Harvard Economists and Government Men Differ in Opinions on New Deal

has obviously just his anger in the crux of the matter when he says concerning the attempt to increase purchasing power; "Such an increase is obviously not a means of bringing about recovery; it is recovery itself. What we have to do is to consider the effectiveness of other means to this end." The discussion which follows though by no means exhaustive, makes a number of valuable distinctions and brings such neglected elements of the problem to the fore as the simple fact that not only wage earners but also farmers, dividend receivers, business managers, and so on are consumers, that a high wage rate may mean reduced volume of employment and thus reduce working class income as a whole, and that as far as our knowledge of business cycles goes consumer spending appears to be of less importance than investor spending. Similarly Professor Mason disposes of many loose notions on what constitutes unfair competition, and he also gives clear warning that the task of adjusting production to consumption and prices to costs is far from the simple matter it may appear to be to the business man who fails to see beyond the range of his own particular problems.

Policies Contrast

But valuable though such clarifications and criticisms are they are by no means the whole story on the economic aspects of the Roosevelt Administration's program. I think I can perhaps best make clear what I have in mind by contrasting the set of papers here under review with the utterances of the group of economists who, in one capacity or another, are connected with the Administration. As to rank in their profession there is little to choose between the two groups; it is quite inconceivable that the Washington group should be unaware of such criticisms and objections as are offered by their Harvard colleagues, most of which as I have said are of an essentially elementary character. How then is the often radically different treatment accorded the same problems by the two groups to be explained? The difference is of course in the starting point. The Administration economists appear to have accepted as their underlying premise the feasibility and necessity of a much larger measure of social control and to be approaching all problems with that in mind. How vital this difference in starting point is for the whole course of the subsequent analysis I can perhaps make clear in a couple of examples.

Take for instance the matter of securing the right kind of government officials and of enforcing the regulative measures adopted by the government. In the articles of the Harvard group there are many references to governmental inefficiency in the past, to the dead hand of bureaucracy, and to the lack of a competent civil service. In his speech on "Social Discipline" in Philadelphia last week Secretary Wallace dwelt on the insufficiency of governmental machinery alone--the government, he said, can only provide the initiative and the framework--but instead of viewing this as counselling despair, he went on to emphasize the absolute necessity of developing social discipline pari passit with the development of the program of social control. There is no difference here in the problem perceived, the difference is merely in the way of looking at it.

Or as two other examples, take the N. R. A. codes and the Administration's labor policy. Professor Mason sees no justification for the codes beyond their service in suppressing racketeering and child labor and in establishing minimum wages. Professor Brown seems advocate for the workers operates between employers, and yet they realize how devastating the unrestricted warfare of powerful unions and large employers associations is likely to be. From the only other alternative, that of allowing the government to play a larger and larger part in the regulation particularly of wage bargains, they recoil in the same sort of terror before the unknown felt by liberal economists when they contemplate a broad program of industrial and agricultural regulation. Whether the alternative their attitude implies is any more desirable or even possible, they seldom stop to consider in any detail.

Codes an Entering Wedge

It is of course easy to deride talk of social control, economic planning and the like as vague and visionary and to twit the planners with having no definite concrete program of what they propose to do. The answer, however, should be equally easy: of course such talk is vague, it must be vague since we have had as yet almost no experience of planning to go by. I am sure that no intelligent supporter of the Administration's policy would regard the codes which have been drawn up so far or the labor policy which has been outlined as more than an entering wedge. As to the codes much has been learned already by both government representatives and business men; much more will be learned as experience is gained and the requisite material for analysis piles up. The economist who is willing to take the plunge has the whole world before him: costs, prices, investment, labor policies all become problems to be handled within the framework of the social determination to do something actively and consciously about controlling social destinies. If on the other hand he feels unable to take this plunge he must accept the opposite alternative of damning the whole movement toward control. One thing that is not likely to be of much use to any one is criticism on special points from those who refuse to accept the fundamental premises from which the work they are criticizing proceeds.

