SCARCITY AND ILLUSION.
IT is said that a starving man is haunted by visions of bountiful feasts, and that the traveller dying of thirst in the desert sees in front of him an oasis which always vanishes as he comes nearer. Illusions corresponding to these occur in the minds of all nations when they are hard pressed by the horrors and privations of war. We all know the case in war time of the person who begins by maintaining a patriotic watchfulness, and ends by believing that every other person is a spy, and that even the servants in his house are guiding Zeppelins through the sky. We also all know—for he is very much with us—the person who is firmly convinced that all the traders of the country have combined in a conspiracy to raise prices, fleece the consumer, and live for the rest of their lives on their ill-gotten gains in Mayfair or in great country houses. That men have been unpatriotic and immoral enough to use the adversities of their country to their own advantage is of course perfectly true, but the common belief that a shopkeeper who now charges a very high price for what he sells is necessarily a " profiteer, ' who is unscrupulously enriching himself without caring a jot whether all his customers are driven to desperation or not, is a pure illusion. Prices are high, and may even become higher, because there is a scarcity of everything. During the war the accumulated wealth of the country was gradually dissipated, and so far it has not been replaced—worse than that, there is no sign that a great and general effort is being made to replace it. The mass of working men are so ignorant of even the rudiments of economics that they are unable to distinguish between wealth and money. They think that because there is plenty of paper money flying about they ought to be able to buy anything they want at the old prices, and that, if they are not able to do so, some wicked capitalist, or oppressive official, or anti-Socialistic shopkeeper is thwarting them for reasonsof his own. In a way a long period of smoothly working civilized life has spoilt this simple man. The exchange of money for the goods required has so long been a virtually automatic operation that money has come to be regarded as practically the same thing as the goods themselves. People who are conscious that things are not going well, and that they are suffering in their persons and their homes in consequence, always look for a scapegoat. The scapegoat of the moment is the " profiteer. ' The most futile and disappointing thing the nation could do now would be to start off on a " profiteer " hunt in the firm belief that when the " profiteer " was found and punished all wrongs would be righted and life would again proceed smoothly.
Nothing of the sort can happen. The "profiteer," except in isolated instances, can never be found, and Mr. G. H. Roberts, the Food Controller, really did a great public service in having the courage to tell the truth on this matter when he -gave evidence before the Select Committee on High Prices and Profits at the House of Commons on Tuesday. He pointed out that it was almost impossible to define profiteering." In view of his own connexiont with Labour, it was brave of him thus to fly in the face of a very popular superstition. Consider the case of bread, for instance. There is of course no " profiteering " in bread, because the Government have fixed the price and subsidized the loaf. But the cost of producing bread nevertheless illustrates the processes which are going on in almost every other trade. Let us say here, by the way, that it is an incident in the fashionable pastime of misleading oneself by phrases that the price of bread escapes all criticism, although in other ways, and sooner or later, the public will have to pay for the debt they are incurring-on the bread supply more heavily than they are paying for articles which are supposed to be subjected to "profiteering." The bread subsidy, invisible to the ordinary eye, is costing the nation fifty millions a year, and in direct or indirect taxation every man and woman in the country will be called upon to help liquidate this debt. But to return to Mr. Roberts's example of the cost of producing bread. Mr. Roberts said that some bakers could turn a sack of flour into bread at a cost of less than 10s. ; yet others could not do it for less than 30s., or even 35s. The actual cost allowed by the Ministry is 23s. Consider what this means. The small baker with antiquated apparatus and unskilful workers complains, no doubt with justice, that the Government have imposed upon him a selling-price out of which he cannot make a living. At the other end of -the scale there is some prince of bakers who has huge bakeries, up-to-date machinery, good working conditions, and quick and skilful workers, who makes vast profits out of the allowed production cost of 23s. He scores on every sack of flour the difference between his actual cost of production—1 Os.—and the 23s. allowed by the Government. He is " profiteering " with a vengeance, yet it is all decreed and sanctioned by the Government !
