The Guardian And Evening Star, with which is incorporated the West Coast Times. TUESDAY, JULY 14, 1931. THE ECONOMIC EQUILIBRIUM.

Hokitika Guardian, 14 July 1931, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. TUESDAY, JULY 14, 1931. THE ECONOMIC EQUILIBRIUM.

The United States has its unemployment problem in very real effect, and in discussing the economic situation of the country, a leading banking journal of New York, goes on to say: If the fundamental explanation of the present situation is that the world equilibrium was disturbed by the war, what reason is there 1 for the implication that the situation constitutes a “breakdown” of the economic order under which all the progress, of the past has been made ? We are moved to the question by this paragraph from a respected source: “Regardless, however, of causes, 5,030.000 able-bodied men with no chance to work, living on the past accomplishments of capital, with the consequent destruction of a large part of our smaller business men and immense human suffering, constitute in themselves a serious breakdown of capitalism. This challenges the best we have in us. How should business respond by plans for the future? I believe the recurrence of such episodes in American life can be prevented.” The characteristics of “Capitalism” are freedom of individual initiative and the right of private property. Have these fundamentals of our civilisation broken down or do they have any responsibility for the present situation? Are we prepared to ■consider the abandonment of either? The • industrial organisation is primarily for - peace time activities; it was forcibly diverted to war time activities with the • results described. The “breakdown” was one in governmental relations, not business \ relations, except as the latter have been disturbed by the interference of war. It does not follow that a remedy for the existing disorder in business is to be found in a . further extension of governmental authority. As for any kind of voluntary control exercised by business itself, certainly it will have to-be of a very tenuous character so Tong as present legislation remains a,s at is. Undoubtedly the tendency in the bus-

iness world is to a closer degree of cooperation, but manifestly that must be a gradual development rather than a, general .(and planned organisation. Business is entitled to be- judged by what it has accomplished for the general walfare in its, own held, whereeach executive has some measure of authority and control. It is quite willing to submit to an examination of an examination of the gains in productivity and the division of such gains as between proprietors, wage workers and consumers. Nothing but such an examination and a. fair judgment upon the showing is needed, to dispel much of the misunderstanding and controversy which exists.* One of the explanations of the business depression frequently offered is that the industries have not been paying wages commensurate with the increased production, or in other words, that production was out-running purchasing power in the hands of the wage-earners. In support of this theory are quoted the figures heretofore given in these columns that in the manufacturing industries from 1919 to 1929, productivity per worker had increased about 50 per cent., while real wages had increased only 27 per cent, The assumptlon is made that the difference be. tween the 50 per cent. and 27 per cent, remained as profits to. the employers. If the wage-earners in the manufacturing industries expended all their wages for the products of these industries andi bought them direct from the factories without any (intervening charges, there would be some basis for this assumption, but of course this is not the case. In fact, the figures are not comparable. Factory - made goods at first-hand prices would bo a small figure in'the total living costs of the employees, and the total of such goods bought by factory employees would be a small port of the factory goods made. Factory' wage earners in 1929 numbered only about 8,550,000, which may be- compared with 41.013,000 total population gainfully employed in 1920, the latest year for which figures ere available. Furthermore, factory-products were in eood demand until the latter part of 1929, when sales began to decline, although wages in the manufacturing industries were still on a rising rather than a falling scale. Therefore it is fair to conclude that the depression did not originate in the wage situation among the factory workers, although loss of employment among those workers after the depression began undoubtedly has been a factor. It is quite certain that the : lo's| ' of purchasing nowey began outsidi'e"of the manufacturing industries instead of in them : nlso that it did not begin with wa go-re duet ions any wl >or o.