THE ECONOMIC PATTERN OF TOMORROW

Barnes, Harry Elmer

What's This World Coming To? Second Of A Series The Economic Pattern Of Tomorrow By HARRY ELMER BARNES IN THE FIRST ARTICLE of this series I dealt with the general pattern of world-change in our...

...Since it was the managerialism of investment bankers and corporation executives that controlled our economy from 1921 to 1929, brought us into the Great Depression, and proved helpless and impotent in getting us out of it, there is little probability that it will be tried again for any, protracted period or could survive if it did temporarily reassert its control...
...Norman Thomas' reasonable socialism would have to adopt a managerial technique of control...
...At the other extreme, we see Josef Stalin and his commissars managing the economy as public servants in a system which has abolished private ownership in productive enterprise...
...Second Of A Series The Economic Pattern Of Tomorrow By HARRY ELMER BARNES IN THE FIRST ARTICLE of this series I dealt with the general pattern of world-change in our age, pointing out how we are in the throes of the fourth great world-revolution since the Stone Age, and that both the first and the second World Wars are only incidental and secondary manifestations of our revolutionary era, hastening the process and embellishing -it with bloodshed and violence...
...It merely means business free from governmental regulation but also equally free to impose it own regulations, in the form of holding companies, monopolies, price-rigging, restriction of output, international cartels, open shops, lockouts, and the like...
...It required 400 years to reach maturity, and its decline will be gradual, even under the impact of war...
...Rather, there is every probability that the war will greatly hasten the trend towards what has been called managerialism, namely, social planning and collective action under a managerial system of control...
...Not Due To Capitalism Even before the second World War broke out in 1939, the system of private business enterprise and the traditional capitalistic way of life were either in a state of demoralization throughout most of the world or had actually been supplanted by a new system, as in the numerous totalitarian states, whether of the Right or the Left...
...When competition is controlled by greed, the trend is inevitably towards monopoly and its related abuses, The only way to stop this is for the Government to interfere...
...By managerialism we mean a system in which the economy is controlled and directed by managers rather than by owners...
...In either case, free enterprise is stifled...
...It is likely, however, that the war and the postwar crisis will greatly weaken the cooperative movement for a considerable period in the future and delay its desirable expansion...
...It differs from Government regulation, in so far as the element of freedom is concerned, only in the agencies which impose regulation...
...All plans look back to profits—and bigger profits—at the expense of our economy and the public weal...
...In all of the giant corporations and holding companies, except only for the Ford Motor Company, those who managed industry owned but a small proportion of the securities of their corporations...
...Progressive publicists, such as Sen...
...These managers may be public agents, under a system of government direction, or they may be business managers under a regime of private enterprise...
...But cooperation offers both abundance and democracy...
...It would not have a ghost of a chance Of being installed or of surviving under a system oi traditional business enterprise...
...Case For True Free Enterprise In the first place, when business talks about free enterprise it does not mean any such thing...
...Finally, capitalism was also temporarily rescued from the parasitical dominion of investment bankers and subjected to the dynamic control of a Government which demanded production rather than stealthy financial spoliation...
...They were, as Mr...
...But the minute it gets on its feet it becomes cocky, reckless, and utterly forgetful...
...Therefore, when business talks about "free enterprise," it means nothing of the kind...
...For the first time, our economy has been compelled to comply with the ideals of the technology of abundance...
...This is unlikely...
...And we should not forget that the war has not been a bounty or a bonanza for all business or that it did not increase production everywhere...
...There is much logic in their argument but unfortunately business does not seem to show enough statesmanship to give real free enterprise an honest trial...
...Robert M. La-Follette, Jr., Maury Maverick, and Thurman Arnold, have contended with much force that a true system of free enterprise, in which we find actual competition and the open market, could give capitalism a new lease on life and assure prosperity, without Government control of economic life...
...Those who crave these should get out and get under...
...The postwar economy which Stuart Chase has been writing about of late is an enlightened and well-developed managerialism...
...Some of the plans have been so greedy and shortsighted as to alarm relatively enlightened businessmen like Charles Wilson...
...It was not hampered by any New Deal bureaucrats...
...Whether the future publicly-controlled managerialism will be one of the Right or of the Left will depend upon time and circumstances...
...In the first place, the impressive production has been due primarily to technical and engineering genius and not to any economic system...
...In this article we shall examine the probable patterns of change in the economic realm...
...This will require a thoroughly planned economy...
...Some contend that capitalism is "all through" and will be speedily superseded with the coming of peace...
...Or, at least she has a few kicks left, even if they are not so healthy...
...With all its admitted weaknesses, it has almost always been true, that Government regulation has been more constructive and more in the interest of public welfare than the self-regulation of business, which usually takes the form of monopoly, limitation of output, and price-rigging...
...Most disconcerting of all, the great cartels and monopolies, and their Government stooges, are already under way in the effort to suppress the more notable scientific and technological advances of wartime, in the hope of defending their investment in, and control of, obsolete techniques and inefficient processes...
...Of course, we may go on for decades proclaiming that capitalism is alive and thriving, just as we now assume that we are living under a system of private banking to as great a degree as in 1929...
...This seems a reasonable prediction, but it is too early to be at all dogmatic about it...
...In between these two extremes, we find the officers of cooperatives also managing other people's holdings and interests under that type of democratic and profit-sharing economy...
...If a regime of free enterprise could be established and would provide plenty for everybody, through full use of our technological equipment, I, for one, would heartily welcome it...
