THE ECONOMICS OF PLANNING

BOOKS OF THE DAY

By J. A. SPENDER

PROFESSOR Roman as uses the word " planning " in an extended

sense which enables him to sweep into one net Socialists, Communists, tariffists, and all others who by quotas, subsidies, restrictions on migration, monetary manipulation, and similar devices are endeavouring to substitute a world of their own imagining for the world as it would be, if left to itself. I say the world, for his final criterion is not the nation but the whole of mankind and the method of production which would best serve to cure what he characterises as its miserable poverty. This in his hands is not so far-fetched a theme as might appear when thus briefly stated. For he is able to show not only that nationalist economics, as now practised, impoverishes the world, but that the impoverishment of the world defeats the object of nationalist economics, if that is the well-being of a particular nation.

Indeed, he goes a step further, and by an ingenious but legitimate extension of his argument he raises a strong pre- sumption that national socialism—i.e., the creation of State monopolies in a particular area—would not only not promote the international socialism which Socialists profess to desire but be actually an obstacle to it. For it is extremely improbable that the citizens of Socialist States in relatively rich areas would be willing, to share the sources of their income with citizens in poorer areas ; it is much more likely that their Governments

would guard their monopolies against competition and shut their territory to immigration. Even now Socialist Labour is almost everywhere seen joining hands with bourgeois Pro-

tectionists in upholding and increasing tariffs.

But what is the ideal economic policy for the world conceived as a unit ? A short quotation will best give Professor Robbins's view :

The economic optimum is not to be attained by maintaining an iron industry," a " cotton industry," a" boot and shoe indu:t ry," a " transport industry " and so on. It is to be attained by using the factors of production in those processes in which they are most productive of the essentially changing pattern of commodities which the citizens of the world demand. As conditions change, its attainment must necessarily involve the expansion or initiation of some " industries," the contraction and even elimination of others. If the statistical classification "the — industry" is given, as it were, an economic status, if institutions are created which bring it about that" it "acts as a unity, if the maintenance of "its" prosperity is the be-all and end-all of policy, then not only is the end of rational policy misconceived, it is likely also to be frustrated.

This rules out the static policy of keeping industries as such in a sheltered and privileged condition by means of tariffs, quotas and similar restrictions, and aims at a free and flexible produc- tion which will follow the " essentially changing pattern of commodities which the citizens of the world demand." Pro- fessor Robbins admits that a Communist society can " plan "

in the sense. of drawing up a series of projects which can be executed, given labour and materials and engineering skill, but he detiies that this method can secure the economic optimum, for that can only be ensured by following the changing

pattern of commodities, which is impossible when a central authority issues a vast schedule of prescriptions. For this purpose the free plebiscite of the market, reflected day by day in the price mechanism, is essential ; and without it the planning authority cannot tell whether it is disposing of its resources so as best to meet the wants of the consumers. In such conditions the consumption of the people has to adapt itself to what the plan produces instead of the plan adapting itself to their demand.

This part of the argument is of great importance, for it takes us to the real defence, often ignored by capitalist econom- ists, of the much abused system of production for profit.

This system is a very large part of political as well as economic

Economic Planning and International Order. By Professor Lionel Robbins. (Macmillan. Ss. 61.) liberty. Since producers do not generally make profit unless they are supplying what people want, it is a guarantee that people will be able to get what they want, and not what a superior authority thinks they ought to want. How large an ingredient this is in the pleasant liberty of daily life every housewife knows who remembers War-time conditions. But, more important still, the loss of this liberty is the sure precursor of the loss of political liberty. For the supreme planning State must exact obedience from both producers and con- sumers. It cannot permit either to strike against its plan, for that would make confusion and chaos extending to all the activities of the State and its Government. When, therefore, the Communist tells us that he only proposes • to borrow our liberties for a time and will restore them when he has got his system into working order, he is playing the confidence trick on us. His system is incompatible with liberty, economic or political.

Accordingly, the disillusioned idealist who, like M. Andre Gide, is alarmed and disappointed at what he sees when he visits Russia is quite wrong in attributing it to the wilful perversion of the Communist idea by men who are false to it. It is the idea itself which is wrong. The regimentation, the compulsory uniformity of thought and conduct, the " depersonalisation " which he finds so hateful, are the natural and inevitable results of the Communist system. The superior Communist authorities dare not give liberty to their subjects, or permit them the opportunity which a free Press would afford of comparing their condition with that of other countries. When the State is the universal provider, disaffection among its customers must be treated as rebellion, treason, counter- revolution. All the totalitarian States are more or less under the necessity of making their subjects believe that they are in an exceptionally happy state of being, and therefore of preventing them from comparing their conditions with those elsewhere, but this is specially important to the Communist.

A large part of Professor Robbins's argument is now the acknowledged orthodoxy preached from Geneva. The Economic Committee of the League of Nations ingeminates it at short intervals and warns us of the consequences of continuing to ignore it. How comes it, then, that no one listens ? The first answer is, I suppose, that most of these arguments are long-term arguments, whereas Governments generally practise short-term expediencies, most of which have the specious appearance of being profitable and advan- tageous, and some of which are actually so to powerful interests among both workmen and employers. The next is that Governments do not think of the world ; they think only of themselves. Tariffs are now in the same position as arma- ments : all admit them to be collectively insane, each claims that they are imperative for itself.

Someone said of a Protectionist leader in the old days of the fiscal controversy, " If you give him an inch, he'll give you Hell." This is an allegory of the whole subject. It is fatally easy to slip into Protection, extraordinarily difficult to get back from it. A powerful vested interest grows up behind each restriction ; there is no question that when trade has once been deliberately canalised in a certain direction, to de-canalise it and let it flow again in its natural channel will for a time cause dislocation, confusion and unemployment in certain areas. It would be foolish to under-estimate the difficulties of a return to freedom, but it is well that we should be kept thinking about it, and for that purpose this is a most useful and stimulating book. Another book might be written on the positive side of the question—on what State-planning may effect in the present state of the world without impeding the return to freedom—but just now what we most need is a warning about first principles, such as this book supplies.