Harnessing the Wild Horses of Industry
A HANDICRAFT culture needs no systematic planning of its economic life. Each local area is self-sufficient. A mechanical culture, such as ours, has no corresponding economic stability if allowed to drift with the winds of free competition and the unlimited pursuit of private profit. A million cogwheels must mesh if food, shelter, and clothing are to be obtained. To-day a great fraction of the gears are out of order. Why should they not be, with nobody making it his business to keep them aligned and oiled? Even in times of so-called prosperity, the creaking is prodigious. Witness the plight of American farmers from 1922 to 1929; the utter disorganization of the textile industry; of bituminous coal.
In these circumstances it is the contention of reasonable men that if we are to elect a mechanical civilization — and we have so voted — we have got to control it. This means centralized planning; the same procedure for the economic region, the nation, perhaps the whole continent, which an efficient manufacturer employs in his own office, whereby he organizes his shop and correlates production schedules to probable demand. We must make the cogwheels mesh — or else retreat, after a frightful cataclysm, to the stability of the handicraft age. Russia to-day is carrying on a magnificent experiment in the purposeful control of the machine. We of the West must follow with experiments of our own, and that shortly. The gods — as this terrible depression proves — are not prepared to grant an indefinite stay of sentence to the policy of muddling through.
A decade ago when I was a young idealist and not a cantankerous critic, I used to forgather with other young idealists, and, with an earnestness almost religious, proceed to the formulation of a master plan for the economic control of seven states in the upper lefthand corner of this Republic. ‘The Northwest Project,’we called it. It took months of the most concentrated labor of our lives. More deplorable still, the results were never, as I remember it, communicated to a person of influence. A peculiar feature of the enterprise was that the plan upon which we toiled dealt solely with economic phenomena containing not one political suggestion; while the young idealists were neither poets nor journalists, but trained technicians — engineers, statisticians, accountants, foresters. We presented ourselves with the problem: How would a group of experts administer a very considerable slice of territory with a minimum of waste and a maximum of well-being for the underlying population?
Was it not charmingly ridiculous, a gorgeous sacrifice of time and effort which might have been so much better employed raising our own reasonably meagre standards of living? Certainly. Yet if the seven states had adopted that programme ten years ago it is safe to say that they would constitute the most prosperous area in the whole world to-day. This is not saying much, but it is saying something.
Before me as I write are some of the old charts and tabulations. How we pored over maps, ransacked the census and files of all the government statistical bureaus! Even the great building where I saw the Russian Gosplan functioning with charts for one hundred and sixty millions of people over more than eight million square miles of territory is less vivid than these yellowing pages. Indeed I can never hear the phrases ‘economic general staff’ and ‘master planning’ that the Northwest Project does not leap into focus. For once I worked on a master plan, and it was as exciting an adventure as ever I had known. For me it is the key to all the current clamor about controlling the machine from a central conning tower. Let me describe very briefly the sort of thing we did, in the hope that I can make the clamor a little more clear to the reader.
I
The seven states of Wisconsin, Minnesota, North and South Dakota, Montana, Idaho, and Washington constitute a solid belt from the Great Lakes to the Pacific. It is an area singularly rich in natural resources and with great possibilities of future development and settlement. The population at the time of our study was approximately ten million. These ten millions, we argued, needed food, shelter, clothing, and reasonable comforts. In what tonnage and quantities? Our first task was to prepare a budget of minimum requirements cast in physical terms, — pounds of flour, pairs of shoes, suits of clothing, tons of fuel, — based on the health and decency schedules of the Bureau of Labor Statistics. These consumable goods were then converted into producer’s goods — bushels of wheat, beef cattle, cotton, wool, lumber, coal, hydroelectric power. We also made side excursions into the labor hours required to convert and distribute these staples.
With requirements in hand, we proceeded to estimate the productive plant and capacity of the seven states, in respect to both developed natural resources, including farm lands, and manufacturing establishments. What is now produced; what can be produced if the present acreage and plant are operated at capacity; what could be produced under a scientific rearrangement of economic factors? In the latter category the chase became — for young idealists — violently exciting. We gave modern engineering a free hand and proceeded to build up the living standards of the heavy-footed Scandinavians of those steppes by leaps and bounds.
