Thoughts on economics and liberty

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The 2014 communist manifesto of Public Health (Richard Horton et al)

Public health published a full-blown political “manifesto” in The Lancet in 2014, written by its editor, Richard Horton. This “medical” journal rightly called it a “manifesto” since it is indistinguishable from Marx’s Communist Manifesto or G.B. Shaw’s Fabian Manifesto.

This is a case of a so-called “scientific” discipline publishing a full-blown communist manifesto. And most of us were entirely unaware of it!

Who will lead the world to this glorious state of “planetary health” as per this manifesto? None other than public health, presumably led by Richard Horton the Marxist (I’ll discuss him separately in the next chapter, particularly his 2017 op-ed).

What exactly does the manifesto want? I’ve summarized its demands below:

  1. It has nothing to do with science, being repeatedly characterized as a “social movement”
  2. Overthrow “neoliberalism” (an “unjust global economic system” that must not be “tolerated”
  3. Stop production and progress: Progress is “dangerous”, there is “over-consumption”
  4. Public health will decide everything for us, as our “independent conscience”

– collective action led by public health

– “promote” health

– “foster” resilience

  1. Focus on equity and “social justice”
  2. People are stupid so their values must be “transformed”; in particular, we must “trust” public health.

This is in the public domain at The Lancet (you have to create an account). I’m sharing more widely with my annotations.

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Anyone thinking of “universal basic income” should think of the DISASTROUS effects of the Poor laws of pre-1834 England

I’ve discussed UBI here. [Also see my note here]

But I chanced upon a chapter in Roger Watson’s 1969 book, Edwin Chadwick, Poor Law & Public Health. It holds a salutory lesson about human incentives. The chapter in PDF.

The Old Poor Law

The state of the poor had been worrying the government for some time. The cost of looking after them had been rising dramatically, from £1,500,000 in 1775 to about £7,000,000 in 1832, and the poor themselves were growing more and more discontented. In 183o there were serious riots by country labourers in the South; ricks were burned and machines were destroyed. The Government put down this ‘labourers’ revolt,’ hanging nine people and deporting hundreds more. Clearly, something more permanent had to be done.

The Poor Law Commission

In February 1832 the Government announced that there would be a ‘Royal Commission for Enquiring into the administration and practical operation of the Poor Laws.’ The Royal Commission had eight distinguished members, including the Bishops of London and Chester, and Chadwick’s friend Nassau Senior. At this stage Chadwick himself was not a member, but Nassau Senior asked him to be one of the Assistant Commissioners. His job was to find out how the Poor Laws worked in North and East London. It was not long, however, before he was also studying Berkshire, which was a very poor rural county.

After ten months work the group of Assistant Commissioners had gathered a mass of information, but the Commission was nowhere near being able to report. The Government and the public were becoming restive. So the Government asked each Assistant Commissioner to send in a selection from his evidence, and this was to be published immediately, in order to prepare public opinion for the changes which would be suggested in the full Report. Chadwick’s evidence was a complete report in itself. It took up one third of the volume, and ended with several clear, practical, suggestions. The members of the Commission were most impressed, and asked the Lord Chancellor to appoint him a full Commissioner, so that he could help to draw up the final report. His name was added to the Commission, and in fact the Report which was published in February 1834 was written by Chadwick and Nassau Senior together.

First, the 1834 Report described how the existing Poor Laws worked. It was a very confusing and unsatisfactory situation. There was no one system in the country. Each parish, and there were 15,000 of them, looked after its own poor out of the poor rates, which were paid by householders. The old and sick were usually given money or food and some medical attention in their own homes. Those were not a problem, and the Report found that ‘allowances to the aged and infirm are moderate,’ and that ‘medical attendance seems in general to be adequately supplied, and economically.’

The major problem was the relief which was given to the able-bodied poor. These were labourers who were fit enough to work but who for one reason or another did not earn enough money to keep themselves and their families. Here, the Report found a chaotic state of affairs, and the reason why the poor rates cost the country so much. In the year ending 25th March 1832 over £7 million was spent on the poor. This was one fifth of the entire national expenditure.

The able-bodied poor were given relief in several different ways. Those who had no job were usually paid money or given food. Sometimes the parish paid local farmers to employ those who applied for relief (this was called the roundsman system); sometimes the parish itself employed them, and sometimes a system called the labour-rate was used, by which the ratepayers (usually farmers) agreed to employ a number of labourers, not because they needed them, but in proportion to the amount of poor rates which they paid.