From this one instance it will be seen that the Government control cannot of itself remove "profiteering." It may even create it. But it will be asked, has not control done us all a great service during the war, Tegulated distribution, kept prices within limits, and sensibly helped us to win the war ? No doubt all this is true. It need not be denied that when there is an inevitable shortage, central control can do a great deal in securing that the limited supplies shall be distributed without fear or favour. The rationing system which put an end, to the distressing spectacle of food queues was beneficent, and the late Lord Rhondda deserved well of the nation. The same thing is true of Mr. Roberts himself. But though control of a limited amount of supplies prevents suffering in a crisis, it can never create and maintain prosperity when there is no crisis. When a Government impose a maximum price, that maximum price generally becomes a minimum price. Interference with the natural laws of supply and demand may save people from death by starvation, but it can never give them what they desire—plenty. Erected into a system, interference would mean life perpetually conducted on half-commons. Of all the systems of control which were introduced during the war, the most scientificand the most useful was undoubtedly that known as "costing." Under this system the various phases through which an article passes from its original source to its finished state are taken note of, and a fair profit is allowed to the manufacturer or middleman handling the article at each stage. When the total cost of the materials plus the reasonable profits at every stage are added together, the proper price of the article has been arrived at. But obviously this inquiry into the life-history of. every article from the cradle to the grave is a cumbrous and expensive process. Necessary during the war, it would be a millstone round our neck when prosperity shows sign of returning.
The truth, and we need not be afraid to tell it, is that, though high prices are an infliction, they have their advantages. They are a declaration, hoisted on high for all the world to see, that there is a scarcity. Every trader who is worth his salt, Or in other words who wants to make a success of his trade—and what competent trader does not ?--rushes in to profit by the high prices where they can be obtained. The result is that what was at one moment an almost empty market soon becomes sufficiently supplied, or even over-supplied. Prices fall ; the consumer benefits ; the trader must look for his opportunities elsewhere. How ridiculous it would be to call the trader who has brought about this desirable state of things a " profiteer " I He has simply responded to the law of his being, and while serving his own purpose has incidentally served that of the public.
It is only too easy to mistake a symptom for the disease, and that is what people are doing every day in crude or perverse remarks about economics. When the human body is suffering from a disease the temperature flies up. The temperature itself is not the disease; it is the signal of disease; it is the sign that a battle is proceeding within between the kindly germs which are defending the health of the body and the malignant germs which have invaded it. The more tremendous the battle becomes, the higher the temperature goes. But all the time the rise of temperature proves that the defenders are putting up a great fight. The low temperature of health cannot be won back till the sufferer has passed through the high temperature. It is very much the same with a nation suffering from scarcity. The high-price stage must be passed through in order to reach the low-price stage. If we want to return to real health, we must go through this stage, and it is useless to disguise the fact. There must obviously be some test by v,hich it shall be decided who is to have the goods when there are not enough to go round. What shall the test be ? The most familiar test is that of price—he who offers most money gets most of the goods. But other tests are practicable. For instance, if a shopkeeper were determined to deal fairly with all his customers and to distribute what goods he had at a fixed price, among his rich and poor customers alike, so far as they would go, a different kind of test would be applied. During the war, when goods were first subject to controlled prices, the test of the food queue appeared. It was the test of physical endurance. Women stood for hours at a time in the mud or rain or biting cold to make sure of getting their share. Another possible test is the power to bribe. The consumer might tell the shopkeeper that he had not the strength or the patience to wait in a queue, but he would secretly pay a premium on every purchase In order to make sure of getting his share. Again, the friends of officials might come off well, but others badly because they had no "friends at court."
We agree that scarcity is still so marked that the situation is not distinguishable from war conditions. If control was necessary then, it may be necessary now. If a trader or a shopkeeper under the continued control defies the law and demands higher prizes for controlled articles than he is allowed, he ought to be punished heavily. In such a case a fine is not enough ; he ought to be sent to prison, for he has committed a grossly anti-social act, a selfish act, against the interests of the whole community.
It is said that a large part of the labour unrest is due to the belief in "profiteering." If that is so, and we can well believe it, we must not treat the suspicion with ridicule because it is mostly unreal. It is shared by all classes ; it is not confined to the manual workers. The duty of the Government, then, is to show that they are aware of what is being thought and said, and that they are not afraid frankly to declare their own opinions. They must not let the matter go by default. They must tell the truth, and tell it widely. They must make it their business to increase production. There is only one cure for scarcity. Hard work and nothing else will see us through.
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