Productive powers were balanced against requirements, and surpluses and deficiencies struck. How far was the region self-sustaining? What did it lack, and what had it to exchange? In North Dakota, for instance, there was — and is — a vast surplus of wheat above the requirements not only of the state but of the whole region, offset by a deficiency of lumber and water power. In Washington there was a surplus of lumber; in Wisconsin a surplus of dairy products and a deficiency of wool and cotton. In the whole area no sugar at all was produced. So, item by item, the score of the major staples was told. Into the domain of luxuries and such necessities as drugs and musical instruments we did not go at all.
Finally came the Olympian task of reorganizing the economic framework: building up self-sufficiency to the line of diminishing returns; arranging exportable surpluses against deficiencies on the principle of the ‘balanced load’ and straight-line engineering. We called into being a mining and power centre in the lignite fields of North Dakota; a woolen manufacturing centre in the sheep lands of Montana, where water power was abundant; a cotton centre in Minnesota, supplied by reciprocal arrangement with a great cotton growers’ coöperative in Texas; a whole battery of food manufacturing centres — flour mills, packing houses, butter and cheese factories, canneries — strategically situated in relation to raw materials and consuming areas. We distributed farm products direct to city folks by a parcel-post system saving 65 to 90 per cent of distribution costs. (One of our members was earning his living working out such a project for the City of Washington.) We laid out forest and woodworking centres in Minnesota and Idaho where lumber workers might live with their families in the central town — it was to be a garden city — and cut the surrounding hills forever. (Another member, a forestry engineer, had mapped out a practical plan for a perpetual timber supply at the behest of the United States Government.) Here ran the power lines; here the great trunk highways by-passing urban areas, with never a signboard from end to end; here the airways and there the postal delivery routes; while brigades of snorting tractors hauled giant combines over vast wheat fields coöperatively worked.
This in the last analysis is what master planning means to me. But after a decade of lopsided prosperity, stock-market depth bombs, silly front-page prophecies by men who ought to know better, and general disillusionment, I realize that no such Utopian map-making is initially possible, or even conceivable, in the harsh confines of ‘things as they are’ in these United States. I am confident that the Northwest Project etched the final goal of economic planning, but more pedestrian steps must lead to it — granting that the Republic ever elects to go in that direction at all. With seven million workless men on the streets, overproduction and underconsumption rampant, purchasing power falling ever more seriously behind technical capacity to produce, and costs of distribution mounting steadily in the chaos which stretches between factory door and ultimate consumer; with the waste of natural resources ever more appalling, and the business cycle running unchecked in a wild orbit of its own as remote from human control as a lunar eclipse — the necessity of so electing seems reasonably plain.
II
Of the kinds and varieties of industrial coördination, history furnishes a number of interesting examples. Unfortunately few have functioned, or are functioning, in the age of a billion horsepower. The handicraft exhibits, accordingly, take on a largely academic interest, save for the light they may shed on the capacity of human nature to adapt itself to an economic general staff. By and large, mankind had no serious use for master planning before 1800; nor was the need really acute until the second industrial revolution inaugurated mass production on a grand scale some two decades ago. Before Watt transformed the lumbering engine of Newcomen, men tended to live in self-sustaining villages and small communities the planet over, even as they live in Mexico to-day. It is the intricate specialization and delicate interdependence over an increasing area which create most of our current tribulations. When men in Akron, Ohio, are threatened with starvation if a rubber crop is interrupted twelve thousand miles away, we catch a glimpse of what specialization entails.
Perhaps the greatest exhibit of economic planning in the handicraft age was the extraordinary regime of the Incas in Peru. According to Prescott, this mysterious people organized their Indian subjects and allies into a huge producing machine, functioning for two thousand miles down the backbone of the Andes. The creative arts were encouraged, soils and crops were scientifically administered, irrigation projects were launched on a grand scale, down the length of the Empire ran great arteries of transportation and communication, and poverty was completely abolished. In an earlier epoch, we are told, the Egyptian empire handled the Nile as an engineering unit, permitting no private parties to tamper with the sources of the nation’s food supply. Rome regulated her imperial commerce with a high degree of centralization and extraordinary administrative ability — but took no lasting measures to restrict the latifundia which finally overwhelmed her at home.