The Speenhamland System

Under the commonest system, particularly in the agricultural areas of the South, the able-bodied poor were paid an allowance to make up their low wages to an agreed minimum. This is often called the Speenhamland system. It was named after the Berkshire magistrates who met at Speenhamland in 1795 to decide what to do about wages for the agricultural labourers, since food prices were rising very quickly at that time. There were two plans before the magistrates. Either they could insist on a minimum wage for labourers, or they could make up the labourers’ wages, so that they were enough to live on. The magistrates rejected the first plan, and agreed to make up wages according to a scale which rose with the price of bread and the number of children a labourer had.

Here is part of the table of weekly wages which the Speenhamland magistrates published. [deleted]

Notice that when the gallon loaf of bread cost 1 /-, a married man with two children was entitled to 7/6 a week. If his income only came to 6/-, he would have an extra 1/6 from the parish. As the price of bread rose, or as the family grew, so his weekly income would rise, whatever work he did or whatever his employer paid him.

This system spread very quickly through the agricultural areas of the South while food prices continued to rise because of the war with France. The Royal Commission also found that it was spreading in the North of England, though we now know that it was not very common there.

The Effect on Labourers

The spread of the allowance system kept labourers reasonably quiet at a time of high prices and low wages, but by 1834 it was becoming obvious that the system had very unfortunate effects in the long run. In particular, the Commission found that it had a bad effect on the labourers. It encouraged idleness, since there seemed no point in working if you could get the same amount of money without working or by working for the parish, which was often very nearly the same thing. It also took away much of the pride which good labourers had taken in their work, since they were made to feel fools for working hard when others got the same money for doing very little. Here is how Thomas Pearce, a Sussex labourer, described the situation, when he was interviewed.

‘In your parish are there many able-bodied men upon the parish?’

‘There are a great many men in our parish who like it better than being at work.’

‘Why do they like it better?’

‘They get the same money and don’t do half so much work. They don’t work like me; they be’ant at it so many hours, and they don’t do so much work when they be at it; they’re doing no good, and are only waiting for dinner-time and night; they be’ant working, it’s only waiting.’

‘How have you managed to live without parish relief?’ ‘By working hard.’

‘What do the paupers say to you?

‘They blame me for what I do. They say to me, “what are you working for?” I say “For myself’ They say “You are only doing it to save the parish, and if you didn’t do it, you would get the same as another man has, and would get the money for smoking your pipe and doing nothing.” Tis a hard thing for a man like me.’

Labourers under the allowance system were often idle, and, even worse, they did not care much about the future. They were discouraged from saving and trying to buy themselves a little land or a pig because if it became known that they had put something by they would not be allowed relief when they were unemployed. Labourers were also encouraged to marry and have a lot of children, because a man with a big family would always get a fair wage according to the scales. On one occasion Mr. Villiers, one of the Assistant Commissioners, went out to test this theory by asking the first labourers he met about it. ‘The opportunity soon occurred; four men were working together near a farmhouse; upon questioning them as to the wages each was earning, one among them, who informed us that he was 30 years of age and unmarried, complained much of the lowness of his wages and added, without a question on the subject being put to him “That if he was a married man, and had a parcel of children, he should be better off, as he should either have work given him by the piece or receive allowances for his children. He was immediately joined by two of the other men who said: “Yes, Sir, that is how it is; a man has no chance now unless he is a family man.”

You can well imagine that if a man married simply to get a better allowance or more work it was not likely to be a particularly happy marriage, and children who were born simply to raise the allowance would probably not be well looked after.

The Effect on Wages

Another important result of the system was that it kept wages low. Obviously farmers felt no need to increase wages when they knew that a labourer’s low wages would be ‘made up’ out of the poor rates. Of course, farmers and others employers also paid the poor rates, but if you employed a number of men you saved more on their wages than you paid out in poor rates. Not all employers kept wages down like this, but it was quite  common. Also, in areas where the roundsman system was used, the farmers could always get paupers from the parish, and their wages were paid entirely out of the poor rates.

The Commission was worried not only because the poor rates were high, and the allowance system had a bad effect on the labourers, but also because of the effect which this in turn had on the country’s wealth. They believed that the country could only get richer if labourers were honest and hardworking. So, clearly, if the Poor Laws were making the labourers idle and dishonest this would eventually make everybody poorer.

