THE ECONOMIC SITUATION

Otago Daily Times, Issue 21990, 27 June 1933, Page 10

THE ECONOMIC SITUATION

~ DR FISHER'S ADDRESS The second of the course of lectures on the world crisis, arranged by the University of Otago, -was given at the University' Buildings last night, when Dr A. G. B. Fisher, professor ■ of economics, gave a lecture on " The Economic Situation." There was a very. large attendance, and the chair was occupied by Mr C. M. Gilray. >•;'■■' The chairman said that Dr Fisher would address them on a subject with, which many people were very much in the dark. Dr Fisher was well qualified to be their guide, not only by his studies and researches, but also because he had recently made a trip to Europe, where be' had met experts in his own subject. Dr Fisher, in an address extending over an hour and a-quarter, indicated some.of the outstanding economic influences which had helped to create the difficulties, from which the world was now suffering. He dealt with the development of trade, economic interdependence of nations, international co-operation, scientific . research, machinery production, and other matters, and asked: In what direction were the people to look for a way out of their difficulties? "Here," he said, "history offers us a helpful precedent. If the producers in the nineteenth century had' shown the same reluctance as producers are encouraged to show to-day to change the character of their work and investment, we should have had on the one hand still more damaging gluts of elemental food supplies and of the simpler forms of manufactured goods, and on the other hand we should have had. no motor cars, no radio, no electric light or telephone, no photography, no popular press, no wireless, no kinema, no gramophone, and nothing of numerous other goods and services, which we take for granted to-day, and the production of which provides employment for a substantial proportion of our population, but which were either completely unknown to our grandfathers, or, if known, were, on account of their cost, quite unavailable to the ordinary man. The character of some of these new services many people dislike: they think we would be better off without them. And it may be agreed that especially in their earlier stages such services have sometimes developed in ways calculated to offend the fastidious. That, however, is not an important point here. The important thing is that scientific advances did make it possible for the average man to enjoy a larger income, which enabled him to purchr.se entirely new things, the products of entirely new industries. If sometimes their choice was unwise, the remedy is to improve the standards of public taste, not to refuse to enjoy the benefits which progress makes possible. There can be no doubt that if we are to have further progress in the future prbduction must develop and change along lines similar to, though not of course identical with, those recorded in the past. It is obviously not possible to predict in detail the changes which will or should occur. There are good reasons for believing that the new industries of the future will demand for their development relatively less capital than the old-established industries of the past. Already we can observe the growing importance of personal services of various kinds, the services of professional workers, of teachers, of musicians, writers, artists, and the like, and it seems reasonable to suppose that, unless the resistances which I have mentioned are resolutely maintained, this will be the line of further advance in the future. In this field, too, resistance to change has shown itself, though inevitably in a way different from that already indicated in agriculture and in manufacturing. If the transfers are to be smooth and effective, not only must people not be discouraged from leaving the old fields of activity, but they must also not be discouraged from entering the new ones, which are likely to be more profitable for them. Here the exclusiveness of _professional organisations, which look with suspicion on any threatened flood of new entrants, has some significance, still further retarding the necessary transfers and prolonging the dislocation of the economic organisation. If we wish to accelerate recovery from the depression we should always inquire carefully

whether those who complain that their profession is already overcrowded and that the flow of new entrants should therefore be cheeked do not really mean, not that the profession is overcrowded in. tap, sense that all the work that desirable there is already being done but that the competition, of new entrants will make it possible to maintain the advantages, m income and social prestige which have been customary in the past. If this is the case—and it usually will be—then there is neither economic nor social justification for the.policy of effusiveness. . " It will be seen that If attach little importance to the fears tiommonly expressed in certain quarters about the glutting of world markets as a whole. It is true that an expansion of markets ot precisely the same kind as that which marked the history of the nineteenth century is impossible, and if we plan tor a repetition of that episode, we must be prepared for disappointment. , But, though the kind of expansion which is now appropriate is different from that ot the last century, the possibility of expansion still rests on the fundamental fact of unsatisfied wants. The nineteenth century expansion of markets was possible because of the flexibility and adaptability of the economic organisation, because a sufficiently large number of investors were willing to try out new fields and new types of work. A twentieth century expansion is equal possible « the same conditions are fulfilled, though the new types of work with which it is now desirable to experiment are for the most part entirely different from those of the past. . . "The reluctance of the individual worker and investor to face the risks of change is an obvious and natural explanation of the resistance of which I have been speaking. There is another subtler and more obscure influence, at which I have already hinted and which, in certain directions, penetrates deep into our economic organisation. Ihe will to change is also weakened by the fear that if economic progress is allowed to go forward rapidly certain privileges and advantages which have been customary m the past for those who occupy the more favoured positions in our cconmoic organisation may be endangered. As a charming, and intelligent woman once put it to me, she did not want the average income standard raised too much, because it would make it difficult for her to get anyone to perform cheap daywork looking after her garden. It is impossible to forecast in detail the intricate changes in industrial organisation and in income distribution which would be necessary if the average standard of income in New Zealand were somehow to be doubled within the next tew decades, but it is quite probable that a complete reorganisation of some types ot work would be necessary, and that some of the existing inequalities in income distribution would be reduced. It would, for example, be impossible to have domestic service performed at anything like the low rates which are common today, and with numerous attractive openings' for girls elsewhere in industry, many persons accustomed to employ domestic servants would find it difficult to pay, the prevailing rates of pay which the new circumstances would create; some revolutionary reorganisation of domestic.work in general might accordingly become

