15 OCTOBER 1954, Page 8

Economists in Politics By ENOCH POWELL ROM principles to their

application is often a long and hazardous journey. No small part of the grand human Comedy of Errors has for its subject the application of economic truth in political practice.

In the abstract no economic truths are more clear or certain than those upon which the principle of free trade is founded. The advantages of the international division of labour, or. to use its vulgar translation, ' buying in the cheapest market and selling in the dearest,' would not in isolation and abstraction be seriously denied by any reasonable person to whom they have been explained. Nor, though it has been provided with conditions and limitations, has the principle itself been under- mined by the economic studies of a century and a half, despite a number of determined attempts to do so.

In contrast, during the same period, the application of the principle has been the rare exception rather than the rule. The free trade policy adopted by Britain in the first half of the last century evoked but transient enthusiasm and slight imita- tion abroad. In Britain itself the policy was being called in question before the century was out. Since 1931 it has been extinct even in the country of its origin. Extinct, that is to say, in the fullest sense; not extinct like nationalisation and the other dogmas of Socialism because that one of the two main parties which advocates them is in a temporary political minority, but extinct because both the great parties in the state know nothing of such a policy, while the party histori- cally identified with it no longer exists.

From force of custom we find this situation less weird than it really is: the almost universal rejection in practice of a principle almost universally admitted to be valid in theory. To elucidate the paradox is a fascinating 'study in political behaviour.

The two chief determinants of political behaviour in this country since 1945 have undoubtedly been the impressions left by the war years and the memory (whether accurate and factual or not, is quite beside the point) of pre-war unemployment. Each helps to explain the free trade paradox.

It is undeniable that in the short run restriction of trade, that is, deliberate rejection of the advantages of the inter- national division of labour, can reduce unemployment. In the specific example of the 1930s, the introduction of trade res- trictions was in fact followed—and for political purposes sequence and cause are virtually the same—by a steady and massive decline in unemployment. Certainly it happens also to be true that trade restriction is a remedy which cannot twice be applied to the same complaint, and that in the long run a policy which tends to reduce rather than increase the value product of labour cannot be advantageous. Politics, however, does not concern itself with the long term or with remedies for future contingencies. Sufficient that free trade in the ex• perience of our generation has been associated with the increase of unemployment and restriction of trade with its diminution. It was probably this experience which chiefly converted the Labour Party (and not only the Labour Party) to the policy of the dear loaf.'

This was not the whole of the explanation. The Labour Party had placed its trust in some form of state regulation of the economy. The experience of the Great Depression, by emphasising the vulnerability of Britain to movements of world trade, suggested strongly that state regulation of the internal economy was useless unless steps were taken to insulate and ' protect' that economy against movements outside. In this very year of 1954, a quarter of a century after the Great Depression, the General Council of the Trades Union Congress has criticised the relaxation of controls by a Conservative government on the ground that the effects of an American depression will be harder to cope with. When this connection between socialism and protection is grasped, it becomes still easier to understand the Labour Party's rejection of free trade.

If the experience of unemployment affected principally thq Labour Party, the experience of war was not so restricted in its influence. The Second World War even more than the First transformed both the internal economy of Britain and the economy of the world at large. The pattern of both hi 1945 was largely the work of the non-economic forces of war Now, the classical advocates of free trade had not been guilty of arguing that its advantages ought to be sought otherwise than by a gradual removal of trade restrictions. But after 1945 the evident impossibility of free trade at one fell swoop came to be equated in the public mind with the impossibility —or undesirability (they are political synonyms)—of free trade ever at all. This seemed to be confirmed by the biennial erise9 of 1947, 1949 and 1951. Inconvertibility, devaluation, the los9 of our gold and dollar reserves—all were so many apparent proofs that the international division of labour was not for the world in which we now live.

It has never been pretended that the advantages of the international division of labour are other than general advano taps. In other words, there have always been private interests and partial affections' which stand to gain by restric4 tions on trade. It was against such interests, as well al political forces and economic prejudices, that the free trade policy of the first half of the last century had to make head t When free trade disappeared in the Great Depression. thesa private interests found public policy suddenly allied with them, The policies adopted by the governments of 1931-39 for the rationalisation ' of British industry were dovetailed with roil trictions upon trade—remember, for example, the inter-relation between agricultural marketing schemes and agricultural protection—and the war economy, which had of necessity to use associations of producers and traders as its instruments, gave to them an added aura of patriotism and beneficence. British industry, as it has been shaped by the events of 1931 to 1951. was not likely to provide many propagandists for the principles of free trade nor to listen patiently to those who would distinguish between its short term limitations and qualifications and its long term advantages.

From whom then ought we to expect enlightenment and guidance, warning against fallacious over-simplification and rescue from the fallacies or special pleadings of politicians and interested parties ? Surely from the economists, if anyone And indeed, the reasons for the paradoxical eclipse of free trade principles are studied delightfully and convincingly in Professor Robbins's latest book, a collection of lectures and articles under the title of The Economist in the Twentieth Century.* But the dates of the originals are worth looking at. ' Full employment as an objective,' which demonstrates the The Economist in the Twentieth Century and other Lectures iii Political Economy. By Lionel Robbins. (Macmillan. 16s.) inevitable inflationary consequences of a real full employment Policy, dates from 1949, when the connection between the two was already becoming a commonplace of political discussion. `Towards the Atlantic Community,' which demonstrates the unfeasibility of European economic integration without political union, belongs not to 1947, the year of the Marshall Plan itself, but to 1950, after the House of Commons had voted against participation in the Coal and Steel Community and when the early expectations of the Marshall Plan were no longer seriously entertained. The main part of the book, a series of six lectures devoted to measured and conditional advocacy of free trade principles, belongs to 1953, when a Conservative Chan- cellor of the Exchequer with scarcely veiled Peelite tendencies already stood high in popularity.

What a pity the dates were not a little earlier, so that we Could have known about the implications of the Marshall Plan in 1947 and about the implications of full employment for inflation and about the merits of free trade in 1945—the year, incidentally, when Lord Keynes felt justified in concluding that the chances of the dollar becoming dangerously scarce in the course of the next five to ten years are not very high.' If, as the title essay claims, Economists have it in their power to make a significant contribution to sincere and disinterested discussion of the leading questions of the day,' they really must try to get there before the rest of us. But then, as Professor Robbins continues, If we [the economists] are to throw helpful light on the great problems of our time . . . we dust be prepared to go beyond our subject. We must be prepared to study not merely economic principles and applied economics; we must be prepared also to study many other disciplines. We must study political philosophy. We must Study public administration. We must study law. We must stunl dy history which, if it gives no rules for action, so much earger our conception of possibilities.' Just so, alas 1 they Must cease to be scientists, and become like others of us- teerely politicians.