INIQUITOUS PROFITEER.

Sun (Christchurch), Volume VI, Issue 1786, 4 November 1919, Page 8

INIQUITOUS PROFITEER.

CAUSES OF HIGH PRICES. A REAL SCARCITY OF COMMODITIES. [Written for the Australian Progressive and Economic Association.] Everywhere the wide world over, the prices of commodities have risen fearfully since the war, and the cost of living has become to the average housefather a fixed and constant terror. In the ranks of the manual workers the phenomenon is attributed by common cousent to profiteering. Are the workers right? Is it a fact that all or most of the producers of wealth who belong to the employing class are engaged iu a conspiracy to force up the cost of living? Let us approach the question in an honest spirit of inquiry. First of all let us define what we mean by profiteering. If the term has a real meaning it must surely signify deriving an unjustifiable profit by exploiting the public necessities. A profiteer, therefore, is any man who in the course of his business operations makes unjustifiable profits by exploiting the needs of the people. We ought, really, to define also the meaning of unjustifiable profits; but it will suffice for our present purpose to assume as unjustifiable any profits now being made that greatly exceed the rate of profits made normally before the War. Well, then, who are making such profits? The average worker will instantly reply, "Every employer." Just as instantly the average employer will retort, "Every worker." And the truth is that most employers and most workers are earning bigger money than before the War. Whether the bigger money is worth more to either is another question. But we leave it for the moment. Since it is evident that the workers (iu view of the increased cost of living) cannot fairly be called profiteers, it is possible that the employers, as a class, may be unjustly blamed by the unproven general assumption that they are profiteers. It is easy to assert a thing; not so easy to demonstrate it. There is some profiteering going ou, perhaps, but strange to relate, no man has yet been able to sheet the charge home to any body of employers; merely to individuals here and there. There is a case for general inquiry without doubt; but there is no cause for hasty general condemnation. Pending the scientific and comprehensive investigation that is promised by the authorities, ought we not to suspend judgment on the alleged prevalence of the ill and discuss the conditions from which profiteering, if any, emanates? How does profiteering arise! In what atmosphere may it flourish? How may it be checked or killed? These are tremendously important queries. Listen to this little story. One day a man discovered a secret way of making a good hat, a really excellent article, very cheaply. There was a shortage of hats in the country at the time, and a great demand immediately arose for the inventor 's goods. Five customers competed for every hat he made. Up went his price, and he quickly began to make a fortune by profiteering—the rascal! Suddenly another manufacturer found out his secret, and began to make similar hats. Soon there were only two customers for every hat both firms produced. The price of hats began to fall. Then a third manufacturer dashed into the arena. Presently there were two hats for every customer, and the price of hats fell into the bottomless abyss! There is a useful moral in this story. The moral is that no man can be a profiteer unless the demand for his goods exceeds the supply. When supplies are short of public requirements, profiteering is possible (that is not to say it is inevitable), but when supplies are adequate profiteering is impossible. All three of our questions, therefore, are answered. Profiteering is made practicable when there is a shortage of production. It is possible for profiteering to flourish in an atmosphere of scarcity. It perishes irresistibly and utterly as soon as supply overtakes demand.