Those Who Did Well Out of the Old Poor Law

If the effects of the Poor Laws were so bad, why had they not been changed before this? Partly it was because nobody knew what to put in their place. Some people wanted all poor relief abolished, but most people feared that then there would be even worse riots and burnings than there had already been when times were bad. But also a lot of people did well out of the Poor Laws, though this only made them more costly and inefficient. Many labourers, particularly the idle ones, liked the allowance system. Many farmers, as we have seen, found that they could save more on wages than they paid in poor rates. There were also the many people who helped to spend the £7 million of poor rates.

We have seen that each parish was responsible for its own poor. So the parish vestry had to collect the poor rates and appoint an overseer for the poor. The vestry was a committee composed either of all the ratepayers who chose to attend, or a group elected by all the ratepayers. Usually the most regular attenders were those who had something to gain, often farmers or shopkeepers. Here is how the Report describes some of the temptations for the vestryman:

‘If he is the owner of cottages, he endeavours to get their rent paid by the parish; if he keeps a shop, he struggles to get allowance for his customers or debtors; if he deals in articles used in the workhouse, he tries to increase the workhouse consumption.’ The Report concluded that vestries were ‘the most irresponsible bodies that ever were entrusted with the performance of public duties or the distribution of public money.’

The overseer was the man appointed by the vestry to collect the poor rate and dole out relief to those whom he thought needed it. The job was unpaid, and usually lasted a year, though sometimes only for six or three months. If the man was dishonest, the opportunities for fraud or favouritism were almost unlimited. Even when the overseer was honest it was almost impossible for him to be efficient. Usually he could not afford to spend much time on this unpaid work, and because he only did the job for a short time, he could not get enough knowledge or experience to be sure that he was giving relief to those who really needed it. In the few cases where a parish had a permanent, paid overseer, this was found to be much more efficient.

The Commission’s Recommendations

The Commission’s Report was not in favour of the existing Poor Laws. It showed that the system was inefficient, enormously costly, and in the long run was very bad for the labouring classes. What did it suggest should be done about it? The ‘Remedial Measures’ which form the last half of the Report were written by Chadwick himself, and the principles on which they are based were his own suggestions. They are very simple and extremely ingenious. When they were put into the Poor Law Amendment Act (1834.) they produced what was probably the most hated single law of the nineteenth century.

First Chadwick wanted to restore the self-respect of the independent labourer which had been destroyed by the allowance system. He proposed to do this by making it less attractive to be a pauper than even the worst paid independent labourer.

Secondly, Chadwick wanted to develop a foolproof system to make sure that relief was only given to those who were really in need. His answer to this problem was the workhouse-test. Anyone who applied for relief would only be able to get it by going into the workhouse. If the workhouse was made sufficiently unattractive, the very fact that someone was prepared to go into it would prove that he or she really needed help. In this way there would be no need for complicated rules to decide when someone should get relief; all outdoor relief, that is, all relief given to people who were still living outside the workhouse in their own homes, could be abolished, and the millions of pounds which were spent on people who were not really in need would be saved. This sounds very sensible but it meant one thing which would be a bitter blow to many: fathers, mothers and children would be separated and put in separate parts of the workhouse.

These were the two main changes which the Commission suggested. The rest of the ‘Remedial Measures’ suggest the arrangements for working the new ideas. First the Report proposed a Central Board of Poor Law Commissioners who would make sure that the law was properly carried out throughout the country, and not bent by local pressures. Next it proposed that numbers of parishes should be formed into groups to be known as Unions, because individual parishes could not afford the separate workhouses for the young, the sick, and the able-bodied men and women which the Report recommended. The Unions would be run by Boards of Guardians, elected by the ratepayers, who would be responsible for working the Poor Law in their Unions. The Board of Guardians would in turn be responsible to the Central Poor Law Commissioners. The Guardians would have to appoint permanent paid overseers, workhouse masters, medical officers, etc. This scheme with its central control and staff of full-time paid employees was in itself a revolutionary suggestion, and many people complained bitterly about the spread of ‘bureaucracy’ and ‘centralisation’, but it is in fact the basis of our system of local government today.


