CHANGE IN THOUGHT

Evening Post, Volume CXXV, Issue 146, 23 June 1938, Page 5

CHANGE IN THOUGHT

i ECONOMIC PLANNING ; GOVERNMENTS DRIVEN l Changes that have taken place in ' ideas about economic planning, largely ■ owing to popular demands, were der scribed to the Wellington branch of . the Economic Society of Australia and . • New Zealand by Professor F. L. Wood j in a lecture on "Recent Experiments in Economic Administration in Euroi pean Countries" last night. Professor Wood pointed out that the depression of 1931 caused more and • more, people to drop the classic theory g that a natural law would rectify any maladjustment in business conditions if ' all the ordinary forces were allowed e to operate without interference. The r feeling that the State should take a •- hand in economic life developed more and more. Action in the depression j, first was deflationary in aim, and it i was strikingly similar all over the ~ world. Old ideas such as the sanctity of contracts that had been thought to ; be the foundation of business relations t were put aside, it being, considered that I- the public good over-rode private good. ; - In justification for deflation it was = said that economy would produce a re- '' vival, but all over the world it failed. • In France, some economists thought, it \ failed only because it was not thorough. Deflationary action was accompanied '' by inflationary action. - Whatever the cause of the failure ' of that policy, it was followed by a [ revulsion of feeling, and the opinion that the Government should take very '. strong action towards expanding busif ness activity grew. The usual means ;- included interference with the financial system. This second phase of Gov- " ernment policy in the depression ini. volved the inauguration of public works t and other State activities and control . of credit through a central bank. e It seemed, the speaker said, that a l " policy that demanded Government '' spending continuously and vast public v works required more extensive Govl ernment action than a policy of deflal tion. It threw economic work on the ' Government for which it was not \ equipped. The State had been created for. laissez faire and public opinion had i gone ahead of it. The new problem existed in many countries. FRANCE AND BELGIUM. I, M. Blum had pointed out that a Cabinet Minister had not time for deep a thought because of the administrative , detail that required his attention, and he had suggested the Prime Minister ~ should not be an administrator — j should not, for instance, be Minister of . Finance—but a thoughtful co-ordinator of the works of the various Departb ments. He should have a source of , expert information independent of the Departments, so that when a conflict of f desires arose in the Cabinet he would 1 be able to judge them. The proposal 5 had been adopted in France, but M. _ Blum himself would not heed his 8 advisers. '•> Another suggestion to the same end _ was the creation of a national economic a council, representative of all industries, ' to which appropriate Bills could be J referred and which could give advice. - The speaker gave the introduction of • the 40-hour week in France as an ex- " ample of change forced by* popular - demand without scientific forethought. I Events had been different in Bele gium, he said. In 1935 it had not '' shared in the measure of world rei covery, and when the Van Zeeland Government came to power it used an economic plan that had been worked -. out in detail before with the object of ". bringing to Belgium prosperity similar a to what the rest of the world enjoyed. Both the economic plan, and the psy;r etiological plan formed to assist it, sucd ceeded fairly well. It had a finite obit ject, to get prosperity, but was not o intended to create a Utopia. Now the Belgian Government was faced with T the necessity of maintaining the ecod nomic position in the face of recession .». in other countries. " It had been pointed out that there r was a political difficulty in economic planning. Plans were required for a - long time ahead. Plans of public £ works should be drawn up in full II detail in times of prosperity against 15 times of depression. But politicians were not inclined to provide for the distant future; their positions depended on giving what was demanded at the - moment. QUESTION OF DICTATORS. In answer to a questioner who asked for a comparison between the actions 'I of European Governments in recent! c years and those of New Zealand Governments, Professor Wood said it was not easy to fix a basis of comparison, _ European countries not being such comparatively large exporters as New , Zealand and the character of their ;• people being different. Innovation was ■ easier in New Zealand, although Germany had a tradition of State Socialism y which facilitated Government interference in individuals' affairs. He did not : think, however, that Germany, with o its dictatorship, was any less tangled in its economic administration than France and other democratic countries. Discussing a suggestion that dictatorships were better qualified than demoS cracies to carry out long-range economic plans, Professor Wood said that the Van Zeeland plan's success proved that a certain finite plan could be pushed through, but it did not prove ,t that the same could be done with n- other plans. Political currents certainly ii- had hampered economic developments, jr but the people's will influenced dicrl- tators as well as democratic Governments, d. ,