In the ancient craft guilds, in the activities of the mercantilists, in the Church itself during the Middle Ages, we find vestiges of deliberate control — some of it of an exceedingly pestiferous nature. Indeed it might not be extravagant to hold that the rise of free competition and laissez faire was hastened by the desire to break away from economic restrictions imposed by central authority. The revolt was healthy, natural, and thoroughly commendable. We must point out, however, that the control against which the young revolutionary capitalists rebelled was in the first place loaded down with traditional imposts, duties, penalties, of the utmost stupidity and unreason, and was in the second place maintained for the exclusive benefit of a small ruling class, chiefly landowners. It is not to be gainsaid, however, that this illustrates one of the grave dangers of master planning. If stupid and greedy men force their way into the conning tower, they may wreck the whole project with bureaucracy and venality.
From about 1800 to 1910, free competition had its heyday, spreading over the domain of the machine like bacteria in a culture. About the only economic functions left to central authority were the issuing of currency, the collection of taxes, and fiddling — most ineptly — with tariffs. Germany under Bismarck was, of course, an exception. She planned an empire at the cost of whatever empires lay across her path. Students of economic control would do well to look into this period — and, while they are at it, into that amazing phenomenon, the industrialization of Japan within a decade or two. Both wagons were hitched to thoroughly malignant stars, in my opinion, but they may contain valuable technical examples, as well as danger signals.
Shortly after the turn of the century it became apparent that free competition was unworkable without extensive modifications which seriously undermined the whole theory — so piously documented by the Manchester School — upon which it was based. Radical philosophers had very little to do with the undermining process. It grew out of the day-by-day exigencies of life and took the form of trusts, monopolies, trade associations, ‘gentlemen’s agreements,’ on the part of the business wing of the community; and trade-unions, state laws for the regulation of hours, working conditions, the employment of children, minimum wages, on the part of the labor wing. Meanwhile the doctrine, hitherto seditious, of certain industries being ‘affected with a public interest’ made hideous inroads into the corpus of laissez faire, taking tangible shape in government commissions to regulate railways, telephones, water, gas, street cars, subways, electric power. In the regulated American telephone system we have perhaps the best example of long-range engineering control which any single industry has produced. In all these developments, despite their utter lack of correlation, we see clearly enough the desire, nay, the stark necessity, of substituting control for aimless drift. The difficulty was — and is — that each functioned in one small segment of the whole interlocked structure and was never headed up into a central plan. The wheat growers of North Dakota might combine to alleviate their difficulties, and the trade-unionists of Seattle, and the business men of Butte; but there was no Northwest Project — at least where the interested parties could see it.
All these movements toward coördination paled into insignificance before the machinery set in operation by the World War. After a year or two of costly floundering, the Allies relinquished free competition altogether and inaugurated the Supreme Economic Council which directed the movement of men and materials over half the world. Traders, middlemen, speculators, crosshauling, the whole tangled fabric of business as usual, were obliterated before an engineering control which articulated supply to demand; and, failing this, the war would most certainly have been lost.
In the United States, citadel of sturdy individualism, the War Industries Board calmly and inevitably undertook the management of three hundred and fifty industries, and practically the entire routing of the supply of skilled labor and essential raw materials. It fixed prices, closed down the luxury trades, speeded munitions with priority orders. Manned chiefly by business executives, it secured the coöperation of almost the entire business world in its programme of high-handed and utterly unprecedented centralized control. Its success is evidenced by the fact that it permitted the removal of ten million able-bodied producers from the industrial machine, — soldiers and munitions workers, — yet so organized the remaining labor supply that the parasites were amply provided for, while the domestic population reached a higher standard of living than it had ever before enjoyed. This it did without taking over a single industrial establishment, or seriously damaging the flow of corporate profits.
With the Armistice, the dollar-a-year men packed their bags, the control nerves were ruthlessly severed, ‘normalcy’ became the slogan of a Presidential election. In due course there followed a dizzy toboggan slide into the abyss, with six million unemployed in 1921, and the complete prostration of agriculture — a prostration from which the farmer has never recovered. His piteous wails have rung in our ears ever since. The Supreme Economic Council faded into a pale ghost known as the League of Nations, publishing admirable reports to which nobody paid the slightest attention. The war demonstrated the incalculable advantages of master planning, but the lesson was never taken to heart. We found a diamond in an ash heap and presently threw it away.
