agency (CIA) in 1947. When the CIA came into being, Lovestone worked closely with it, using the FTUC as an intelligence-gathering organization and providing the CIA's counterintelligence chief, James Jesus Angleton, with information about communist labor union activity. Sources disagree about whether the Lovestone-Angleton relationship was one of equals—an independent FTUC assisting the CIA—or a matter of Lovestone being a subordinate, feeding information to the CIA. Either way, the arrangement persisted until the mid-1960s.

Some in the AFL-CIO disliked Lovestone. For instance, Victor Reuther, reputedly at one time on the CIA payroll himself, felt that the direction in which Lovestone led the AFL-CIO was tragic for international unionism. The context of Reuther's remarks is the AFL-CIO endorsement of the Vietnam War at a time when the membership and the movement were moving away from that support. At the same time as Reuther was reaffirming AFL-CIO support for the unpopular war, dissident auto workers from 14 countries were in Detroit, Michigan, to establish a different sort of unionism in the face of a globalizing world, one that sought to revitalize class solidarity.

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