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The Webb’s “refutation” of Mises and Hayek in their 1935 book extolling Soviet communism

Sidney and Beatrice Webb, the intellectual forces behind Fabian socialism, wrote a 1150 page book extolling soviet communism, and Pigou PROFUSELY PRAISED THE BOOK IN HIS 1936 review in the Fabian mouthpiece, the Economic Journal. The book:


The Abstract Economist’s Criticism of a Planned Economy

There is one school of economists, which has adherents in all the western countries, who do not trouble to dispute the actual achievements of the planned economy of the USSR, because they claim to possess a science according to which these achievements are logically impossible. It is only fair to set forth, even if succinctly, the argument which convinces such an economist that a planned economy must, by the very nature of its being, fail to produce the results that it claims.

Such an economist asserts, in the first place, that the absence in a planned economy from the great part, of the field of distribution, of a completely free market among individual buyers and individual sellers, must necessarily prevent the maximum satisfaction of the aggregate of consumers taken as a whole. What he calls the “price mechanism”, based on perfect freedom of competition among buyers and sellers in such a market, coupled with unhampered liberty to any entrepreneur to produce whatever he chooses, and complete freedom of movement from market to market, both of commodities seeking purchasers and of purchasers seeking commodities, necessarily result, the deductive economist would say, in the whole aggregate of consumers getting, in return for the whole aggregate of their expenditure, the very maximum that is possible of what they themselves decide to be their heart’s desire.[1] Or, with greater circumspection, he may declare that such a perfect freedom for buyers and sellers alike, must certainly result in a greater aggregate satisfaction of the consumers’ conscious wants than the decisions, whether as to what shall be produced, or at what price each commodity shall be sold, made by even the wisest legislature or government department.

The deductive economist’s second assertion about a planned economy, such as that of the Soviet Union, would be that its abolition or supersession of the motive of pecuniary profit in the entrepreneur or other proprietor of the productive enterprises of the community, and also in the merchants and traders who move the commodities to the markets in which they are most keenly in demand, must necessarily result in a less assiduous attention to the wants and desires of the whole community of consumers. It is, such an economist declares, the desire for profit, the determination to make profit, and the expectation of being able to make profit, that alone calls forth the greatest energy and persistence in the mine-owner, the manufacturer, the merchant, the wholesale trader and the shopkeeper, or anyone who acts in any of these capacities. It is this motive, selfish as it seems, that drives the capitalist to engage in business, to risk the loss of his capital, to make or adopt new inventions, and to strive to satisfy, to the utmost degree and at the lowest cost, the wants and desires of the consumers, on whose continued purchases any lasting success in profit-making ultimately depends. Such an economist will confidently assert that, at any rate over the greater part of the field of production and distribution, there is no known substitute for the incentive of pecuniary profit, without which, even under the wisest government, the methods of production must inevitably stagnate, and the nation’s aggregate output decline in quality, and even in quantity per head of population, whilst the efficiency of distribution would very largely disappear, to the incalculable loss in satisfaction of the consumers.

Dealing in greater detail with the planned economy of Soviet Communism, the deductive economist of the western world would point out that, if the Soviet Government fails to debit each of its capital enterprises with annual interest, at an appropriate percentage upon the amount of capital invested in them, its failure to add this interest to the cost of production deprives that government, and the public, of the data necessary for a decision as to which of the proposed new works it is economically most advantageous to proceed with first; and indeed, also of the data which might lead to the judgment that some of them involve too large an expenditure of the nation’s capital to be economically justified. The only system, it is asserted, on which a community can obtain the maximum return for its investments of capital, is one which takes for its guide such a continual allocation of capital as will result in the return yielded to the last increment of capital employed in each of the enterprises being always uniform.[2] This optimum distribution of the nation’s aggregate capital, it is declared, is that to which, under perfect freedom of competition, unfettered private enterprise is always tending to approximate. Such an optimum allocation of capital, it is asserted, will never be reached, or even attempted, by any government. In particular, it is urged (quite forgetting the grounds of the decision in the USSR) that the whole policy of Soviet Communism is constructing gigantic productive works scattered all over the USSR, and therefore not always at the economically most advantageous place, and its haste in developing mass production by the use of the latest machinery, at a time when capital is relatively scarce, has resulted in the consumers getting positively less to eat and less to wear than if the handicraftsman and the kulak had been left free to enlarge their own more primitive enterprises. It is suggested that it would even have paid the USSR to have imported the cheap machine-made products of western Europe and America in return for more timber, grain and furs, putting its scanty capital into enlarging these industries, rather than sink that capital in the attempt to make the USSR self-sufficient in the supply of every kind of machinery (as if there were no other consideration to be taken into account!).

