The New Zealand Tablet THURSDAY, JANUARY 19, 1922. ECONOMIC FUNDAMENTALS

New Zealand Tablet, 19 January 1922, Page 25

The New Zealand Tablet THURSDAY, JANUARY 19, 1922. ECONOMIC FUNDAMENTALS

CROSS the weltering world which opened before the gaze of men when the curtain of *//\AvVv smoke lifted from the battlefields, philosophers who think and statesmen who hate ~ - to think stare dumbly wondering how to set about the reconstruction of which they talk glibly enough, wondering too what Sp* has happened to disturb all their old fixed ideas about economics, about labor and wages, about progress and production. Why are wages so high, why are prices so high, why is money of so little value, and what does the apparent wealth which has its evidence in cheques, deposits, and bank-notes really mean in view of the billions of war debts and the dislocation of industries and the unrest of peoples ? Then on the one hand there are strikes and threats of revolution, and on the other profiteering and swindling, and as a .result of all a growing hatred between class and class. Hopeless, heartless statesmen play their old games with the people. Their subsidised press supports them. Onlookers wonder what is to be the end of it all. * We used to boast before the war of our ago of progress. We thought we had made great advances, socially arid economically, and that the age of poverty was gone. We appealed to our marvellous inventions and to our mastery over the elements of wind, -fire, water, and electricity. Superficial people imagined that our workers were cleverer and better men than the old guildsmen who hammered the stones and carved the marble and planned the arches of Rheims and Winchester. But now men are beginning to realise that machinery was not' the contrary of poverty and that compulsory schools did not mean education. Quantity may have superseded quality in the arts and crafts, but we are not so sure as we were that there has been any progress in that. 'Men who feed machines do not take in their work the pride and interest that men took in older days, and laborers have become more like cogs in the wheels than the independent, skilled handicraftsmen they were of old. Our power of production is apparently incapable of satisfying human wants, and the machines that enable one man to produce as much as twenty seem not to have left the world twenty times better off, nor to have shortened the hours of toil by

anything like the proportion we should have expected. Wo discover that the machines have been used for the purpose of producing Luxuries and comforts, and that not more than one worker in ten has been employed on necessary things, while the other nine have been working to satisfy artificial needs, and to make profits for capitalists. We have accepted as true for a number of years a set of"phrases which wo regarded as the science of political economy, and we are beginning to ask ourselves if we ever understood what they' meant, or if they meant anything at all. Value, prices, wages have come to have a real interest, for us, and we find thatthe old maxims do not help, us in the least to grasp what the terms mean. Every man was supposed to get what he produced, or its value.. Everything was supposed to be sold for something near its cost of production. Cost of production therefore determined price, and price was determined by cost of material and wages, with of course a margin of profit. The accepted axiom was that value depended on cost of ; production. Now we are beginning to find out that all this told us exactly ijothing, and the unsatisfactoriness that most of us felt when reading treatises on economy was due to the fact that we were wandering in a labyrinth of fallacies heaped upon fallacies. -The equation of the cost of production means nothing. It is a truism that leaves us where we started, and our reasoning on it was round a vicious circle all the time. Upon it we built up the conclusions that there is a natural price, that wages depend on the price paid for things made, and that this was exactly in conformity with social justice. We estimate even skilled labor by what is paid for it. We take the cost and say it represents the value, just as we would say that the value also determines the cost, and oui estimate of. quantity of labor is again a vicious circle. Thus, as Mr. Leacock says, the keystone of the whole arch is knocked out when we find that our timehonored equation was but a truism, and we are. left to seek for another foundation for the economics of reconstruction. * All our ideas concerning prices, wages, costs and profits were traditional and few questioned them. People are beginning to see now that it is not true that every man gets what he produces, and that just as low wages represents low productiveness, high wages represents high productiveness. We used to think that all these things were fixed by the tacit law of natural justice. The Socialists who- protested against the whole economic system felt that traditional views of political economy were all wrong, and that there is no doubt that the .Socialists were quite right in that. It is becoming clearer nowadays that prices and wages are the result of very complicated forces in no way at all connected with social justice, , and, that they are rather representative of momentary states of equilibrium between class and class. One thing is quite certain: the law of charity. and the inspirations of Christianity were altogether ignored in the struggle, of which the motives would rather seem to be necessity on the one hand and avarice and inhumanity on the other. —— :