...Nobody save over-exuberant radicals looks for the rapid and sudden demise of capitalism...
...This was making promising progress before the second World War...
...If Cooperation Is To Succeed Whatever economic system emerges in the future must, if it is to have any hope of permanence, be devoted primarily to the efficient exploitation of our ever more efficient machinery to produce in abundance for human use those basic commodities required by the bulk of the nation...
...Business enterprise had some 12 years— from 1921-1933—in which to demonstrate its talents in the way of handling our economy and empire of machines...
...There might be some hope if business could learn anything from experience, but the events since 1929 have amply demonstrated that it cannot...
...Justice Brandeis put it, managing "other people's money...
...If the old grey mare of capitalism "ain't what she used to be," she still has a few healthy kicks left in her...
...But I see little prospect of any such development...
...It now clamors for a return to the very system that all but ruined the nation and business itself...
...When the war is over, all these wartime incentives to expanded production, maximum employment, and high wages will disappear or abate, unless the Government continues to control and buy, and this would not be private capitalism...
...High wages could be paid cheerfully because profits, after tax payments, were unprecedented...
...This has been recommended by persons as far apart in their economic philosophy as Earl Browder, Vice President Wallace, and Tom Girdler...
...The whole history of Government regulation, from the Statutes of Laborers at the close of the Middle Ages to the Sherman and Clayton Acts, proves that it is difficult for the Government to control economic motivation and processes from the sidelines...
...The net result was the Great Depression, the Bank Holiday, and collapse of our economy...
...That capitalism has learned little or nothing from this experience with full production, high wages, and great demand for consumer goods is to be seen in the fact that business is everywhere yearning, and in some quarters frantically and defiantly demanding, to get through with the war arid return to the old ways...
...Despite all the talk about economic planning by business, not one business plan looks forward to the complete utilization of our mechanical equipment for human service...
...This is a highly superficial and misleading appraisal of the situation...
...This temporarily rescued capitalism from one of its greatest practical weaknesses, its unwillingness to pay enough out of profits inthe form of wages, salaries, and farm purchases to create an adequate consuming public...
...The remarkable efficiency of wartime production of goods in such countries as the United States has been hailed in some quarters as proof of the continuing vitality and efficiency of old-fashioned capitalism...
...Russia proves that managerialism may be exceedingly radical, putting aside the whole capitalistic order...
...From the vantage-point of both historical perspective and economic analysis, it appears probable that private capitalism in the form we have known it is now entering its twilight period as the dominant economic pattern of the contemporary world...
...Some competent observers predict that we will have a leftwing managerialism in the Old World and a rightwing brand in the New World...
...Countless small businesses, which have not been able to get their slice of the warrproduction melon, have been totally ruined or driven into serious restriction of output and penury...
...Business enterprise, like the sick Devil, is exceedingly humble and contrite and very receptive to considering reform when in the dumps...
...When we come to business enterprise, which has not meant free enterprise in the United States for over 50 years, there is in it little to give us confidence that it can guide our economy in the difficult postwar days...
...And the name most frequently given to such an economy today is managerialism, which I have briefly described above...
...But just ask any banker after he has a couple of old-fashioneds under his belt...
...Inasmuch as postwar economic problems are likely to be just as complex and difficult as those of wartime, and our economy will also be compelled to carry the staggering new burdens of debt and other wartime lesions, it is hardly likely that the regimentation and government control will be entirely relaxed or abandoned...
...Indeed, most of American big business had already become managerial in character before 1939...
...One type of managerialism which could provide both efficient production for use and a maximum degree of economic democracy is the cooperative movement...
...Indeed, it is safe to say that, leaving the short-lived NRA aside, business imposed more regulations on itself before 1933 than the New Deal ever imposed upon it...
...There is now much talk about the desirability of setting up a system of "free enterprise" after the war...
...It must be installed right at home in the great nations of the world...
...In the second place, the war and the Government demands suspended all but completely the very es-, sence of capitalistic production, namely, the scarcity ideal and the limitation of production in the interest of profits for the few "producers...
...The war has everywhere subjected private enterprise to rigorous and comprehensive regulation, often to complete regimentation...
...It should be made clear that managerialism does not have to be reactionary or fascist, though it will be if the progressives of the nations do not get on the alert...
...As Henry Morton Robinson has amply demonstrated in his Fantastic Interim, Government not only kept its hands off business but business literally ran the Government...
...In the third place, and very important, the ordinary ' and inadequate purchasing public of underpaid wage-earners, impoverished farmers, and the white-collar proletariat was supplanted or supplemented by the Government, which had almost unlimited demands and wholly unlimited resources in purchasing power...
...it means business extensively regulated by the more powerful elements in business...
...State-controlled economic planning is much more likely to dominate the economic scene in the years after the war...
...But is not likely that the capitalistic system and the profit psychosis can ever regain economic omnipotence in any large portion of the contemporary world —not even in the United States for any protracted period...
...If it gets into the battle directly, then we have state capitalism or state socialism...
...If cooperation is to succeed, it cannot just be admired from afar in a few small and well-civilized countries...
...In the case of Government regulation, the restrictions are put on business by public authority, while, in business enterprise, the regulations, usually just as extensive if of a different nature, are devised and applied by business...

Vol. 8 • May 1944 • No. 21


 
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