ECONOMIC PROBLEMS.

Otago Daily Times, Issue 21103, 13 August 1930, Page 6

ECONOMIC PROBLEMS.

, TO TUB EDITOU ' Sib,— The younger generation in New Zealand have not had the personal experience of a severe trade depression, only the older generation of to-day can look back and recall the experience that-com-menced in the later Seventies, when a .world depression set in, which lasted for. 15 years. This experience waa anything but cheerful, but the conditions then prevalent differed greatly from the conditions prevailing, to-day. There was then practically no restriction upon trade, no compulsory arbitration with fixation of wages by legal enactment. Wages and prices of commodities were fixed by bargaining, and higgling was common, in wmcmtho weaker side succumbed to the. etrong. The force of economic circumstances controlled both, then, as it does now, but with mhch less ethical consideration than we find to-day. In this respect at any rate the world m,ay ha said to have made some progress, in theory if not in practice. It is now more generally admitted that reciprocity must be recognised throughout the whole economic system, and not in international trade only. The old mercantile theory that the law of supply and demand is an inexorable determinant of value, can no longer be sustained, because our judgment clearly shows us that value is an intrinsic quality, the result of personal skill in production, while prices are only an effect, determined by supply and demand, and rise of fall quite independent, of value, and fluctuates only from the effects of an increased or decreased volume in production. This fact is slowly but surely dawning upon the community, but is as yet far from being sufficiently recognised to constitute an ethical force sufficiently powerful to control,the political elements in the right direction. 1 The dominating idea prevails that high prices are synonymous with high .value and prosperity with high prices. The fallacy of this notion must be dispelled before reciprocal relation between labour and capital.can be established. If we recognise—as we all do —that the most coveted of. all material possessions is found to consist in money—because of its ready exchangeability for real wealth, then we are forced by ethical and physical considerations to admit that money cannot be obtained,from other people for nothing and that the value of money arises entirely from the productiveness of labour, the primary factor from which the value of money originates. Productive labour is therefore the most. important, while money is only the means by which we measure the vpluc of labour, and by which we denominate the price of commodities iin terms upon’which we effect exchange. Now, reciprocity demands, thatjirices must be determined by value, and not by scarcity, a condition which is at present ignored by the Court of Arbitration, and by supply and demand in fixing prices. Public opinion on this subject, or course, cannot be'taken as a guide, since each disputant views things from a "personal and not from/ a collective standpoint. But that' does not 1 alter the fact that economic law' inexorably rules and finds its explanation in the reciprocal relations established in Nature, which, mankind would do well to obey.—l am, etc., 1 • W. SIVEBTSEN.