III
On one nation alone the lesson was not lost. In 1922, Lenin inaugurated the New Economic Policy in Russia, and an obscure little bureau was set up as part of the machinery to draft a plan for the unification of electric power. This was whimsical, inasmuch as the young Republic had no electric power to speak of, and no visible capital with which to acquire it. Indeed, after eight years of war, revolution, and marauding White armies, she had very little industrial equipment of any kind. Production had fallen to 20 per cent of the 1913 output. Handicraft economy based on village self-sufficiency alone saved her from utter collapse. A few devoted engineers schemed huge dams and vast power sites, while practical men laughed. But the vision would not fade. Power became the symbol of the dawning religion of communism. Men in ragged blouses, swilling hot tea in glasses, dreamed glittering steel, looping transmission lines, purring dynamos, huge bastions of cement. The plans of the little bureau grew more and more ambitious. Presently it became known as the Gosplan, and, lodged in an old barracks in Moscow, was gulping statistics — incredibly bad statistics — by the carload.
Man is the most adaptable of all the animals. A people hitherto bucolic reached for the machine, for all the machines which James Watt had loosed on the Western World. It grew machine-minded if not machine-mad. Henry Ford became an icon second only to Lenin. And the machine came to Russia — and comes and comes. But it came only as the Gosplan ordered, not helter-skelter as it came to England and Germany and America. The little bureau suddenly found itself at the apex of the economic life of the nation.
The initial objective was to bring production up to the pre-war level. It was accomplished in 1927, the year I visited Russia. The statistics had vastly improved. They had to improve, or the whole planning fabric would disintegrate. I watched engineers and draftsmen working on the first tentative Five-Year Plan. This was to be the next objective — to double pre-war production by 1932. It was another year, however, before the incredible labor of comprehending all phases of economic effort was finally reduced to blueprint, and the relation of available investment to production quotas, to consumers’ requirements, to transportation load, to food supply, to exports and imports, to housing programmes, to available labor, to engineering and management, determined. On October 1,1928, the Five-Year Plan was launched — to the derision of practical men the world around. To-day, with more than half the period elapsed, and the prospect of completing many of the quotas in four years rather than five, the laughing comes from another quarter. We witness the stupefying success of master planning in a nation distinguished since time out of mind for its utter lack of technical progress, its impracticality and mental moonshine. If Russians can plan, one is almost moved to say, so can cows.
Turning westward again, we find, since the war, a wide desert with one or two oases. The State of Arizona has had a planning board since the depression of 1921, due to the persistent vision of a lone engineer, Mr. P. G. Spilsbury. Its function is advisory only, but it has won the confidence of statesmen and business men, and, in its small way, steered the development of the state’s industry, trade, transportation, highways, tourist travel, in an intelligent and purposeful direction. A report dated August 1930 shows that Arizona has probably suffered less from the current depression than any other single state. Governor Roosevelt is keenly interested in a planning project for the State of New York.
To the south, the Republic of Mexico has recently inaugurated a planning commission with mandatory powers. It is working on the division of the country into regions, mapping the best industries for each; on the future development of railroads, highways, airways, and seaports; on extended irrigation and afforestation projects. Here again one man, Mr. Carlos Contreras, has been the driving force. In England, we have had a shower of paper plans for the rehabilitation of that distressed island, of which the latest, dated February 1931, lies on the desk before me. It is a very far-reaching document indeed, aiming to keep capitalism, socialism, democracy, and imperialism all happy playfellows under the same roof. France has coquetted with a planning board since 1925. Its power is growing. France, however, with her self-supporting peasants, is not so helpless before the machines as certain other nations.
Meanwhile the drive toward industrial coördination — as distinguished from master planning — has accelerated steadily in the past decade. Its chief manifestation in the United States has been the merger movement, and in Europe the rationalization movement. The latter is a slippery phrase meaning almost anything, from a Taylor system for loading pig iron to the regrouping of a single industry. Lately the gentlemen engaged in furnishing us with raw resources, both at home and abroad, are moving heaven, earth, and the Sherman Anti-trust Law to secure unified control of the mining of coal, the production of oil, the output of sugar, copper, silver, rubber, zinc, or what you will. The idea of all these perspiring gentlemen, as announced in the public prints, is to eliminate waste and overproduction by restricting supply to demand. Nothing could be more praiseworthy. The only question in these arrangements is whether output is not in danger of being further restricted to what the traffic will bear.
