POST-WAR PROBLEMS

Otago Witness, Issue 3343, 10 April 1918, Page 7

POST-WAR PROBLEMS

WORKERS' EDUCATIONAL CLASSES Tho tutorial classes of tho Ucago University which have been organised by the Workers' Educational Association were opened for the winter session last evening, there being a very large attendance' of students. Archdeacon Woodthorpe, the lecturer, discussed "The Mechanism of Exchange and the Study of Markets." By way ot a preface to his lecture he said: —"1 begin this course ot lectures with a deep sense of responsibility, because I realise th» gravity of the subject which we have to study at the present time, and I recognise-that the Workers' Educational Association ought to do a great work in forming the mind of the people on economic subjects and in disseminating knowledge that may be of priceless value to the community.'' Proceeding with his lecture, he said that modern society is distinctly a pecuniary society, a society of business. Under present conditions wc produced .for a market, for exchange, in spite of the fact that tins economy is comparatively modern. Wo produced for the most part for a competitive, impersonal world-market. Tho mark of our present system was free, per-, sonal, initiative under private property for private gain. The centre of this competitive system was price. Money was the focus of modern business affairs. It was the standard of values simply because in a society producing for exchange it was the one established intermediate commodity. Therefore, as medium of exchange, it was the standard of immediate and deferred payments. Through credit the money economy laid hold upon even the distant future. As society had evolved, it had -passed from a society of individual production through a system of to a money-economy, and it was now moving rapidly to a credit-economy. Thus more and more, money was not only the medium of exchange, and standard of value, it passed more and more into our system of social values. We often estimated a man in terms of his money. Our national problems strike' this very point, and all ran back into the question of value. The same was true of human values. Because, therefore, the present economic life was organised upon lines of private property, of pursuit of individual gain, and of production for exchange, it was inevitable that everything revolved on this question of price. We needed, therefore, to have a clear idea of the analysis and laws of price. Wages, for example, were the price of the services of employed labour; profit, the pricereward of the independent, self-employed labourer, the entrepreneur; rent, the price commanded by property lent for hire; interest, the percentage which the time use of wealth, in terms of price, bears to the total price. Each of these was a problem of price adjustments. The "pecuniary unit" was essential to the development and maintenance of a comprehensive industrial system. The advantages . of exchange were just those of the division of labour. In modern exchange every person who was essential was justly entitled to a share of the product. The middleman was just as necessary as the farmer in a true system of exchange. Exchange led to the full utilisation of tho productive capacity of every man or of every nation, xne growth of the modern trading system, with its elaborate mechanism of exchange involves three essentials: (lj the formation of a class of merchants to act as middle men between the producers and the consumers; (2) the development of the means of transport, both for long and short distances, including the carriage of commodities like wheat or raw cotton across half the world, as well as the door-to-door delivery by retail shops; and (3) the invention of money as a means of exchange. Trade was now international, and highly specialised. .transport systems were very elaborate, and sale and purchase are now facilitated by money. The ultimate objecC of production was not sale, but exchange of a produce for other commodities, and the ultimate consumption of these. The value was expressed in price. Price was simply a means of expressing the exchange value of things. The real exchange value of goods was the amount of all other commodities in general for which they could be exchanged through the medium of money. 'ihe commodity which served as (1) medium of exchange and (2) common denominator of values was money. The value of a perfect pecuniary' unit must be the same everywhere, and always, and that was a very difficult thing to secure. The real value of money was its purchasing power, tho quantity of goods for which a certain quantity of money could be exchanged. It was necessary to make a careful- study of money and the mechanism of exchange. This system of exchange was now one of the marvels of the world. The simple invention of money had now given rise to a system of credit and banking which might be simply described as a system of doing money's work without the use of any form of actual money at ah. The functions of money were generally classified as follows : (1) A medium ol exchange; (2) a measure of value, for we are able to compare the values of any two commodities by their common denominator —price. (3) As a standard of value, or standard for deferred payments. This was not easy to fulfil, as " the purchasing power of money" varied from time to time. Thus " values depended on demand and supply, and causes of fluctuations in values might arise on either side." The demand for money varied with the use of substitutes as media of exchange. Such substitutes were bank notes or other paper money, cheques, and bills of exchange, and various arrangements by which book entries, on the credit and debit side of an account, obviated the actual handling of either money or any concrete representative of money. The pecuniary unit was essential to tho present economic structure, which was marked by three institutions—private property, free contract, and individual initiative, —but its service would bo equally indispensable in a society quite unliko ours. Under Socialism, even if the State took tho initiative in production, it would require for the purpose of "economic judgment a means to determine the quantities in which its varied goods wero to bo produced. This would require a means for exact valuation, such as could be found only in a proper accounting system, for which the pecuniary unit must furnish tho basis. Wo therefore concluded that "the pecuniary unit," "the principal manifestation of money, was- an agency of chief importance in establishing and maintaining a complex economic- order. The great difficulty of our unit to-day was

tho fluctuating price of geld. If \vc could establish an inflexible and recognised unit of purchasing power, tho whole economic system would bo placed on a distinctly rational basis. Tho term markets was used in its economic meaning—that was, an area in which there is free communication (between producers and consumers, both in tho sense that buyers and sellers alike were well instructed as to what tho others were doing, and also in the sense that tho commodity itself could be moved easily from one part of a market area to another, in response to/the varying conditions of supply and demand in different parts of the area. In this way free communication could take the place and the publication of prices preserve uniformity of price. To command a wide market the commodities must be: (a) Objects of _ universal demand'; (b) easily described, sampled, and graded; (c) portable; (d) durable —i.e., neither fragile nor perishable. The time element was also important. A "long period" market depended on: (1) The nature- of the commodity; (2) the duration of demand for tho commodity; (3) the nature of the supply; (4) - manufactured goods, tho supply of which could be inceased or diminished. Hero there was a great scope for men of clear intelligence, exact knowledge, and organising power. Hence arose the need of the Stock Exchange, whose function it was to create a market for capital, to find capital for the formation of new companies, to buy and sell stocks and shares of existing companies, and to float and deal in Government loans and stocks. All the regulations and methods of the Stock Exchange were to expedite and facilitate business. The mainspring of the wholo system was the necessity of doing business quickly and safely.