CONSCRIPTION' OF WEALTH

Evening Star, Issue 23351, 22 August 1939, Page 6

CONSCRIPTION' OF WEALTH

METHOD OF WAR-TIME FINANCE OUTLINE OF THE IMPLICATIONS THREE DIVERGENT INTERPRETATIONS Conscription of wealth is a phrase which has come into common use, although few people seem quite certain of what they mean by it. The Labour Party, in England, Australia, and New Zealand, has demanded conscription of wealth as a war-time measure, and the British Government is officially reported to be prepared to consider it—if war comes. .But what does the phrase imply ? Its broad general meaning is clear enough: if war involves conscription of man-power, then the owners of wealth should be called upon for similar sacrifices. The ambiguity arises from the fact t that the sacrifices must be similar, since they cannot be the same, and! opponents and supporters of conscription of wealth appear to attach various meanings to similar,” some of them several meanings at once (writes S. J. Butlin, lecturer in economics. University of Sydney, in the ‘ Sydney Morning Herald ’)• In England, both Conservatives and Liberals have paid lip-service to the idea, but implying apparently only heavy taxation; the Labour Party spokesmen have spoken with more than one voice, some ,of them very uncertain., , , . -What is involved is a method of financing war—that is, of transferring to the Government control over a large share,: probably as much as, or more than, half of the national income, in the form of goods and services for war purposes. And this method is to be different from those used in the Great War or in present rearmament programmes in such a way that the rich do incur “ similar sacrifices.” NEGATIVE ASPECTS. Certain negative implications may be drawn. Conscription of wealth would at least rule out finance of war by inflation or by loans, since the former would not hit the wealthy as such particularly hard, and some wealthy people would make large profits, while the latter would not involve any sacrifice from the rich, except in the minor form of heavier post-war taxation for interest. At the very least, too, wealth conscription would mean that the rich would not be permitted to make extra profits because of war. This is a view held by . many people who do not demand conscription of wealth. In England, for example, the National Defence Contribution is levied on all excess profits, and an Armaments Profit Duty is to he imposed on large profits from defence production, which, incidentally, ought not to be necessary, since profit margins on armaments are controlled. But these negative aspects throw little light on the concrete applications of wealth conscription. These appear to be interpreted in three divergent directions. First, the wealthy might be called upon to pay an especially large share of the costs of war, by means of taxation based upon the value of property held. But there would be no sense in calling this conscription unless an exceptionally large share of costs is met in this way. Property taxes already exist, and would certainly he stiffen in war-time; unless such taxes were steepened to the degree which is commonly described as a capital levy, and possibly accompanied by compulsory loans, there would be nothing new to justify calling such a method of finance conscription of wealth. Secondly, it might be intended that in a more general sense the rich should bear a large share of war costs through reliance oh steeply-progressive taxes as the major source of revenue.. Here the term might be applied' to describe the notion of sharing costs in this particular way as contrasted with finance by loans or inflation or by more regressive taxes. The London 1 Economist ’ specifically defines conscription of wealth in this sense and gives its blessing to such a. policy. But much the same comments apply as to the taxation of property sense; heavier taxation and steeper progression are inevitable in any Case, and the demand for conscription of wealth appears to be more than an issue as to the degree 1 of reliance on taxation for war revenue. NOTION OF SACRIFICES. A third interpretation approaches nearer the general notion of sacrifices similar to those, imposed on men conscripted for service. The Great War provided many illustrations of the Government suspending ordinary market processes and securing its supplies by more or less compulsion, as Germany and Italy are doing to-day. _ Goods were commandeered, compensation being paid at rates less than those which the owners would have demanded if they had been free to choose; Government acted as importing agent for vital commodities, taking whatever it required for its own purposes and leaving what remained for private cou-

sumption; for some materials “ priorities ” ensured that the most urgent war demands received supplies irrespective of price, and particular industries (such as railways) were run under direct . Government control. It is scarcely 'necessary to cite parallel examples from the war economy of Germany, Italy, or Japan, Those who demand conscription of wealth in war appear to be asking in rather confused fashion for a generealisation of such methods amounting to nationalisation, ” for the duration ” of at least, industries producing war materials This would imply payment, not at inflated rates, or even at prewar rates, but at very low rates paralleling the_ military pay of conscripts. In such circumstances, conscription of wealth would 1 presumably involve also conscription of the wealthy, or of so many of them as were actively engaged in directing and controlling production, to continue in those jobs. Taking over of all property would not be implied, nor would there necessarily be any additional property taxation. There is nothing inherently impracticable in such a scheme, although it might well founder on the resistance of the wealthy, not merely to the sacrifice of control over their property, but also to foregoing the inflated profits to be made in war-time. It would be the simplest and most direct way of financing a war, _ short-circuiting the problem of drawing equipment, materials, and men away from peace-time production by the monetary methods of taxation, loans, and inflation. That inequalities and individual hardships would 1 be inevitable is true enough, but the same holds of conscription of men, and probably in equal degree of orthodox methods of war finance. Whether such a policy is desired or not is another matter, but at least this appears to he the most intelligible meaning of a demand for conscription of wealth.