PAYING OUR WAY ?
THERE can be no doubt whitever that the Economic Survey for 1949 is an impressive document, likely to inspire its readers with a sense of achievement in 1948 and with hope of consolidating that achievement in 1949. There can equally be no doubt that that is precisely the impression it was intended to give. It is the best written of the three annual economic surveys which have appeared so far, and its authors have achieved the effects which they set out to achieve with care and circumspection. The com- pletion of post-war reconversion, the 12 per cent. rise in industrial production above the level of 1947, the expansion of investment at a time when a contraction had seemed likely, the rise in the national income and in home consumption, the remarkable improve- ment in the balance of payments until there was actually a small surplus on current account—all the good news is presented with a nice blend of understatement and advertisement, of encourage- ment and warning, of congratulation for the British public and self-congratulation for the Government.
This Survey stands firmly in the new tradition of White Papers which justify the national policy at the same time as they explain it. It puts the reader who wishes, for the purposes of study, to separate the facts of the economic situation from the opinions of the authors of the Economic Survey in a somewhat defensive posture. Yet anyone can discover directly from his own experience that any assertion that, at this moment, the economic horizon is reasonably clear needs careful examination and criticism. The exporter can examine the state of his order book, anyone who has goods to sell knows whether trade is more or less brisk than it was a year ago, the wage earner can form his own opinion about the security of his employment and the purchasing power of his pay, and any taxpayer can decide for himself whether the amount be is paying in taxation appears moderate and reasonable. If these personal impressions could be added up it is, to say the least, doubtful whether they would produce quite such a firm impression of satisfactory progress and prospects as the Economic Survey. The two sets of impressions do not square by any means. Nor is it easy to relate the continued, if unspectacular, economic advance which the Survey forecasts for Britain in 1949, and the news of sagging markets and even of a trade recession in the outside world—about which the Survey says next to nothing.
• That is not to say that the account given in the Survey is entirely and exclusively cheerful. The fact that in terms of dollars we are still far from paying our way is stated and reiterated with all the emphasis it needs. If there is a criticism it is that this point has been given even more emphasis than it needs. There is always a danger of oversimplification involved in concentrating too closely on particular areas of difficulty (or bottlenecks as they used to be called) in the economic system. But it remains a good feature of the Survey that it does not cover up the dollar deficit Nor does it pretend that progress in 1949 can be as rapid as it was in 1948. It boldly sets out the need for the continuing restriction of total consumption and calls upon indi- viduals to do their bit in raising the present unduly Iow level of saving. There are, in fact, plenty of qualifications in the text. But the same central impression of solid progress -remains. And so does the difficulty of reconciling that impression with the facts of individual experience, typified by the constant complaint of traders that there is less money about, and with the highly uncertain outlook for trade in the world in general. Does any- one really believe that the present Government has bit upon just that combination of public with private enterprise, that ideal economic balance, which will enable us to go steadily forivard whatever happens to the rest of the world ? The fact is that one particular difficulty runs through the Economic Survey from beginning to end, and raises one doubt after another in the mind of a careful reader. It is the subtle intertwining, in such a way that it is next to impossible to disentangle them, of the effort of the British people with the policy of the British Government. In fact the Survey somehow contrives to give the impression that such improvement in the economic situation as there has been was generally due to the enlightened policy pursued by the Government. There is little suggestion that progress might have been faster if the Govern- ment had tried harder to cut down its own .expenditure, that sometimes (as in the case of steel) progress his taken place despite the Government's policy rather than because of it, and that the " world causes which were once readily enough invoked as an excuse for failure may have been partly responsible for relative success.
It is never suggested in the Survey that practically every economist of respectable standing has disagreed at many points with the policy pursued by the Government. On the-contrary, it is stated on page 5 of the Survey that " the expansion in total output, combined with the measures taken in concert by the Government and people to make the best use of these resources, did much in 1948 to restore our balance of payments and to improve our capital equipment without sacrifice to the standard of living." This is a particularly plain instance of the use of half-truths to reflect credit on the Government. It may truly be said that the policy of disinflation pursued by Sir Stafford Cripps during 1948 was willingly agreed to by the people. But it is also true that that policy was widely advocated long before Mr. Dalton resigned and the present Chancellor reversed the policy of the Government, and that there are still many opponents of Sir Stafford Cripps within the Labour Party. As to making the best use of resources, just what proportion of the people of this country think that the £3,000 millions and more spent by the Govern- ment is all well spent ? No common man reading the Economic Survey should ever give up the attempt to distinguish those good features of the present economic scene which are properly attri- butable to the-Government from those which are not.
What that attempt reveals is that, while the Survey mentions many of the qualifications which must be made to its general statement of progress, it does not mention all of them. It points out that the impression of spectacular recovery in 1948 must be discounted to the extent that 1947 was a year of set-baCks, crises and miscalculations. It does not point out that all three of the economic disasters of 1947—the fuel crisis, the dollar crisis and the initiation of too many capital construction schemes which we could not possibly complete—were partly due to Governmental mis- calculations of a reprehensible kind. It points out the danger of continuing inflation. It does not point out the major inflationary factor which is the present fantastic volume of Government spend- ing. It forecasts a continuance- of full employment. But it does not explain that full employment cannot at this time be forecast at all except on the assumption of a strictly controlled economy. In other words we cannot have full ettployment in a free society. Nor is there any sign in the survey of a hopeful looking forward to the day when we can.
A year ago the Spectator, in commenting on the Economic Survey for 1948, which was attacked almost unanimously by all the rest of thecPress, went its own way and described the road ahead as hard but hopefuL The Economic Survey for 19491 looking back, has come to the conclusion that the way was, indeed, hard, but that the hope of recovery really has been strengthened in the past year. We still face the same difficulties of expanding our exports to the Western hemisphere, increasing our production, reducing-our costs and staving off inflation. But those difficulties have been reduced to more manageable proportions. We are still dependent on American aid in our struggle to balance our accounts. But that aid is more firmly assured now than it was then. The cruder problems of home production and the balance of payments are on the road to solution. The more delicate problems of adjusting our production to changing world demand, anticipating shifts in the terms of trade, and striking a healthy balance between public and private expenditure must now be faced. The way ahead is• still hard. What is more, it is darker than it was, since we are probably approaching a major readjustment in world trade. But it is still hopeful, in the light of the successful effort by the British people revealed in the Survey and the attempt of Sir Stafford Cripps to pursue a policy of disinflation. Those are the two factors to cling to—the effort of the people and the pursuit of an enlightened financial policy. Hope would be even higher if a continuance of the second could be counted upon as surely as the first.
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