ECONOMIC PLANNING

Evening Post, Volume CXIX, Issue 152, 29 June 1935, Page 11

ECONOMIC PLANNING

NOT A MOID SYSTEM

ADDRESS BY DR. SUTCH

COMMUNITY INTEREST

(Special to the "Evening Post.")

PALMERSTON N., This Day.

Economic planning does not imply the erection of a rigid system, but constant adaptation to changing conditions, Dr. W. B. Sutch stated last evening when addressing the Economic Society at Palmerston North. Planning could be applied to sections or to the whole economic system, but if sectional planning conflicted with the wellbeing of the people or was opposed to other sections it failed. The definition of economic planning was not very wide. Dr. Sutch said, and the reason for that was that pre-sent-day regulations • and restrictions were not real planning but mainly haphazard innovations, the result of expediency rather than of deliberate forethought. Discussing the working of the old economic system in the past, lie said that self-interest and competition ensured that-the consumer would obtain low prices; that the worker would go to that employment where h was best paid, and thaf the investor would place his money where there was the most profitable opening. If there were too many in any one industry, profits would fall, wages fall, capital would be withdrawn from the industry, workers would leave and seek better positions, and bankruptcy would weed out those least fitted to survive. Thus equilibrium would be restored. If any industry were making high profits, capital would be directed there and automatically the additional competition would lower profits and so bring the industry to equilibrium again. THE OLD SYSTEM. The system worked because its imperfections were hidden, but it only worked so long as no one interfered with it. Once it got out of adjustment, however, it was impossible to wait for it to get back again. "In fact," he said, "the picture of a freely competitive smooth working economy always tending towards equilibrium is unreal. Over wide sections of our economy there are minimum standards of wages, there are Government regulations of trade practices, there are monopolies and semi-monopolies, gentlemen's agreements, and price-fixing associations.' Economic theories were built up on the assumption that competition was the rule. We might easily build up a set of theories where monopoly is the rule and competition the exception. It would be a truer picture of our economic syste*m, if system it can be called." :' The main reasons for lack of automatic adjustment were monopolies, wage rigidity, economic nationalism, the monetary policy, the rapidity of technical invention, and innumerable faults in the system. "We all know that the world will not go back to the old day's, yet we hesitate to try to plan," said Dr..Sutch. "We improvise and hope for the best. Might it not be better to have an end in view, and plan towards that end? FLAN FOR CONSUMPTION. "I would suggest that the-end in view should be the attainment of the maximum of public welfare and individual freedom. We should plan for consumption. Any plan which merely protects producers is not in the public interest and should be condemned. - Once we have defined our aims, one difficulty in planning is re;, moved. During the war, Great Britain planned her economic life in order to help win the war. At the present time the Russians are planning to lay the foundations for Social-' ism; the Fascists are aiming to preserve Capitalist vested interests and to fit the country for war; if New Zealand is to plan any department of economic life she should plan to achieve a truer democracy and a more efficient utilisation of her resources with the public welfare as the end in view." :