Conjuring Tricks

Professor John Jewkes, once before referred to in SWARAJYA, is a Fellow of Merton College in Oxford; he has written in Farmand Annual Number; (Oslo, Norway) reiterating his views in his characteristic and convincing way. He begins by giving a picture of Britain’s present economic condition in which he makes an indirect but striking reference to India also.

There is no doubt that our country is in economic peril. Not, let me hasten to add, peril of any sudden, complete collapse or spectacular breakdown, not of the kind of paralysis to which India has been reduced in so melancholy a fashion by the clumsy mishandling of their central economic planners, not of the kind of chaos that has followed from uncontrolled inflation in a number of South American countries. We are not in danger of committing economic suicide but we are in danger of slowly falling behind, of not producing enough stuff in the country to make things go.

Writing about the British Labour Party’s administration, Prof. Jewkes says:

Our economic position is much less satisfactory now than it was 18 months ago. As a nation we have borrowed heavily abroad since October 1964. Our present debt with the International Monetary Fund is bigger than any nation has ever run up before. Although as a nation we depend more critically than nearly any other upon booming world trade, and upon the steady erosion of trade barriers and the free flow of international capital, yet in the last ten months we have done a great deal to threaten all three— sawing away at, the branch upon which we rest.

It ought not to surprise any one, says Prof. Jewkes, that socialists when put in power behave as socialists. ‘They have tried to apply the principles which they honestly believe in, which is what makes them such a menace to our economic future.”

This leads Prof. Jewkes to tell us in crystal-clear language the principles which socialists are wedded to:

“First, that the growth of private property should be subservient to the growth of public property. Second, that public spending should take priority over private. Third, that more government is always better than less government. Fourth, that of all the incentives to effort the making of profit is the least commendable and that economic competition is degrading although, unfortunately, not altogether escapable. Fifth, that big units, especially big industrial units, will always be more efficient than small. And sixth, that there are short cuts to economic prosperity, which will obviate the need for hard work, of which perhaps the most important is the myth of central economic planning.”

These are the doctrines which make Prof. Jewkes look upon the socialists as a menace to Britain’s future. The professor finds fault with the Conservative Party for not giving sufficient thought to their own principles, for instance to the most important of all things in economic progress incentives for full-scale production.

Unless my observations have gone completely astray, four-fifths of the work of the world is carried out under the spur of the profit motive in its widest sense: the profit motive, that is to say, ranging from the coalminer who wants to do the best for himself in the matter of wages, through the professional man, the teacher, the doctor, the Member of Parliament and the businessman wanting to do the best for his shareholders and for himself.

Then, Prof. Jewkes takes up Anthony Eden’s phrase—a property owning democracy—and says: “And so, if one is seeking to unleash the full energies of a nation, it seems to me absolutely essential that people should have a real stake in our society. And there the first need is that more people should own private property.” And this is what is forgotten or not realized or ignored dogmatically by the central planners of production.

It would help a great deal to raise the status of property rights in this country if governments were more scrupulous in respecting these rights and in compensating appropriately where they were forced to infringe upon them. When private property is damaged or destroyed by the building of neighbouring main roads or aerodromes or any other public activity, the initiative should be taken by the authorities to search out the damage which they have been doing in that way and make recompense and not wait for aggrieved parties to have to protest at injustice.

Prof. Jewkes gives his recipe:

So far I have been dealing with incentives: make it easier for people to accumulate property and have a stake in the country; make it easier for them to earn higher wages for additional effort and then refrain from taking it away from them again in taxation. I turn now to the kind of institutions which will best foster efficiency and production.

Here my recipe (and I am thankful to see that it is coming to be more widely accepted) would he more free markets and freer free markets. That is to say, wider competition and more intensive competition.

It is interesting to read what the professor thinks of central planning which he describes as “another dangerous socialist principle, that by means of something called central economic planning, the national economic machine can be hotted up to produce results otherwise unattainable, and all this not as a result of the greater effort of anybody except groups of economists and statisticians in government departments writing down figures on pieces of paper.”

We have economic magicians telling us to believe all sorts of things that we live in a dynamic society whilst they fasten new shackles on trade and enterprise; inviting us to think of our wealth in the distant future before we have got round to producing it; inferring that Ministers of Finance or Economic Development have levers which can be pulled which will jack up standards of living.

Prof. Jewkes winds up his exhortation in these words:

“I hope that in the coming months many more of the people in this country will come to recognize such ideas as the conjuring tricks they really are. This will be a first step towards realizing that the primary functions of a Government should be to provide defense, justice, a currency which keeps its value, the conditions which will maintain a high and stable level of employment but not inflationary, overfull employment, to confine its welfare services to those in need and create the incentives and institutions which will unleash the energy of each one of us. Then we can safely let the rate of economic growth determine itself.”