Thank God for Fools

I have been thinking so far chiefly of a contrast between two sets of economists. But the New Deal owes neither its conception or launching primarily to economists. What of the fallacious notions held by the less educated--from an economics point of view--of the Roosevelt camp? Here everything depends on general predisposition and nothing on specific economic arguments. I myself feel that we should thank God both for the damn fools and their fallacious notions. The essential thing is to make the start in a radically new direction and that is something--even though from the point of view of underlying social and economic conditions it may have been long overdue--which is not likely to be done by people who have too clear an idea of what they are doing. Any change in social direction which necessitates not only a reorientation of governtal policy but also a revolution in social attitudes requires a powerful accompaniment of propaganda which is not only not likely to contain exclusively sound economic reasoning but is also sure to contain a lot of pure nonsense. Whether or not this nonsense is to be solemnly condemned or is to be tolerantly winked at depends on whether or not one is in sympathy with the fundamental aim toward which the propaganda is directed.

Finally, I sould like to enter into a full-length discussion of that ancient bugbear, the national income, which for generations has been used by liberal economists to scare light-headed social reformers. The main point seems to be that from the point of view of social well-being the national income is so uncertain a quantity and the conditions under which it is earned of such great contributing importance that the liberal economist's confident assertion that such and such a bit, or even program, of "meddling" will diminish the national income need not frighten us very much.

In the foregoing remarks I have openly disregarded the authors' own disclaimer that they are talking only about recovery and not about reform. As Dr. Taylor appropriately remarks and as all the papers themselves show, the separation of recovery and reform in the present state of affairs is impossible. It has been my object to show how under the cover of devoting exclusive attention to recovery the authors have inevitably developed a bias toward reform as well--a bias which is of fundamental importance in influencing the judgment one may form of the economic and social policies of the Roosevelt Administration.

Codes an Entering Wedge

It is of course easy to deride talk of social control, economic planning and the like as vague and visionary and to twit the planners with having no definite concrete program of what they propose to do. The answer, however, should be equally easy: of course such talk is vague, it must be vague since we have had as yet almost no experience of planning to go by. I am sure that no intelligent supporter of the Administration's policy would regard the codes which have been drawn up so far or the labor policy which has been outlined as more than an entering wedge. As to the codes much has been learned already by both government representatives and business men; much more will be learned as experience is gained and the requisite material for analysis piles up. The economist who is willing to take the plunge has the whole world before him: costs, prices, investment, labor policies all become problems to be handled within the framework of the social determination to do something actively and consciously about controlling social destinies. If on the other hand he feels unable to take this plunge he must accept the opposite alternative of damning the whole movement toward control. One thing that is not likely to be of much use to any one is criticism on special points from those who refuse to accept the fundamental premises from which the work they are criticizing proceeds.

Thank God for Fools

I have been thinking so far chiefly of a contrast between two sets of economists. But the New Deal owes neither its conception or launching primarily to economists. What of the fallacious notions held by the less educated--from an economics point of view--of the Roosevelt camp? Here everything depends on general predisposition and nothing on specific economic arguments. I myself feel that we should thank God both for the damn fools and their fallacious notions. The essential thing is to make the start in a radically new direction and that is something--even though from the point of view of underlying social and economic conditions it may have been long overdue--which is not likely to be done by people who have too clear an idea of what they are doing. Any change in social direction which necessitates not only a reorientation of governtal policy but also a revolution in social attitudes requires a powerful accompaniment of propaganda which is not only not likely to contain exclusively sound economic reasoning but is also sure to contain a lot of pure nonsense. Whether or not this nonsense is to be solemnly condemned or is to be tolerantly winked at depends on whether or not one is in sympathy with the fundamental aim toward which the propaganda is directed.

Finally, I sould like to enter into a full-length discussion of that ancient bugbear, the national income, which for generations has been used by liberal economists to scare light-headed social reformers. The main point seems to be that from the point of view of social well-being the national income is so uncertain a quantity and the conditions under which it is earned of such great contributing importance that the liberal economist's confident assertion that such and such a bit, or even program, of "meddling" will diminish the national income need not frighten us very much.

In the foregoing remarks I have openly disregarded the authors' own disclaimer that they are talking only about recovery and not about reform. As Dr. Taylor appropriately remarks and as all the papers themselves show, the separation of recovery and reform in the present state of affairs is impossible. It has been my object to show how under the cover of devoting exclusive attention to recovery the authors have inevitably developed a bias toward reform as well--a bias which is of fundamental importance in influencing the judgment one may form of the economic and social policies of the Roosevelt Administration.