Puzzles of Economics
ECOROMICS of a Changing World. By H. V. Hodson. (Faber and Faber. 7s. 6d) Mu. HODSON is that rare and impressive phenomenon—a soceessfid economic journalist of high theoretical attainment. We expected, therefore; great things of Economics of a Changingiforld; but we have been cruelly disappointed. If few men alive could have written this book, fewer stilt would have cared to write it. We looked up from every page with
the question Why and for whom has it been produced ? " •• Mr. Hodson's book," we are told on the inside of the cover, " is written primarily for readers embarking on the study of the subject." But what readers embarking on the study of the subject will be grateful for the discussion here of the question
-" Whether the home or the foreign producer pays an import duty ? " " In the graphical representation of price forming "— no graph of any kind appears throughout the book--" we must imagine the supply curve divided into two parts added together to form the joint curve, and one of them shifted, magnified or shifted while' the other remains as before. Since these two curves can obviously be of any shape whatever . . . " Ob- viously. On the other hand, Mr. Hodson makes no pretence of assisting us directly on broad questions of policy in the manner of, say, his introducer, Sir Arthur Salter: " The economist," he says, " in his scientific capacity is morally colour blind as well as politically impartial," and he himself remains in•hii. scientific capacity throughout.
Lastly, there remains the possibility that Mr. Hodson has written for-brother economists. But, frankly, it is impossible to assess very highly the contribution to the science of a text- book of no fewer than three hundred pages, which lays down dogmatic conclusions after the merest skeleton of argument on every most disputed point in pure and applied economics. Who but an examination-candidate in the course of a last desperate revision could be much helped by, for instance, his treatment of " Consumer's Rent" ? " That notion," he decides, " is of no real concern to the economist ; indeed, it is puzzling and misleading, since it suggests that unto him that hath shall always be given." And so on throughout the hook in a fluent, remorseless stream with no table of contents, nor chapter sub-divisions nor any other concessions to the willing reader trying to discover when Mr. Hodson is explaining accepted doctrine and when he thinks he is throwing new light.
There is no questioning, however, Mr. Hodson's knowledge of the phases of the present depression, or of the more acces- sible current explanations. Briefly, he adheres to a modified form of Mr. Keynes' theory that a period of depression is one in which savings exceed investment, in which a part of the public's savings goes to waste through being left on deposit in the banks and not lent out to industry, &c. In the case of the present slump he detects also underlying de- flationary tendencies which were in existence before the collapse of the 1928-9 boom. The most interesting passages of his boOk are those emphasizing the tendency of the world as it gets. richer to spend an ever larger proportion of its income on services and an ever smaller one on primary com- modities. He fears a consequently increasing probability of over- production in - primary industries; and huge price-falls -in those industries wherever over-production, even if only on a small scale, emerges. .Unfortunately, in a review of the trade cycle theory he completely ignores the work of Pro- fessor Hayek and of the London School of Economics gene- rally. On the other hand, lie under-estimates the significance of the " under-consumptionist " theory by treating its problems as capable of purely dialectical resolution. " It seems," he concludes, " rather fatuous that words should have been wasted in debating whether over-production or under-consumption is the dominant factor."
Mr. Durbin is strong exactly where Mr. Hodson is weak. Every aid to eye and brain is employed to make attractive his analysis of Major Douglas, J. A. Hobson, J. M. Keynes, Prof. Hayek and other trade cycle theorists. From him, if from anyone, we ought to learn at last the full truth about under-consumptionisin (the theory that trade depression is caused by too .much saving and too little spending). For Mr. Durbin -is the first economist of -standing -to devote to it several years of unprejudiced study. His conclusions, how- ever, are likely to irritate equally the theory's academic critics and " the great mass of its believers." Of the latter he reluctantly confesses, " I am sorry that I cannot join their number or share their hope." But he does find a strand of valuable thought amid much nonsense, and orthodox econo- mists will dislike the idea of having to make even this with, drawal in favour of the " cranks."
The real achievement of Mr. Durbin's book is the stating in simple terms of the issue involved in the great Keynes-: Hayek affair, which for all its acid incoherencies, spread a year or two ago over the two chief technical journals, must rank as the one first-class economic controversy of this decade: Mr. Durbin's manner is a model of how to handle distinguished thinkers, of how to respect their logic and, deferential but• undaunted, to expose the limitations of their assumptions. For himself, while rejecting the title of " Sadistic deflationist ". levelled at the School. of Economics. (where he lectures) he issues a warning that inflation may well relieve depression to-day at the cost of sowing the seed of a similar depression in the future. If made Banking Dictator, he himself would " stabilize consumer's income per head" : that is to say, he would see to it that in every year the same amount of money was spent, not in all transactions (for these would include payments for goods at all stages,. raw materials, but on goods at the retail stage. His next book will expound more fully these novel schemes and should prove a distinct event for those who believe in the power of Utopias to lead
practice in the right direction. FRANK PAKENLIAAL
Previous page