Finally, the deductive economist of the western world denies that under the best planned economy there can be, in a community continuing to make inventions, to discover new sources of wealth, or even to change its fashions, any complete abolition of involuntary unemployment—even long-continued mass unemployment. Such ever-recurrent unemployment, it is declared, is the price that must inevitably be paid for the freedom to invent and explore, the freedom to substitute new methods for old, and even the freedom to alter tastes and habits, upon which the very progress of mankind depends. Such an economist may sometimes admit that the community as a whole may rightly relieve the sufferings of the involuntarily unemployed, as it might the victims of an earthquake. But the deductive economist is more apt to hint, if not openly to declare, that mass unemployment under the operation of the “price mechanism” is merely a result of the “rigidity” of the wage-scales of the wage-earners, even more than that of the rates of interest demanded by investors; a rigidity which obstructs the operation of the law of supply and demand. The amount of unemployment, it is sometimes asserted, is a function of the cost of labour. If the wage-earners would let the “price mechanism” apply freely to the remuneration of labour, and, in bad times, accept lower wages, there would be fewer unemployed. If wages were low enough, it seems to be held, in face of all the facts, that no person would be involuntarily unemployed, perhaps except, transiently, a few individuals, through temporary maladjustments of the market!

A Communist Reply to the Economist’s Criticism

The economic thinkers in the USSR to-day would, we fear, deal very summarily with such criticisms of the economists of the western world as we have ventured to set forth.[3] The claim that the operation of the price mechanism in an absolutely free market necessarily secures the maximum satisfaction then and there possible of the wants and desires of the whole aggregate of consumers, would be simply laughed to scorn. In the first place, it would be objected that such perfect. freedom is demonstrably incompatible with the actual organisation of any human society that has ever existed. It is, in fact, no better than an economic myth, and one which cannot be shown to be capable of application in any community whatsoever. Even as an economic myth, it must be rejected as logically indefensible, because by its very nature it is dependent on any number of unstated and arbitrary assumptions, such as the institution of individual ownership in the means of production; the universal application of laws against theft and fraud of the particular kind now in force in western Europe and the United States; and the existence of a police force capable of rigidly enforcing such laws. But, even assuming that such a mythical argument could have any cogency, the communist absolutely denies that there is any ground for the inference that the price mechanism, under complete freedom of production for a free market, ensures the maximum satisfaction of the consumers’ desires. The “price mechanism” does not even purport to have regard to the wants or desires of all the members of the community, but only to those of such of them as possess purchasing power. It is only what he calls “effective demand” that the deductive economist claims to satisfy. It is only those having “effective demand “who are allowed votes in what has been termed a “continual referendum on what shall be produced and consumed”. Yet in every country of capitalist civilisation a considerable number of persons at any time, and in every recurring slump millions of persons, find themselves, through no fault of their own, for longer or shorter periods, without any purchasing power, and yet with imperative wants and desires which are “effective” enough to cause suffering and even death, but which do not constitute any “effective demand” that the economist will recognise.

Moreover, the economist’s whole inference of “maximum satisfaction”, even of “effective demand”, is logically unsound, unless it can be shown that equal amounts of purchase price represent, to different purchasers, equal sacrifices of happiness. It is obvious that this cannot be demonstrated. On the contrary, the very inequality in individual wealth, which exists to a greater or lesser degree in every human society short of complete communism, necessarily involves the uncomfortable fact that purchase prices, of equal amount in money, represent, in different buyers, extreme differences in sacrifice. It follows that there is absolutely no ground for the inference that these equal prices purchase equal satisfactions. The London crowds returning home from city offices, overtaken by heavy rain, incur the cost of taking public vehicles very largely according to their degrees of opulence: the wealthy banker takes a cab in the least shower; the salaried manager yields to the expense if the rain gets slightly worse; the junior clerk turns up his collar and holds out until he can reach the underground railway; whereas the girl typist, sharing her scanty wage with a sick mother, trudges homeward drenched, before she will part with the price of to-morrow’s dinner. But it is not merely the maximum satisfaction of desires that the price mechanism fails to secure. It is plain that, with unequal incomes, there is not even a decent measure of justice secured in a community of persons having unequal needs.[4] The “price mechanism” in the free market does not even ensure a maximum of social efficiency in wealth production, because this requires the exaction of less work from the sick and the weak than from the hale and strong, and the provision for the former of more care and sustenance than for the latter; whereas the prices for their labour, which provide their respective purchasing powers, tend, in a free market, to be more or less proportionate to their value to the profit-making employer, and this value is almost in inverse ratio to their needs!

