Economic Planning and the Tariff/the Open Door at Home

by James G. Smith

[Princeton University Press, $3.00]

by Charles A. Beard
[Macmillan, $3.00]
So far as concerns economic planning, Professor Smith’s book is one of keen analysis and healthy skepticism; and its most solid argument for lowering trade barriers is based on the usefulness of foreign competition in lowering domestic prices set too high by a planned and controlled economy. But one can read the book from end to end without finding any answer or even any reference to the fundamental problems posed by a free international trade. Among such problems would be the following: —
Will not international free trade produce on a national scale the same disasters that our interstate free trade has produced on a sectional scale — such, for instance, as the destruction of a large percentage of the cotton textile industry of New England and its flight to the low-wage labor market of the South? Are we prepared to repeat this experience on an international scale in competition with the Orient instead of with our own South?
Again, England’s free-trade policies in the nineteenth century destroyed her agriculture as a preliminary to fitting her to be the workshop of the world. Now she has fitted the rest of the world to be its own workshop and it no longer needs England. She must make mortal adjustment to the new conditions. Such major readaptations are corollaries of changing world conditions under free trade. Gan they be made safely? Is not some measure of ‘protection’ preferable?
If China and the United States should enter into free commercial intercourse over a generation or two, each tending to specialize in accordance with its natural advantages, il may bo presumed that we should find ourselves furnishing food and raw materials to Lliiua (doubling or tripling her underfed population in the process) while her patient, tractable, skillful, low-paid millions did our manufacturing for us. Would this ’natural’ development be desirable even in peace times? Could it be less than epochlly tragic in the not unlikely event of a war which cut the lines of transpacific commerce?
But if Professor Smith is oblivious of such fundamentals in the field he is exploring, this is by no means true of Dr. Beard, whose hook faces and answers questions of this sort in a realistic and forthright manner. A nation in our position, whose policies are guided by a genuine national interest instead of by worship of principles or subservience to sectional advantage, will, he is convinced, be led by the necessities of the situation to a restricted and controlled international interchange of goods, services, and capital; and the key to that interchange will be found in desired imports rather than in any inherent necessity for exporting a ‘surplus.’ With this conclusion the reviewer is in complete accord.
Dr. Board’s weakness lies in the area of Professor Smith’s strength. He is not skeptical enough of this dream of a planned economy, and of controlled production and consumption. He imputes to finite minds capacities for analysis and effective self-conscious coöperation far beyond anything the human animal has yet displayed —or else he is content with such a simplified and reduced economy as falls far short of our capacities or our deserts.
We do not need to stifle our possibilities to bring them within the meagre limits of a managed economy. Instead, let us look with an appraising eye on the beautifully effective processes of the profit system in its healthful manifestations, and learn to cast out of it the ugly diseases and malformations which destroy its effective action. The profit system may yet become the servant of public interest instead of a blundering and destructive tyrant over it. It can do for us things which planning can never accomplish. A little more study, a little more exercise of both skepticism and imagination, and perhaps even Dr. Beard wi11 see his way more clearly.
But enough of criticism. I am enthusiastic about this book!
Dr. Board’s philosophy is fundamental. He cuts down through all the partial, sectional, superticial, traditional, conventional things to a basic analysis of ultimate national interest. He examines the material and spiritual environment in which we find ourselves. He balances the useful functions of physical and social science, of morals, æsthetics, and will. He outlines the part which each must play in an effective, realistic service of real national interest.
When and if we do set our feet on the forward path, I am sure we shall find that it follows the trail which this pioneer has blazed.