Settling Him. We have seen that profiteering cannot be carried on except in times of scarcity—when the public demand for a commodity exceeds the supply available for distribution. This rule applies aniversally to every article used or consumed by mankind. The rare thing is always a dear thing, and the owner of a rare thing, which is wanted by other men, is always in a position to exact a big price for it. Is he a scoundrelly profiteer when he declines to sell a rare thing for its former or future value as a common article? If that be so, we are all profiteers in some sense or another —equally the labourer who demands high wages when and because labour is scarce, and the mustard merchant who shoves up the price of mustard when and because the nation's stock of mustard is insufficient to go 1 round. The writer himself must plead j guilty. The other day he put up a small piece of land to auction which lie had bought originally for a song. Five men wanted that bit of land. They competed eagerly for it, and ran up the price to quite a big figure. The writer, through his agent, sold to the highest bidder, and took the money with an untroubled conscience. Yet he was a profiteer of course? Would anv of his readers have acted differently? Bill .links, the wharf labourer, bought the other day an old petrol engine at a junk sale for a few shillings. The seamen's strike came and caused an unparalleled demand for all sorts of motor machines. Bill sold his engine for 13 of the brightest and best. No man would have acted differently, but Bill, of course, was a ruthless profiteer? He got the biggest price he could for his property. These illustrations suffice to show that any man may be a profiteer without being natively wicked —or a human tiger: for it is assuredly no more villainous to profiteer in land or petrol engines than in other commodities. We are all built on the one plan. The profiteer (alike the most innocent and the worst sort) is made by circumstances. Our fight as a nation against profiteering, therefore, should be directed not against the profiteer, but against the circumstances which make profiteering possible. We have seen what those circumstances are. In a word they consist of scarcity, i.e., shortage of production. The only way to kill profiteering is to kill scarcity. The only way to kill scarcity is to increase production. That is the great solvent of the problem of dear commodities. And what a nice way we are setting about the job of killing profiteering! Everywhere we look around us are idle factories and idle hands. TII3 spirit of the strike is in the air. Production proceeds intermittently instead of continuously. Our output of almost all commodities is steadily diminishing. The national stock of useful and necessary commodities is growing beautifully less. In the manner of lunatics we cry out at the high cost of living, and we are doing all we can to perpetuate conditions of scarcity and to make the cost of living soar still higher. We are like the students, satirised by Gautier, who

spent their days complaining of headache and their nights drinking the beer than produced it. The cure of high prices is in the hands of the producing workers, not of the legislators of this country. Our Parliaments cannot alter the laws of supply and demand, not even though they were to nationalise every industry in the laud. Those laws are eternally unchangeable, and they will operate just as relentlessly under a communistic as under a capitalistic regime. Plenitude is the only possible preventive of high prices. Plenty means cheapness. Scarcity is a synonym for dearness. Plenty can only be achieved by increased production, and that depends fundamentally on the workers.

High Prices Considered Scientifically. For mouths past the demagogues and j agitators of society have been denounc- ' ing the employing class as primarily and culpably responsible for the high cost of living. Ruthless profiteering, they say, is everywhere in vogue, and: they stigmatise every man engaged in the production and distribution of commodities as a profiteer—except the wage-earner. It is a sweeping charge and definito enough, but what truth is there in it? Quite recently several State and Federal commissions of inquiry searehingly investigated the affairs of certain industries wherein to all appearances profiteering seemed to bo rife; but, strange to say (with one exception), these commissions failed to discover any profiteering at all. This does not prove, of course, that profiteering does not exist, but it certainly suggests the need of looking further afield for the real causes of high -prices. Profiteering may bo a contributing cause, but it is assuredly not the only or the chief cause, for high prices are universal, and, as we have seen, profiteering is not universal. Here is a fact that may help us. The cases of alleged profiteering that have* been officially investigated all relegate the question of high commodity prices back to the cost of production, which has advanced enormously in recent years, owing to sensational increases in wages and in the prices of all the raw materials of industry.

It may be conceded that the prices of raw materials went up, as a rule, before the cost of labour began to soar, but the one phenomenon always swiftly pursued, and often surpassed in gravity, the other. A careful study of all the facts available to the economist's examination reveals the following chain of processes at work in the order designated: —(a) Increase in the prices of primary products; (b) increase in the cost of producing commodities in industries dependent for their raw materials on primary production; (c) increase in the prices of manufactured articles, consequent on "a" and "b"; (d) increase in wages in the secondary industries; (e) increase in wages in the primary industries; (f) increase in the prices of both primary and secondary products to meet "A" and "e"; (g) increase in wages generally to meet "f"; (hj) increase in prices generally to meet "g." And we find, also, that when the stage "g" and "hj" is reached, the processes "g" and "hj" have the tendency to recur successively and continuously thenceforth, each chasing the other in a circular race which neither can win—much in the fashion of a dog chasing his own tail — for each is bound to the iron wheel of what has gone before. Getting back to origins, it is plain that the whole business started with epochal increases in the prices of primary products, including the raw I materials of secondary industry. What I was the cause of that ? The answer is [simple —shortage, the shortage caused |by the AVar. The War withdrew milI lions of men from the work of production, and set them, toiling like Titans at the work of consumption. Soon after the War had started, half mankind was busily engaged producing material for the other half to destroy, and the latter half did its work so thoroughly that little or nothing was saved for the eventual benefit of the whole. The work of consumption, moreover, was not confined to the destruction of materials. It extended to the devastation of vast territories formerly devoted to the production of foodstuffs and industrial raw materials. This fact cast the entire obligation of feeding and supplying materials to mankind upon a sen-sibly-reduced cultivable area, and upon a greatly diminished producing population. Inevitably a less amount of foodstuffs and raw materials than ever before was produced, and for this I less production there was a greater demand and the keenest possible competition. Therefore, the prices of all primary products rose, steeply and prodigiously, and as they rose they forced up the prices of all manufactured commodities, together with the price of labour in every industry. The War is over now, but its consequences still afflict us, for the world is still terribly short of the things it requires in order 'to sustain a civilised existence. I T ntil jtliis shortage is made good, the cost of living must remain high, or all experience is a liar. The Economist's Conclusion.

