The Mixup in Economic Talk

Author(s): Stuart Chase

Source: Challenge, Vol. 2, No. 8 (May 1954), pp. 47-51
Published by: Taylor & Francis, Ltd.
Stable URL: https://www.jstor.org/stable/40716785
Accessed: 17-11-2023 10:10 +00:00

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Challenge

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Could a visitor from another planet find his way between the terms
"socialism" and "capitalism" by watching our economy at work?

The Mixup in
Economic Talk
By Stuart Chase

the laws of thermo-

Stuart Chase, an economist who has
dynamics were developed, been branching out into the study of
many inventors busied themselves communications and of the social
sciences as a whole, is the author of
with perpetual-motion machines. such works as "The Tyranny of
In 1660, the Marquis of Worcester Words" and "The Proper Study of
Mankind:9
contrived a wheel fourteen feet
in diameter, rigged with fortycannot be formulated unless the
sliding weights of fifty poundseconomist takes both psychology
each. Even Leonardo experimented and anthropology into account.
with quicksilver to turn a wheel Thorstein Veblen, Wesley C. Mit-
forever. But by 1775 the Paris chell, John Maynard Keynes, a
Academy of Sciences refused to few others, have been aware of
accept any more schemes for per- this; but most economists have
petuum mobile. Physics had ad- stubbornly held to prescientific
vanced to the point of proving assumptions about human be-
their impossibility. havior. . . .
Unfortunately economics is still Ideologists have had the field,
plagued with perpetual-motion and the average citizen has failed
machines. Every man is still free to get a workable map of thè
to propound his own economic economic territory, either present
plan to save the world. A major or past. With some justice he
difficulty is that economics is so has called economics the dismal
completely interwoven with hu- science. Linguistic difficulties have
man behavior that reliable theory made the map even more inaccu-

Excerpted from "Power of Words," Copyright 1953, 195*, by Stuart Chase.

Reprinted by permission of H ar court, Brace A Company, Inc.

May 1954 47

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rate by personifying abstractions, be unable to make head or tail of
especially in the form of an abso- them. Terms like "Wall Street
lute "Capitalism" opposed to an profiteers" and "Creeping Social-
absolute "Socialism," with no in- ism" can generate plenty of heat
termediate points of view al- but no enlightenment. The world
lowed. . . . of tangible behavior is moving
The war between these two into a new and dramatic dimen-
words is perhaps the greatest sion, which the old words cannot
verbal block in the world today. describe or explain.
Do you devoutly believe in "gov- What, for instance, can the
ernment ownership" or in "free standard theorists, right or left,
enterprise"? No middle roads, no make of the economy of Puerto
compromises are recognized in Rico? I have studied it at first-
this war. Yet the actual space- hand and found a situation calcu-
time world is full of middle roads, lated to drive either a "Capitalist"
halfway measures, compromises, or a "Socialist" to despair. An
whether in the West, or in RussiaAmerican engineer, long in resi-
itself. People in factories, offices,dence, summed it up for me soon
shops, are carrying on day by dayafter my arrival :
in ways which bear no relation to "They haven't any ideological
the two-valued talk. But the talk principles, or if they have, they
cannot fail to confuse their day- don't show. Their only commit-
by-day acts and hinder needed ment as far as I can see is the
corrections. We may blunder intowell-being of the whole island.
them, as we blundered into the They are not tied up in either
"New Deal" reforms. More often Marxian or free-enterprise strait-
we lose our way in a morass of jackets. They can think without
dogma. "Which side are you on?" looking it up in the book; they
asks a left-wing song, and to mil- are flexible and mentally free to
lions of people on either side, thatthink out what needs to be done.
is air that matters. . . . If business can meet a need, fine.
But if business cannot, then let
The closer one looks at economic
the government do it, or a co-
realities today, the clearer it be-operative, or a nonprofit associa-
comes that both "Socialism" and tion. The main thing is to get it
"Capitalism" are old-fashioned done. They have achieved what
concepts, useless to explain what you once called 'ideological immu-
is taking place. An intelligent nity.' "
visitor from another planet would This is the more surprising

