TRENDS IN ECONOMIC POLICY

Dominion, Volume 33, Issue 188, 6 May 1940, Page 5

TRENDS IN ECONOMIC POLICY

Condonation Of Monopoly

EFFECT OF REORGANIZING

INDUSTRY

Dominion Special Service.

PALMDRSTDN N., May 4,

The reorganization of large sections of industry and agriculture on a monopoli.-.-tic basis in au attempt to secure a greater measure of stability and ordered progress,> was discussed by Dr. if . M. Smith in a lecture ou "Trends in Economic Policy,” delivered to members of the Palmerston North branch of the Royal Society. The lecture was the first of a series to be given by Dr. Smith on “Alan and His Future.” , „ Saying that no simple diagnosis of our economic anti social ills could be made, Dr. Smith drew attention to the magnitude and disturbing character of technological advances, and to the resulting clash between progress and security. While the vested interests of both capital and labour might selfishly strive to prevent progress and adjustment, there was a genuine ease for controlling the impact of technical advances. That, however, was not what present policies appeared to aim at. .Coincidentally with developments in economic policy, said Dr. Smith, there had been mplitica-t.ion of economic theory. Tlie ideal economy erected by the classical economists on the assumption of free competition had been largely abandoned, and a great deal of recent analysis had been directed to the study of imperfect competition and monopoly, which were now regarded as typical, of the economic order. At the same time, largescale unemployment had. led most economists to adopt a new attitude toward employment and wages. It was no longer the fashion to blame inflexible wage rates , for all our troubles. Nowadays it was recognized that the problem was one of releasing productive forces and of .overcoming the failure of enterprise and investment. Economists now accepted the idea of managed currency and exchanges, and no longer believed that selfregulation was necessarily effective. In the formation of economic policy, the ordinary elector played little part. Policy was determined mainly by pressure groups, which became more active and insistent in times of crisis.. Statesmen were responsive to the political pressures they immediately felt—the, pressures of organized groups. Thus, it was estimated that the disastrous silver policy pursued by the U.S.A, in recent years was determined by less than 2 per cent, of the population of seven of the more thinly-populated States. Economic policy had relatively little connexion with party programmes. These were usually more wordy flourishes, and what they really meant was not known till the partyachieved power. Hence there was a great deal of equivocation in the manner in which economic policy was proposed to the electorate. Dr.* Smith then dealt with some examples of the trend to monopoly, cartellizatiou, or corporativism. The trend appeared to be largely independent of the party colour of particular governments, no doubt -because the fundamental, problems were everywhere the same —by some means or other, to keep the economic system working. Examples of the new order such as the British Iron and Steel Federation. Agricultural Marketing Acts in Great Britain, the Dominions, and the U.S.A., and the operations under the New Zealand Industrial Efficiency Act were described and analyzed. Along with the trend to monopoly' during the past generation. Dr. Smith noted the change in the attitude of the common Jaw toward restraint of trade. Such restraint was now freely accepted by the courts and was reinforced by,- it large measure of statutory' condonation of monopoly. In conclusion, Dr. Smith referred to the' faet that in permitting monopoly -governments had usually required that the industries protected should proceed to measures of reorganization for greater efficiency. However, he said, the industries were usually satisfied with merely maintaining or raising prices, and the degree of reorganization was negligible. It was too early yet to pronounce any final judgment on the working of the new policies, but it was significant that prices were not as a rule reduced, and that the public interest was not immediately and directly considered. A critical attitude was desirable, and greater publicity to the proceedings between interests and governments was absolutely essential.