But the communist has a far stronger reason for objecting to the economist’s argument in favour of production for a free market. The economist apparently can never rid himself of the conception that the main object of society must be to enable and promote the maximum accumulation of individual riches. For the sake of this all-important end, he will put up with the existence, and even the increase, of inequality in opulence among individuals and social classes, and the existence of a destitute proletariat whose wages do not suffice to maintain their families in health. For this end he insists on buying labour in the cheapest market, actually preferring, in many cases, children to adults, women to men, and even weaklings to the strong, if only he can get them at a low enough wage. For this end, he exploits the labour of backward races, incidentally destroying their indigenous social order, and recklessly introducing among them disease and demoralisation. For this end, he will allow the unrestrained using up of the future resources of the community; the careless destruction of the forests; the reckless draining of the oil-fields; even the destructive exhaustion of the soil itself. The amenity, the beauty, even the healthiness of the country will be sacrificed to the supreme end of a maximum of production, not of wealth to the community but of riches to the entrepreneurs, to the very accumulation of which, it is claimed, society owes its material progress. It is interesting to contrast, with the criticism of the western economists, the ends that are sought in the planned economy of the USSR. Both the First and Second Five-Year Plans were avowedly governed, not by the question of how to secure the greatest profit or personal riches for a small minority of entrepreneurs and captains of industry—not even the greatest amount of wealth for the whole of the present generation—but by considerations not taken into account at all by the individual profit-maker, of whom the western economist habitually thinks. There was, first of all, the need for national defence, which is a terribly expensive service, not yielding pecuniary profit to the citizens as such. There was the requirement, deemed imperative for strategic reasons, of the quickest possible industrialisation of the country, irrespective of the economic cost that might be thereby incurred, in order that the USSR might become practically self-sufficient before the capitalist powers were able to combine to attack it, or to blockade it. There was the imperative necessity, as it was, after prolonged consideration, deemed to be, of mechanising agriculture, as the only way of quickly increasing the gross output of foodstuffs to an extent that would ensure, even if not a maximum yield of profit each year, yet enough food in the famines which had heretofore desolated Russia every five or ten years. Then there was the conception that justice as well as humanity demanded that all the various peoples which together make up the USSR should be brought up to a common level of civilisation. This required that the new industrialisation should be extended to all parts of the Soviet Union, even if this involved some sacrifice of the greatest possible immediate wealth to the dominant race. The same conception demanded that positively more should be done for the women and the children than for the male adults, and more for the backward races and the backward districts than for those which had already made more progress. All this emphasised the importance, even for the sake of productive efficiency, of rapidly developing the education of an exceptionally backward population and of equipping the whole area with hospitals, doctors and nurses, and generally the expensive apparatus of a Public Health service to fight disease and lessen the excessive infant mortality. The judgments and the decisions on all these matters may have been right or they may have been wrong. But no person of common sense can deny that they were of supreme importance to the well-being of the community and that they had to be made on other grounds than their effect on the personal riches of the minority of investors, or even than the amount of pecuniary profit or loss that they involved to the existing generation. Can we wonder, when the planned economy is found to be determined to an extent that is relatively great, by such ends as these rather than by considerations of what would yield the maximum profit—and this profit to be enjoyed by only a minority of the population—that the economist’s criticisms fail to secure in the USSR even the amount of attention that they deserve I Whilst the western economists count as success solely the maximising of exchange values in relation to production costs, the soviet planners take account of every purpose of an enlightened community.

[1] “The actual direction of industry, the decision whether more wheat shall be produced and less corn [maize], or more shoes shall be produced and less hats,” writes an American economist, “is left to the choice of independent producers who make their decision with reference to the state of the markets.” To him it scenes clear that prices in the market-places are in effect a continual referendum on what men wish to produce, what they wish to consume, where they wish to work, and where they wish to invest their savings” (article by Dr. Benjamin N. Anderson, junior, on “A Planned Economy and a National Price Level”, in the Chase Economic Bulletin, July 9, 1933).