necessary. There are • few who' ; would care to affirm in set terms that economic progress should be stayed lest the supply of cheap domestic service should be en* dangered. But it is only a few, years ago since a New Zealand Minister of the Crown wag reported to have . expressed doubts about the wisdom of ■ further extensions of, secondary education. If everybody receivecTa secondary education, "who, then," he asked, "would do the dirty work?"' And the undisguised satisfaction evinced in certain quarters at the difficulties which recent economies in education in New Zealand threatened to place in the way of;children of poor parents training for work better paid than that which their parents had been able to offer shows that this sentiment of class-distinction is ah important' factor in the situation. It is, of course, an essential part of the Communist thesis that the continuous maintenance of high economic standards for all is impossible because those who occupy privileged positions will always refuse to allow any "action which seems likely to theraten their privileges. It is for those who enjoy privileged positions to show that this thesis is untrue. It is certainly true that the responsibility for making the necessary transfers rests largely upon the shoulders of those who control the flow of capital investment. The individual worker often has a considerable degree of freedom in,selecting new occupations, but even if the provision of the miscellaneous services to which I have referred becomes relatively much more important it will still be true that the distribution of labour among various industries and'occupations must follow rather closely the decisions of those who decide where new investments are to be placed. The practical conclusions which are implied in this analysis are undoubtedly distasteful to many of us. But if they are. rejected we must definitely make up our minds to give up the idea of further material progress. If we continue to strive simultaneously for contradictory ob' jectives confusion and economic disorder are inevitable. If we want progress we must submit to adaptations and refrain from resisting the necessary changes in the relative importance of industrise as fields for employment. If we don't like these changes, then we must abandon the idea of progress. We cannot have itioth ways. And if we plump, as I think w,e should, for progress, we cannot avoid the upsetting conclusions which follow merely by refusing to look at them. Many cherished modes of thought must be drastically revised, many popular slogans must be cast aside as the hollow and misleading things which they undoubtedly are. But these conclusions must be resolutely faced. The attitude of many people to the conclusions of economi- analysis + hese, days is not unlike that '/.the old lady who was paying her first 'isit to the London Zoo. She was taken to. see an unusually ugly hippopotamus, whereupon she shut her eyes very. tight and declared emphatically, "I won't believe it." Unfortunately, or perhaps . fortunately, conclusions which are displeasing to us canuot be disposed of in. this .simple way an> more than hippopotamuses can. And in this case there is the.less, excuse for refusing to face the conclusions of inexorable logic, for on closer examination the hippopotamus will be found to be not such an ugly beast after all, but a docile ani-

mal which, if handled in the way which its constitution demands, is.likely to become a very serviceable instrument for raising standards of civilisation which shall be really worthy of human intellect and human, capacity. ! ; .' " lb is impossible to conclude this survey of some of the fundamental factors underlying the present world crisis on a note which is either definitely optimistic or definitely pessimistic. It would, be foolish to pretend that recovery is inevitable. We are not justified in assuming that because we, have somehbty muddled through previous depressions, we shall get through this one in the same way. There is a sufficient number of. important new factors in the present situation to justify: us in regarding it as. unique, requiring treatment in certain respects different from anything that has been practised in the past. But it would be equally unwise to give up the struggle, because recovery was too:difficult or even impossible. ..The situation demands intellectual effort ,ot a more intense kind that most people have yet been willing to give it; but -it is still plastic, it i 8 still capable of control. The general lines along which action is necessary, are not difficult to discern, though the details in many cases are obscure. It is quite probable that for certain purposes entirely new instruments of institutions will have to .be devised to make possible effective and genuine, cooperation between groups of producers and national units, and those who have grown used to old institutions must not be allowed to block the development of the new, however respectable and hoary with age the old may have been. Even when progress was much slower than it might, if we allowed it, be to-day, the basic social and economic institutions were constantly changing. The people who wish to preserve the institutions of the nineteenth century unaltered in the entirely new -conditions of the twentieth i are among the gravest dangers to rational recovery • which we have to face. One thing is quite certain even when we merely blundered through depressions, they ended at last only because certain individuals either on. their own account or as servants of the State did certain quite definite things, because certain quite definite events occurred. A depression-has never. yet disappeared merely' in consequence of the assiduous repetition of mauical incantations or popular slogans. This one, too, will disappear if a sufficiently large number of people take the trouble to penetrate to the foundations of our economic organisation, and boldly begin action along the lines which a full understanding of the principles of an economically-pro-gressive society .show to be.'essential.' i; Dr Fisher answered a number of questions, after which a hearty vote of thanks was accorded to him for an instructive address. ■,'- ■'•-.•.■'