UP PRICE, UP WAGE!

Evening Post, Volume CXVI, Issue 22, 26 July 1933, Page 9

UP PRICE, UP WAGE!

BUT WHAT OF THE BUYER ?

"ONLY THE MARKET KNOWS"

From day to day the American cablegrams have- told of a "code" in this industry and a "code" in that industry, but they are" now discussing a' "blanket" movement, being a "code" for industry and business in general. The "blanket" "code," like the other codes, aims at industrial recovery. This blanketing effort applies to "all employers, excepting farmers and housekeepers, that hire more than two persons." AU employers, with those exceptions "will bo urged to observe shorter hours, and to increase wages, with tho«,immediate objectivo of securing the re-employment of ■ 6,000,00.0 persons by September 1, increasing tho nation's purchasing power sufficiently to maintain higher production "prico-le-els." After reading this, one turns to Diyß. M. Anderson's address on Juno 8 to the Pilgrims of the United States, because it anticipates—and opposes—such developments as tho cablegrams relate. Tho valuo of Dr. Anderson's anticipatory opposition (whether the reader endorses it or not) is that it admirably serves to elucidate tho issue. PRICES CAN BE MADE, BUT NOT ! ' SALES. There seems to be no doubt that in the "coded" industries —which now, under tho "blanket," include everybody but tho farm and the kitchen —men will bo got to work producing goods. But Dr. Anderson says that tho problem is "getting men to work producing goods that can bo sold." His emphasis is on the last four words. There seems to bo no doubt that the "codes" can fix hours, wdges, output, prices. But can they create buying? Tho directing brain—or co-ordinator, as Dr. Anderson calls him—would 1 naturally seek tho producing of goods than can bo sold. But can nny central j brain decide what are the saleable' goods; must it not be tho market, and tho market alone, that decides. "No central brain can know which these goods are. Tho market knows. "The individuals in chargo of industries, each studying his own specific market, can know, but not even they can know how much demand can bo increased as they and their fellows each increase production, as each takes in new employees, and generates new buying power for all other products." •;

This observation goes right to the pivot-point on which the codes rest:

"I 'am particularly apprehensive regarding the proposal to allow trade associations on a great scale to get together, with tho Sherman Law (against restraints on trade) waived, to raise prices and limit output, euphemistically called 'adjusting supply to demand.' If one industry alone docs this, it may, if it does not overdo it, increase its profits, although even one doing it could easily mean less men at work. But [and here ho anticipates the blanket] if all of them do it, they will simply strangle one another."

Why "strangle"'? Becauso the product of one industry is the raw material of another.. Becauso the inter-relation of industries is so'intimate that a profit here is a cost, there. The farm itself cannot sell if the processing industries (meatworks, fcllmongering, etc.) load up the processing costs of farm products. . BETWEEN FACTORY AND FARM PRICES, A general move to raise prides by limiting output would, in Dr. Anderson's opinion, certainly not increase buying power, and "there is no surer antirevival measure than a widespread, application of this plan." In normal conditions it is easier to reduce manufacturing output than to reduce farm output (hs is evidenced by New Zealand's dairy production and her dislike of British quotas) and Dr. Anderson makes a point which should bo appreciated, in. this country when he says:, " One of the great troubles in the present situation has been that manufacturing has curtailed output —'adjusting supply to demand,' as the phrase goes—on a colossal scale, while agriculture and raw material production have gone on largely unchecked. Thcro is an immense unbalance between extractive industries on the one hand, and manufacturing on the other, -manifest in the exceedingly low prices of raw materials and of agricultural products, as compared with the prices of manufactured goods." Can this unbalance be corrected by allowing the manufacturing industries to limit outputs and raise their prices' Dr. Anderson's views on that point nro very definite: '.'There, arc those who believe that the way to start business going is to raise prices and wages hy whatever method this could bo accomplished, and that, in particular, a rise in the prices of mnmifftfUvred goods, and a rise in wage rates in factories, should ho the starting point. I think this view very definitely wrong." PRIMARY RISES WANTED FIRST. He goes on to say that what the factories need is not greater price but greater output (the very thing the code would restrict) if 51: can bo sold. Restricting it, and higher-pricing it, will I

not sell it. And what workers need is not higher wages but more work. "What the factories need is greatly increased volume, and w*hat labour needs is, first of all, greatly increased employment. The price rises that we want, to come first are in foodstuffs and in raw materials."

Giving the issue- a New Zealand application: the rise in wool has happened before any "coding" in the. Yorkshire woollen industry, but yesterday's cablegrams state that "thcro are problems ahead for the Yorkshire trade to adapt itself to the jlew higher raw wool values." If the Yorkshire industry had been "coded" first (limited output, fixed prices of manufactures) would its profits (if any) have leaked through to the wool grower1?

Here is Dr. Anderson's prejudgment(June 8) on just those things.that the cablegrams state are being done by the Roosevelt regime: "Ultimately, as employment increases and asfcaw materials and foodstuffs rise, the aggregate of buying power in tho country would be so greatly increased that.tho prices of manufactured goods and the wages of factory labourers can rise also; but this should be a later step, brought about by natural forces, by tho markets, rather than a first step artificially forced. To get rising prices of manufactures or even rising wage rates, before there is an increase in employment and an increase in volume of production, is merely to choke off demand, and to add to the misery of tho millions of unemployed tho additional burden'of a. rising cost'M living."

The thousand and one reactions of prices and costs upon each other, the inter-relations among the industries (steel wants dearer steel and railways want cheaper rails), the international inter-Tclations, quarrels between employer and employee as to whether the new wage is in line with the new price —the co-ordination of those and other multitudinous elements "must be through the markets and not through a central brain or central authority."

Thero is such a thing as .1 measure to protect capital values, and there is such a thing as a measure to protect standard wages. Both these could be protected —temporarily, at any rate—■ even if work stagnated. But Dr. Anderson says that the demand of the moment is to get men back to work. Anything that does that is a revival measure. What chocks work is an antirevival measure. "If wo wish revival without an early relapse into chaos, I do not think we shall go far with the advocates of the planned economy."