"THE NEW SCIENCE OF ECONOMICS."

Dominion, Volume 6, Issue 1702, 19 March 1913, Page 4

"THE NEW SCIENCE OF ECONOMICS."

Sir,—Your Vnl r 011 "Somo Labour Fallacies" ill Saturday's issue is very fresh and breezy, and for that may l;'e Lord bo praised. The time is coming, however, when you and everyone elso who champion "Orthodox Economics" will find that Socialists and Anarchists, and Single Taxcrs are not the only people who are guilty of fallacies. I aumit these persms emit much sound and fury signifying nothing, but are ihe bases i f eeenomic science so well founded (hut you can afford to dogmatise as you do in

Saturday's issue? Aro there not some great problems relating lo economic thought that all the wisdom of the last 100 years has l>oen unablo to explain? "Cyclical fluctuations in trade," ."poverty," "unemployment"—does thero exist any economist who can venture lo explain these things? Does it ever occur to you or to your readers that it is strange that a scicnco like orthodox economics should bo opposed by several rival schools founded by men of genius and supported by brilliant and distinguished men? Now, I am not a Stale Socialist, or a Labourite, or a follower of Karl Marx or Henry George.' I am a patient student of economics, who has been probing and probing, and studying the various schools and systems for 15 or 20 years, and' I say unhesitatingly that you in your article are guilty of greater fallacies than those whom you seek to condemn. I say that all tho systems of economics at present in existence are hopelessly wrong, but nono so utterly damned as the school you profess to champion. All the schools arc wrong, because they iiso concepts that aro totally inadequate to explain, the phenomena, they are dealing with. The concepts are money concepts, and with these concepts economists have constructed a system based on illusion. All economists have fallen under the spell of this illusion, Socialists and Individualists alike. Adam Smith Mid John Stuart Mill, Picordo and Jevons, Herbert Spender and Karl Marx, all have si'fTered '"rom this extraordinary form of hypnotism. You yourself, sir, in your leader, have disclosed that you aroia victim, and indeed the wliolo world, both of I'jbour and commerce, has been mastered by it.

I have said that this illusion grows out of the use of money concepts. What is tho illusion? It is this:— "Thero is a- something called Capital. And there is Labour. These are the factors of production. Capital employs Laliour, and they produce wealth. They share the proceeds (on lines worked out with skill by tlio orthodox economists). Labour foolishly consumes its share. Capital is self-restrained, and saves some of its share. The shore saved goes to create moro capital, and thus produce mo-o wealth. Capital is rewarded for its saving. Its reward is called 'interest,' and interest is said to bo 'tho reward of abstinence.' " Now. sir, is not this the picture that you and every educated'man presents to his mind when thinking of the process of cr&iting wealth? Well, this is all sheer illusion, resultin" from the use of money concepts. I said above that I have been probing at economics for some 15 or 20 years, and recently I have stumbled on some remarkable discoveries. I havo discovered that the picture painted above is ail illusion, but I have also discovered a great number of other things. By using concepts other than money concepts 1 havo discovered tho real and actual process of wealth production that is going on; and I havo succeeded in explaining the mystery that has baffled the minds of economists for over 100 years—commercial crises by cyclical fluctuations in trade. My discoveries aro so extraordinary that until they are explained people will think that 1 am merely dealing in paradoxes.

Let mo set. somo of ray discoveries down. Remember I speak as one who has got behind an illusion and discovered the 1 realtiy that :ies there. (1) Saving always results in economic loss. ■ (2) There is practically no such thing as saving in modern industry. (3) Capital is not created by saving. . (4) Capital never represents an in"crease in wealth, but very frequently a decrease. It is a phenomenon, of redirection only. ' (5) Every 'trado produces fresh capital automatically when required, and just as end when required. (fi) Tho capital so created iB created at the expense of some other trado or trades. (7) Fresh capital cannot, aqd does not, from its very nature, add one penny to the sum total of the wealth of the community. (8) The saying that "interest is the reward of abstinence" is a wicked aud malignant lie.

Now, I don't make these statements and assertions just for tho sake of rhetoric. I can prove them all. By abandoning "motley concepts" and using concepts based (n tho reality o' the cco'nomic process I havo created an economics of actuality that explains all the problems of modern industry. I have created a perfect' science. And I liavo smashed orthodox economios and its great illusion and all its lies into little pieces. Incidentally, I may say that I have destroyed State Socialism and tho systems of Karl Marx and Henry George. But that does not matter. I have something far better,to put in their place I claim to havo made a scientific discovery cf more importance to Jlie welfare of the human race than any discovery ever yet made. I take no credit for it. I stumbled on it by accident. Now, assertion is not proof. I have made a stupendous claim, and I am going to prove it. Tho results of my researches will ultimately appear in book form, but I propose in tho course of the next few weeks to deliver a lecture on Wellington on my discoveries and on the new science of economics that I have created, and I invito you and your readers to attend and havo this illusion icn.cved from your minds.—l am, etc., S. W. FITZHERBERT. Te Kuiti, 10th March, 1913. [Our correspondent certainly has undertaken a i somewhat formidable task when he sets out to smash "orthodox economics," and each indication of the lines on which lie is proceeding, as is disclosed by his letter, does not encourage one to look for any vital changes.]