Nelson Evening Mail FRIDAY, JUNE 12, 1942 NEW DEAL AND THE NEW ORDER

Nelson Evening Mail, Volume 77, 12 June 1942, Page 4

Nelson Evening Mail FRIDAY, JUNE 12, 1942 NEW DEAL AND THE NEW ORDER

AN article in the ‘‘Nineteenth Century” magazine entitled “The! New Deal in Reverse” reads like! the reprieve notice of what has been ’ branded by “advanced thinkers” as a! doomed economic system—capital- j ism. It is topical because there is { a good crop of zealous planners going round with recipes for a “New Order” after the war: significant because history has shown that what the United States thinks about the economics of living to-day, the rest of the Western world often thinks tomorrow. G. L. Schwartz, writer of the article, advises the reconstructionists (if | they want to keep up to date) to 1 study the report of the Temporary j National Economic Committee (T.N. E.C.) set up in the United States in 1938 at the instance of President* Roosevelt to investigate the concentration of economic power. Its origin and composition suggest that its views are representative of current American opinion on economic policy and are, in effect, the latest version of the New Deal. Reviewing the history of the New Deal, Schwartz says it was founded on a rooted antipathy to the competitive system and on a belief in what he calls piecemeal planning. The depression was regarded as the ultimate failure of the competitive system itself and all the critics of the so-called planless or purposeless capitalist regime rushed in with schemes to replace it. The New Deal, he argues, was primarily Intervention to restrain the competitive system itself and to substitute for it planned industrial self-govern-ment. It envisaged more or less voluntary co-operation of producers in industries in order to plan production in the future under some sort of Government supervision, and without regard to the “infamous” laws of supply and demand. Industries were to organise themselves co-oper-atively in the public interest. Codes were established in drastic modification or replacement of competition. In practice its vague objectives resolved themselves into price-fixing and regulation of output. The programme adhered to the familiar but disreputable course of helping distiessed sections of the economic system to recover their fortunes by exploitation of the consumer through the grant of statutory monopolies. Business men were encouraged to set up price-fixing and output-fixing monopolies which were made as comprehensive as possible by the offei of adjustment payments or by quotas based on past production. The ploughing in of cotton and the slaughtering of pigs for rendering into grease and fertilisers were practical manifestations of the policy of replacing un-co-ordinated private enterprise by a system which guaranteed “parity prices,” “a reasonable return,” and adequate protection against “unfair competition,” “unpredictable changes in demand” and “over-rapid developments of technique.” According to Schwartz the report of the T.N.E.C. shows a major retreat from these doctrines in less than a decade. There is practically no trace left of the brain-trust influence ol the early thirties. The report, he says, is an affirmation, almost a paean, in favour of private enterprise. In its preamble the committee avows its faith in free enterprise and declares that every recommendation which follows is intended to keep enterprise free. The report itself and the accompanying evidence are shot through with this theme. . . . Private enterprise must be protected from destruction. . . . The object of the Government should be to protect and stimulate private enterprise rather han to supersede it. . . . The maintenance of free competitive enterprise by the suppression of restrictive practices which have always been recognised as an evil .... a tree competitive system offers the best oppor-

[ tunity for the widest participation in 1 the gains of increasing technology i achieved through a reduction in the price of goods, in the stimulation of new enterprises and in the extension of existing ones. . . . The basic solution of curtailed production for selfish ends is to be found in the development of competing industries and firms. ... It is generally agreed that competition must be maintained as the principle of our economy. . . . The American system is based on the maintenance of the free market. . . . It will avail us nothing to carry out a gigantic defence programme to a successful conclusion if in so doing we lose sight of the basic philosophy of our American economy—a competitive system of private capitalism. .... Government protection is actually called for, not in determining and enforcing reasonable prices but in restoring price competition. . . . Government regulation of prices in industry is not compatible with economic liberty nor with political freedom. . . . The theory of free enterprise is competition, low prices and volume of output. . . . The country needs a wholly free and enterprising system of free enterprises; the free flow of all goods, purchasing power and enterprise capital for production; the encouragement and development of new inventions, accompanied by aggressive pioneer product promotion. Whether the committee which made the report was too optimistic in its belief that a return to free competition is possible did not concern the writer so much as the presence of such a belief and its expression. It needs to be remembered, too, that the report was an attempt to find a formula for a normal economy in peace not for an abnormally regulated economy which practically all nations are called on to endure in time of war. The writer thinks it may be accepted as the creed of the progressive opposition in the United States popularly associated with the New Deal. He feels that all these countries who hope to co-operafe with the United States after the waz* mttst take heed of this t<Tr/iarkabla trend of informed American opinioti away from the ce'-dina! ji'incipl«c the New Deal.