ECONOMIC POLICY.

Manawatu Standard, Volume LX, Issue 132, 4 May 1940, Page 12

ECONOMIC POLICY.

ROYAL SOCIETY LECTURE. At the meeting of the Palmerston North branch, of the Royal Society on Friday evening Dr. W. M. Smith delivered the first of a series of lectures on “Man and his Future,” taking as his subject in the series “Trends in Economic Policy.” Ho discussed the reorganisation of largo sections of industry and agriculture on a monopolistic basis in an attempt to secure a greater measure of stability and ordered progress. Though no simple diagnosis of our economic and 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 i and security. While some vested interests of both capital and Labour might selfishly ’ strive to prevent progress and adjustment, lie said, there was a genuine case for controlling the impact of technical advances. This, however, was not what present policies appeared to aim at. Coincidentally with the foregoing developments in economic policy, said Dr. Smith, there had been modifications of economic, theory. The 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, large-scale unemployment had led most economists to adopt a new attitude towards employment and wages. It was no : longer the fashion to blame inflexible wnge rates for all our troubles. Nowadays it was recognised, said the lecturer, 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 self-regulation was necessarily effective. In the formation of economic policy, said the sneaker, 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 j they immediately felt—the pressures, of organised groups. Thus, it was es-' timated that the disastrous silver j policy pursued by the United States in ! recent years was determined by less than 2 per cent, of the population of seven of the more thinly populated States. Dr. Smith also pointed out that economic policy had relatively little connection with party programmes. These were usually mere wordy flourishes and what they really meant was not known until the party j

achieved power. Hence there was a great deal of equivocation in the manlier in which economic policy’ was proposed to the electorate. The lecturer dealt with Some examines of the trend to monopoly, enrtellisation, 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 snme, namelv, by some means or other to keep tho 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 United States, and the operations under the New Zealand Industrial Efficiency Act were described and analysed. Along with the trend to monopoly during the past generation, Dr. Smith noted the change in the attitude of the common law towards restraint of trade. Such restraint was now freelv accented bv the courts and was reinforced by a large measure of statutory condonation of monopoly. In conclusion, -Dr? Smith referred to the fact that in permitting monopoly governments had usually reouired that the industries protected should proceed to measures of reorganisation for greater efficiency. However, the industries were usually satisfied with merely maintaining or raising prices and the degree of reorganisation 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 direot* ly considered. A critical attitude was desirable and greater publicity to the ( proceedings between interests and governments was absolutely essential. |