U.S.A. TRADE

Grey River Argus, 12 February 1938, Page 6

U.S.A. TRADE

Signs of Deadlock Since it was the black days on wall Street which in 1929 signalled the outbreak of the world economic crisis, what happens on Wall Street receives particular attention, and it is therefore only natural that the recent great declines in quotations and the days of panic in the United States should have given rise to great anxiety throughout the world and caused the question to be asked whether this was not a sign that the boom had ended. But it was just the last world slump which proved the extraordinary importance .of “confidence,” and for the moment “confidence” has not been seriously shaken in connection with the latest events. Notwithstanding the great difficulty in sorting out the different causes of fluctuations on exchange, the general impression at the moment is that the black days are due much more to causes of a purely speculative and political nature than to a really alarming slump trend. It is just as clear, however, that there can be no question of a continuation of the boom; the state of trade is at a standstill, and at a level, moreover, which is lower than the preceding boom peak. Were it possible to draw general conclusions from former trade trends (a cut-and-dried way of regarding economic developments can lead to very dangerous false conclusions!), one might be inclined to believe that there is for the moment no danger of a slump. But more probably what has occurred now is the first proof that a hard-pressed “manipulated” economy reacts differently from a free economy, which, in the last slump just fell to pieces entirely and suffered great damage to its foundations. Of the United States it is particularly true that organs of direction and regulation were buist into capitalist economy when this damage was being repaired, which affect all economic trends and may thus produce something quite different from the usual signs of a slump. It is a generally admitted fact that the effects <bf “capitalist economic planning” are double-edged. So long in fact, as this “planning” is restricted to the giving of aid, within the capitalist system, to industry which has no longer enough force to cure Itself, and as long as the capitalist elements are carefully preserved while this action is being taken, this “State intervention on a large scale” certainly means in most cases the removal of particularly disturbing sources of infection but at the same time a certain preference for particular section of industry as against 1 the “non-manipulated” sections. In spite of the elasticity generally credited to it, the Roosevelt experi- 1 ment clearly showed that this kind: ; of "capitalist economic planning”’] makes another wound with each one I which it heals. It becomes increas- < ingly more difficult to perceive here the general line of a new economic ' conception; the impression is rather ‘ that of a man playing one card af- I ter another till only the last is left. ; One after another all the most im- i portant sections of industry, each ac- ; cording to the extent and the per- < manence—or lack of it! —of the “plan- ( ning”, fall victim to other economic ( laws. It is quite possible, and there ( are even some indications in this direction, that this kind of half-and- , half “planning” will one day bring t industry to a complete- standstill, in- £ instead of having made it more elas- ( tic and less liable to crises.

Roosevelt's latest message to Congress and his appeal for private capital to be used in the revival of industry, admits fairly clearly that it has in the main been the financial intervention of the State which has up till now been responsible for the good state of trade, and that private capita], while accepting the good chances of profit thus offered, has not participated actively with the real function of employer capital—private investment and the acceptance of risk. This is the real cause for the present standstill or even retrogression in trade, since the State—its capitalist structure being preserved—is unable of itself to maintain trade at a high level by means of its capital intervention.

To-day in the United States the increase in mass purchasing powe? through increased wages, reduced hours of work, aid to the farmers, the veterans’ bonus, etc., has been paralysed and even overtaken by » much greater rise in prices. This—the original driving force for trade—has now become the most decisive and dangerous obstacle to all industrial initiative. What remains of real, “planning” when Roosevelt has to start his now housing project with the statement that both building costs and building workers’ wages must be decreased ? Can there be any salvation for trade when one of the most important key industries is rightly waked from its lethargy, but economic circulation is braked by reducing wages? Experience of the “elastic system of wages and hour of work,” of which there is to-day talk in the United States, has always shown that this kind of elasticity gradually brings industry down to the ground. Roosevelt’s immense housing plan, for the erection of from three to four million dwellings within a five-year-plan, at an expenditure of from twelve to sixteen milliard dollars, will provide still a further lesson in the theory and practice of capitalist economy. In spite of the economic recovery in the United States, the building industry is still in fact in the depressed state of 1930. Since then an average of only 180,000 dwellings has been built annually, while the average before 1930 was 800,000! Up till now the building trade has been neither manipulated nor subsidised; it has remained outside ■ the “planning” attempts made up till now. which means that it has been in a state of permanent stagnation. Now the card “housing” is being played, and the question arises of which section of industry, unmanipulated or no longer manipulated, will now be left to stagnate and will finally have to bear the burden of a building industry profiting from State aid.. And the further question arises of how many cards Roosevelt still has in his hand, which will allow of his continuing his “planning” on such a giant scale, only to arrive finally at a deadlock. In spite of praiseworthy endeavours, the Roosevelt brand of economic planning has shown up. til) now that, within the framework of the- strictly maintained capitalist economic system, it is only possible to shift the. burden from one section to another, one part enjoying a boom at the cost of another, without any real health being brought into industry as a whefle. These limits should be recognised, and the conclusions drawn for Socialist economic planning!