There may be many profiteers in the industrial world of Australia, but if they numbered thousands instead of scores (and they may not even number scores), their combined unholy exploitation could not have played more than an insignificant part in reinforcing the great chain of causes that has forced up the cost of living. Infinitely mightier forces than were ever wielded by rapacious capitalists have been at work to lift commodity prices to their present level. During four years of world-warfare the world's consumption of commodities exceeded the world's production of commodities. Hence a general world-shortage of useful and necessary commodities was precipitated. True enough, certain countries produced more than usual, and greatly in excess of their local needs, as was the case in Australia with wool, wheat and metals. But any such abnormal sectional production was in each case but a drop in the bucket of the general world famine, and it affected the general sitution not at all. There are persons who contend that prices should not have been increased or been allowed to increase in Australia, and that the consuming public here should have been given the benefit of cheaper food and commodities by reason of our increased primary production. The idea is worthy of Bedlam. Australia was a participant in the War, and was morally . bound to supply her surplus to the 'Allies. In this'connection two things are clear: —(a) She could not discriminate in price between her people here and her Allies overseas without doing a deadly injury to the cause for which she fouglit; and (b) she could not force her primary producers to sell their products at less than the world's market price without causing production to dwindle towards extinction. There is only one price for exportable produce—the world price, and that is not fixed in the country of production. It is fixed by the outer world's demand for the commodities produced, and if the Government of the producing country were to seek to lower it by force against the producer when the price is high, the producers would simply go out of business—to the ruin of the nation. As a matter of fact

it was the high price obtained for our excess primary products from the outer world that chiefly enabled Australia to bear the economic burden of the War, and no sane man doubts that we should, as a nation, have failed of this great mainstay had the nation, through its Government, attempted to exploit its primary producers for the benefit of its urban citizens.

The general world shortage of all primary commodities was the initial cause of forcing up the price of all commodities and the general cost of living, here and elsewhere. For a time our primary producers profited because their products were the first to increase in price, and their cost of production was momentarily stationary. But they profit no longer from that circumstance. Indeed, so greally has the cost of primary production increased in the meanwhile that the farmer and the metal producer of to-day, notwithstanding the present high prices of wheat, meat, and metals, are not any better off than before the War, and many are much worse off. And the same thing may bo said concerning many of our secondary industries. There are exceptions, of course, but the rule applies to most. And the wage-earning class, speaking broadly, is in the same boat. Wages everywhere are much higher than in any period of the world's history, but living is so dear that almost every living soul is discontented. What is the cure for this omnipresent curse of dearness? The economist is a man who has no politics, no party, no class interest. He is neither a capitalist nor a trades unionist. He is simply a dispassionate scientist —an observer and recorder and impartial interpreter of facts. Let him answer us. His reply is clear and cool:—"The cost of living must remain high, with a constant tendency to increase until the world's unsupplied (and presently unsuppliable) basic requirements are obviously about to be overtaken by production. The combined power of wisdom of mankind ctTn neither alter nor influence this immutable economic law. Living is dear to-day because the world is short of necessary commodities. The cost of living in any country cannot fall permanently until this shortage is made good. When the shortage is made good the cost of living must fall, because no power on earth can sustain it. The cure for the troubles now afflicting mankind is to be found in one word—production. And that is the pure and undiluted . truth. Mankind is suffering grievously beyond the shadow of a doubt. Biit it is not suffering because there is profiteering and because prices are high. The real cause of its suffering is that there is a real scarcity of most of the commodities that are essential to sustain life and to make life worth living. The solution is to increase production until scarcity becomes sufficiency. Nothing else can do a scrap of real good.