[2] Any government, of course. finds that it has to take into account needs and results incommensurable by the economists’ arithmetic. The London County Council does not debit its parks with interest on their capital cost, as it is quite impossible to measure in money the returns that they make to the community; and quite futile to compare the relative cost and utility of an expensive open space in a densely crowded central area, with those of a less costly open space on the edge of the mass of houses, where the use by the public is largely prospective.

[3] It would be hard to convey, to the economists of the western world, the depth of the contempt felt for their reasoning by the economists of the USSR—unless by the estimate, that it is at, least equal to that felt by most of the economists of the western world for the reasoning of their Russian colleagues ! We venture to suggest that the reciprocal ignoring of each other’s studios and the reciprocal contempt for each other’s arguments is, on both sides, unworthy of what should be a matter of serious common investigation.

[4] The communist may safely admit that, if it must be accepted that personal satisfaction is accurately measured by retail price, the conclusions of Professor Mises and Professor Hayek are correct. But it is obvious that, in a population having unequal incomes, they are glaringly at variance with the facts. Other opponents of soviet Communism admit that it “cannot be assailed in this position. If the problem consists of making the economic system serve extra-economic ends” —such, we suggest, as national defence, the improvement of Public Health and a universalisation of culture— “then the planned economy provides an excellent solution” (Economic Planning in Soviet Russia, by Boris Brutzkus, 1935. p. 230).

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Arthur Cecil Pigou was effectively a Fabian socialist

I smelled a lot of (albeit rather refined) socialist thinking in Pigou’s Economics of Welfare, and suspected he might be linked with the Fabians.

Keynes was DEFINITELY a socialist (I’ve written a lot about it), but Pigou was merely “progressive”. [see my notes at:]

Nevertheless, he pushed for far greater government intervention than had been acceptable to standard economists till before his time. I find his work on positive externalities particularly poor.

==In 1948, he wrote what would surely qualify as a Fabian Socialist Manifesto. (extract from his book, Socalism vs Capitalism). I recognise in this extract EVERYTHING THAT NEHRU DID TO DESTROY INDIA. Nehru was a Fabian. I thought only India was destroyed by them, but I find that they are active globally, even today: Positive externalities as a way to increase government power! VERY CLEVER!

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If, then, it were in the writer’s power to direct his country’s destiny, he would accept, for the time being, the general structure of capitalism; but he would modify it gradually. He would use the weapon of graduated death duties and graduated income tax, not merely as instruments of revenue, but with the deliberate purpose of diminishing the glaring inequalities of fortune and opportunity which deface our present civilisation. He would take a leaf from the book of Soviet Russia and remember that the most important investment of all is investment in the health, intelligence and character of the people. To advocate “economy” in this field would, under his government, be a crimical offence. All industries affected with a public interest, or capable of wielding monopoly power, he would subject at least to public supervision and control. Some of them, certainly the manu4 facture of armaments, probably the coal industry, possibly the railways, he would nationalise, not, of course, on the pattern of the Pogt Office, but through public boards or commissions. The Bank of England he would make in name—what it is already in effect—a public institution; with instructions to use its power to mitigate, so far as may be, violent fluctuations in industry and employment. If all went well, further steps towards nationalisation of important industries would be taken by degrees. In controlling and developing these nationalised industries, the central government would inevitably need to “plan” an appropriate allocation If, then, it were in the writer’s power to direct his country’s destiny, he would accept, for the time being, the general structure of capitalism; but he would modify it gradually. He would use fortune and opportunity which deface our present civilisation. He would take a leaf from the book of Soviet Russia and remember that the most important investment of all is investment in the health, intelligence and character of the people. To advocate “economy” in this field would, under his government, be a crimical offence. All industries affected with a public interest, or capable of wielding monopoly power, he would subject at least to public supervision and control. Some of them, certainly the manufacture of armaments, probably the coal industry, possibly the railways, he would nationalise, not, of course, on the pattern of the Pogt Office, but through public boards or commissions. The Bank of England he would make in name—what it is already in effect—a public institution; with instructions to use its power to mitigate, so far as may be, violent fluctuations in industry and employment. If all went well, further steps towards nationalisation of important industries would be taken by degrees. In controlling and developing these nationalised industries, the central government would inevitably need to “plan” an appropriate allocation for a large part of the country’s annual investment in new capital.

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