PEACE BY ECONOMICS
By BALBUS* MOST people would agree that absolute national sovereignty has become an anachronism, at any rate in overcrowded Europe, and must in some way be restricted if we are to minimise the danger of war. But there is little agree- ment as to the methods by which this desirable end could be brought about. Most of those who have concerned themselves with the subject have concentrated on political machinery, in which the precise degree of sovereign restriction is formally laid down. But though this de jure restriction is necessary in certain spheres, like the purely political, it may be suggested that in economic affairs a de facto restriction is more desirable and more likely to give results.
Modern war has become so technological and so total that it cannot be waged with any chance of success unless backed by an extremely high industrial potential. War could thus be made much less likely if we could set up in Europe an indus- trial organisation which cut across national boundaries and operated in such a way as to prevent the industrial potential of any great nation from being mobilised as a whole for armaments production. If you look at an economic geography, you will see that Nature has obligingly laid the foundations for such an arrangement. The largest concentration of heavy industry in Europe is based on the coal and iron ore distributed round the intersections of Western Germany, Lorraine, North- Eastern France, Eastern Belgium and Luxemburg. Again, the Silesian industrial region is by nature a unit, though politically divided (hitherto) into German, Polish and Czech sections. And there are many other examples.
The next step is for man to build on these natural founda- tions. Already steps have been taken in this direction. In spite of every obstacle, much has been done towards the pool- ing of ownership, policy and markets in various big industries. Examples are the European cartels for iron and steel and for aluminium, and the great chemical industries. Unfortunately, these have not been brought under any control in the public interest, and so have on the whole been irresponsible, with restriction of output and maintenance of the price-level as their main objective. This tendency towards regional and functional integration is probably inevitable in modern condi- tions, and has been accentuated by the Germans' elaborate organisation of the industrial resources of the huge area now under their control.
What is needful for our present purpose is to see that each such grouping of industry is independently rationed as regards the key raw materials it needs. And this will only be possible if a world-scale system of raw material control is set up after the war. Such a system could be readily developed, granted American willingness to co-operate, out of the positive side of * This pseudonym conceals the identity of a well-known public man who has been engaged in important discussions on national and inter- national reconstruction. the British blockade machinery, which even now is engaged on the constructive task of rationing neutral countries in accord- ance with their needs. Control schemes would be needed for those ten or a dozen substances which' are both key raw materials and suitable for control: Iron, tin and copper are obvious candi- dates among metals, and rubber, cotton and sugar among pri- mary products, while wheat is an obvious case of unsuitability. The separate control schemes would be supervised by some international body—shall we call it the Raw Materials Union? —representing all the countries willing to join in the scheme and admitted to its privileges ; and steps would doubtless be taken to ensure that consumer as well as producer interests were taken into account.
But what concerns us here is. the relation of the scheme to a non-national organisation of European industry. This could be arranged for along some such lines as the following. In each major area, such as Europe, industry would have to be organised on two levels. In the first place, single industries or groups of industries would be required to form a series of Regional Associations, so distributed as to cut across national boundaries whenever possible (though different industries would of course differ in their geographical set-up). Each of these would have to operate as a unit. The separate associations would have to submit their programmes of marketing and pro- duction to the second type of body. Each of these latter would represent a major area as a whole, and would act as a pro- ducers' co-operative entrusted with the job of buying the neces- sary substances from the raw material controls and distributing them to the regional associations. Let us call them Area Distributives.
Under such a scheme it would be impossible for any power- ful nation, least of all Germany, to embark on a policy of autarky, or to concentrate its heavy industry behind an arma- ments programme. If the German component, say, of the Belgian-French-Luxemburg-Ruhr heavy industry association tried to use the raw material allotted to it for such illegal pur- poses it would not• receive its rations and would be unable to function. In other words, the machinery for normal produc- tion and marketing would also act as machinery for sanctions. Thus economic sanctions would be automatic, and would not have to be built up each time, as under the League, out of many wavering national wills. Checks and counterchecks would have been set up between the economic and the political acti- vities of Europe, just as they were set up by the American Constitution between the executive and the legislature.
It may be objected that such an elaborate system would be difficult to organise in the difficult years after the war. The objection is very pertinent. But it can be largely met by taking the process in two stages, of which the first would be tem- porary and adapted to the immediate post-war phase of recon- struction. The needs of reconstruction will be so urgent, the necessity for drastic action so 'obvious, that any scheme which holds out a real promise of meeting those needs will be readily accepted. What we must do is to use the needs of recon- struction as opportunities for a stable peace, and think out our post-war reconstruction machinery so that it could develop into a permanent organisation such as we have sketched.
This can be done if the entire business is. entrusted to a Reconstruction Commission, through which alone raw materials and credits, as well as other help, would be allotted, whether for the relief of hunger and disease, the rebuilding La devastated areas, or the development of industry. IndustrY alone' concerns our present purpose. Here, the Reconstruction Commission, entrusted with the distribution of credit, with the machinery of the British blockade in its aspect of raw material distribution, and of the British shipping control to ensure priority of transport to 'the more urgent materials, would automatically be in the position of Area Distributive for Europe. With these powers in its hands, it could insist on imposing any organisation it wished upon European industry. If it chose to insist on European industry grouping itself into Regional Associations cutting across. national boundaries, there could_ be no gainsaying it, and in so doing it would have laid the firm foundation for a permanent scheme. The essence of the matter, in the economic as in other sphcres, is to regard Europe (as much of Europe as possible!) as a whole. We must at all costs avoid the mistake of being hypnotised by the existing framework of things into imagining that this has any intrinsic quality of rightness or permanence. Most people by sheer habit, or if you prefer a harsher term, mental laziness, start from the premiss of Europe as consisting of a mass of sovereign Nation States, and try to work upward from this, compromising htre, whittling away there. We must make the mental effort of imagining Europe functioning in some way as a single unit, and then work down from that major premiss towards its regional affairs, whether in industry, or in the regional political units we call nations. It is often said quite sincerely that Germany must inevitably and always be the industrial centre of Europe. This is totally untrue. Economi- cally speaking, Germany is an unnatural unit, which has imposed a purely political unity on parts of numerous natural industrial regions. By divorcing economic from political powers this fact will at once become apparent. And the same applies, mutatis mutandis, to all the other industrial nations of Europe. In this separation of mowers lies one of the main hopes of preventing war from arising in Europe.
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