A DISPASSIONATE EXAMINE-ATION OF SOCIALISM

Hutt News, Volume 6, Issue 16, 14 September 1938, Page 4

A DISPASSIONATE EXAMINEATION OF SOCIALISM

(By Frank N. EOBSON)

(No. 4). The Socialist's urge to nationalise the entire productive and business system arises out of the belief that private enterprise and free competition inherently rob the community of its just rewards, and generally "exploits" the people. It is 11 important to closely examine this aspect of the matter.

This condemnation of the "profit system" is the result of superficial thinking. Most Socialists agree that the total purchasing power of the community as a whole is inadequate to buy all the goods and services available. PRIVATE ENTERPRISE ENSURES PROGRESS Under Private Enterprise, the man who opens a factory or a business, in competition with other similar concerns whose numbers are unrestricted, fully realises that his success depends entirely upon his ability to ascertain the tastes and requirements of the people and to cater for them.

If he; fails to gauge the public requirements or to produce those requirements up to a satisfactory standard, then the spublic will not buy his wares but will patronise those of his competitors who have better succeedod in doing so, and thus he will automatically be eliminated from the productive system.

This system of Private Enterprise plainly enables the individual consumer to exercise his own personal tastes in goods and services. Under this system the individual best equipped to ascertain and cater for public requirements will automatically make his way to the forefront, and it is most important to note that he has been placed there by the consuming public, and not, as '11 the case of nationalised industry, by a minister a board, or a departmental Lead. Few will have much hesitation in deciding whether 'the consuming public or one of more State officials are best qualified to judge in a r.alter of this sort.

N'ow, if we have succeeded in showing that the very principles of Private Enterprise are more likely to react in the interests of the community on the ]: oductive side than a national monoP' ly, it must next be candidly recognised that the remaining essential qualification is "the ability of the community to buy the goods and services thus produced. This becomes a matter of puTjphasing power, expressed in terms of money.

Advocates of nationalised industry invariably insist o» confusing the indusliial or productive system with the monetary or financial system. While many individuals may be actively concerned with both the productive and the financial systems, their operations are, nevertheless, in two distinct spheres. No factories or business concerns actually make money—or, if they do, the long arm of the law will soon descend upon them! They may earn money or distribute it, but the actual manufacture of money is quite rightly confined to the banking or financial system. Were it otherwise, chaos would soon result from tho indiscrimin-

ate creation of currency. Those Socialists who do admit this fact contend, however, 'that under Private Enterprise the factory owners —or the primary producers', Or retailers, who are equally part of the Private Fnterprise system —greedily 'take so much in profit that thpse who work for 01 salary are left with insufficient money to buy reasonable requirements. To that cause they .attribute the infibi.it,y of the. community to buy all exiting production.

In the ordinary way, competition eft'ectur liy prevents the making of any fantastic. profits, and the usual profits merely represent the wages or salaries of the private owners. While these may be higher than average wages, they may also, and frequently are, much lower, despite the attendant worry, and work involved in building up and 1 conducting a business. Frequently, too, losses are sustained.

Let us, however, consider the rarer example of very large profit and becomes of it.

It will be admitted that there is a physical limit to the amount of food, . clothing, housing and even of luxuri(& which any individual can consume — that is, cat, wear, or use. Therefore, if his income from profits as controller of an industry is greater than required to cater for his physical requirements, what becomes of his surplus income? Is it not 're-invested in industry, either directly or through other individuals'? If so, it must result in yet greater production. As the individual under - review is already getting all the products required for his own use, then 'the increased production must, if it is to n be consumed, go to someone else.

Thus it will be plainly seen that, if a surplus of unsold goods remains coincident with an unsatisfied' demand, even after all private owners of industry have satisfied their own requirements, then the fault cannot lie with the profit motive, since it must react against profits if industry cannot sell the whole of its production. The fault must be sought elsewhere.

Could it seriously be suggested, that the amount of food, clothing, housing and even of luxuries consumed by those enjoying higher incomes in New Zealand, has created a famine or scarcity of those commodities, and that it is this famine of actual goods—which is real wealth—which causes poverty amongst (he rest of the community'? It is selfevident that there remains an unsold abundance which the community is for some reason unable to purchase. The total purchasing power of a community obviously includes all forms of individual profits, and if this total does not equal total prices of all goods and services available, then how can profits have caused the gap/