48 Challenge Magazine

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because when Governor Luis comes a feeble instrument to
Muñoz Marín came into power in
protect the interest of consumers.
the early 1940s his party was
As the impasse was reached,
frankly socialistic. No good Social-
ist trusts businessmen, any more strange things began to happen.
than good businessmen trust So- The Governor and his economic
cialists. The first reforms were staff, instead of standing on their
along doctrinal lines. Government socialist principles, sold the five
corporations were set up to oper- manufacturing plants to private
ate new projects in both agricul- business. The Ferré interests, who
ture and industry. The object was bought four of them, were the
to shift from a one-crop sugar leading industrial group on the
economy to diversified agriculture island, and had long experience
plus diversified light industry. in dealing fairly with union labor.
It was clear, too, that certain They put the factories on a pay-
essential utilities and services ing basis. The government used
could not be organized at all the $10,000,000 received from
unless government set them up.
their sale to build hotels, factories,
The island government could bor- shops, for lease or sale to other
row money more cheaply in the businessmen. When these proper-
States ; private business feared to ties were sold in turn, the govern-
take the risks. In addition to ment reinvested again - and went
power plants and water systems, on repeating the process as a
five industrial plants were means builtof bringing new industry
and operated by the government -
to the island.
cement, clay, glass, a shoe fac- As far as I could determine,
tory, a paper mill. this move toward cooperation
Before long the program ran with businessmen was the result
into difficulties. Some of the agri- of direct experience; no theories
cultural corporations were badly were involved. The Governor and
managed, and losses continued in his staff did not rush from the
four of the five industrial plants.bosom of Karl Marx to the bosom
Only the cement mill showed a of Adam Smith - after the fashion
profit. One trouble, of course, was
of a number of American intel-
union labor. A socialist govern- lectuals in recent years. No. After
ment is supposed to be on labor's some harsh administrative experi-
side, which gives the unions heavyence, the top command was
leverage in all managerial de- flexible enough to move with the
cisions. Collective bargaining be-facts, while never for an instant

May 1954 49

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losing sight of its goal, the eco- particular time in Puerto Rico.
nomic well-being of the island. After they are fully launched, the
They cared more for Puerto Rico government should not try to
than for dogma. Perhaps some of operate them indefinitely, but
the staff found it painful to dis-should allow business men to have
card their ideology, though no onethe headaches and make the de-
mentioned it to me. Perhaps some cisions. I think the government
retained their fear of "wicked should get out of the municipal
capitalists" and "profiteers." I telephone business, but it is doing
found many of the staff, how- a good job with slum clearance
ever, busily entertaining the and housing. It should provide
wicked capitalists, taking them most of the utilities - power,
around to factory sites, and show- water, drainage, transportation.
ing them how to make more It should build more schools
money. and hospitals but fewer baseball
Under this treatment, local parks. . . ."
businessmen in the island, and
even businessmen from the main- Every modern economy, whatever
land, began to build up ideological the talk, is a mixed dish - with
immunity. They lost their fear of government ownership stewed up
the wicked "State," and came to with private ownership, garnished
look on government men as their with labor unions, cooperative
friends rather than a nest of societies, resale price maintenance
bureaucrats determined to tax laws, and huge nonprofit organiza-
them to death. The remission of tions like colleges, churches, and
taxes on new enterprises for tenfoundations. . . .
years also contributed to a tolerant Fortunately some new economic
point of view. theory is being developed to fit
I asked Luis Ferré, whose firm the new economic facts of middle
had bought the government plants, roads and mixed economies. J. K.
where he thought the line should Galbraith, in his arresting study
be drawn between government and of the American system, American
business. This is his reply: Capitalism, succeeds in bringing
"We can produce cement more map and territory into reasonable
cheaply than the government and agreement. Socialism, far from a
outsell our competitors all over growing menace, is old hat, he
the Caribbean; but the govern- says, while the free market of the
ment must take the risks of laissez-faire classicists is pretty
launching new enterprises well at this
buried under the technology

50 Challenge Magazine

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of mass production and mass dis- ing to set up captive plants ; into
tribution. A monopoly of national pressure from government threat-
power by organized labor is ex- ening antitrust suits; into angry
tremely improbable, especially farm organizations and angry
after the revealing experiences ofunions. If labor leaders play fast
the Labor government in Britain. and loose, businessmen, farmers,
What the United States now and government will combine
enjoys in effect, says Galbraith, against them; and so on, for all
is an economy based on the prin- five power centers.
ciple of "countervailing power," Few Americans understand this
where five great institutions pressure game. It is new, and it
strenuously interact, compete, and does not fit the accepted stereo-
limit each other's ambitions. If types. There is no "side" to be on;
one of them gets too far out in and two-valued judgments give
front, the other four unite to way to a five-valued situation.
drag it back. The five are : The theory of countervailing
1. Big business - primarily power goes a long way to explain
mass production. the economic stability of America
2. Big distribution - the chain in recent years. Older theories, by
stores, mail-order houses, the contrast, could not explain it. Gal-
great department stores. braith has set a pattern of the
3. Big labor- the A. F. of L., kind of mature, objective thinking
d.O., and the Railway Brother- we should expect from our econo-
hoods. mists in the future. . . .
4. Big agriculture - including In the age of the atom, super-
the farm lobby. imposed on the age of the ma-
5. Big government - swollen chine, we need flexibility to sur-
through the advance of technology,vive. There is no flexibility in
and by reason of wars, hot and dogma which says that business
cold. is always "bad," and government
If big business raises its prices is always "good," or vice versa.
too high, it will run into pressureThe crucial question is who can
from large distributors threaten- do what needs to be done. ■
4 11

Déjense Pro
Because the United States has a very rich economy, we can use
indefinitely 15 to 25 percent of the total national production for
defense - if we have to- without seriously affecting our standard of
living. - Twentieth Centwry Fund

May 1954 51

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