IV
The major historical exhibits have been passed in review. Russia with her Five-Year Plan easily leads the list, closely followed, for sheer technical achievement, by our own War Industries Board. Let us turn our attention to what might be termed the theory of master planning. What area does it cover, what types of economic activity are included, how is the planning machinery set up? The triple aspect — geographic, economic, political — is cardinal to any plan. The variations within these three dimensions are of course endless.
Area may range all the way from the whole planet to a small local community. The Supreme Economic Council of the Allies was the nearest we have dared to come to world control, while ‘town planning’ has been a commonplace in America and Europe for decades. The latter has ranged from vague committees of earnest citizens with no power, no money, and no tangible objective, to complete towns, blueprinted and built from the ground up, like Letchworth near London and Radburn near New York.
The world, for all that it grows smaller every day, is still too big to provide a basis for any plan not frankly Utopian. In Men Like Gods, H. G. Wells has supplied perhaps the most stimulating of the Utopian designs. The World Court, the League of Nations, are the first feeble flutterings in this direction, unless one includes the gyrations of the oil, copper, and silver interests above referred to. We shall probably see more and more of these international groupings.
Town planning, for all its admirable function, is altogether too small to be dignified by the term ‘master planning.’ The latter by definition connotes an attempt to come to terms with the machine. Rome knew town planning, and Athens and Chichen-Itza. To-day we need to plan because of the specialization introduced by the industrial revolution, which, unregulated, leads to overproduction and unemployment. This specialization knows nothing of town boundaries, but operates in units of a continent or more. A continental plan for North America would comprehend from 90 to 95 per cent of the goods and services necessary to self-sufficiency, but here again Canada and Mexico might view coöperation with the Colossus in the middle of the bed not without justifiable apprehension. But a plan for the United States, like a plan for Russia, is not beyond the limits of reality. Both are large enough and sufficiently equipped with natural resources to go far toward stabilization. The point is not so clear for an island like England.
From the psychological point of view, if not that of pure engineering, the best unit is probably the economic region. By that is meant an area which embraces unity of soil, climate, general topography, and racial mixture. New England is such a region, and so is the corn belt, the cotton belt, or the Northwest zone of wheat and timber. The sight of a New England village green after long absence brings a mist to my eyes. This is where I was born, this is my homeland, the place I love. The Alps look cold and bleak beside the White Mountains of New Hampshire. One signboard on the Mohawk Trail hurts me more than a hundred on the Rocky Mountains, while I am content to view Los Angeles as one glittering cosmetic container. Human beings, for all their rushing about at fabulous speeds per hour, are lost without a place to take root in. This does not mean a house so much as waving prairie, high plateau, undulating meadow land, sand and cliff and sea. Regional planning designed to make the home country fairer, happier, more to be loved, is the sort, perhaps the only sort, of master planning which will some day arouse the emotions of the wayfaring citizen. It contains also the competitive element. Our region shall be cleaner, more desirable, than the one next door. To date, this valuable incentive has been in exclusive charge of gentlemen buying by the acre and selling by the front foot.
So much for theories of area. Where shall the economic lines be drawn? A master plan, it seems to me, must include all economic effort which furnishes the ordinary citizen with the necessities and reasonable comforts of a civilized life. This means food, shelter, clothing, public health, education, and the rudiments of recreation — say a great system of national and regional parks. The coördination of a specific industry, — coal, copper, or railroads, — however excellent and useful it may prove, is not master planning. It falls under the head of control, if you will; but master planning must mean correlation, synthesis, to meet the challenge of specialization in the machine age. To control leather, while letting hides run wild on the one side and shoes on the other, lands us precisely nowhere — however it may affect the balance sheets of the embattled leather men. It is possible, however, and indeed necessary, to accent the essential industries and to neglect — beyond the stage of rawmaterial control — the superfluities and the luxuries. Thus wheat and lumber should be in the conning-tower spotlight, while golf balls, cigar lighters, toys, and platinum rings could, for all we care, hover in the shadow. Another distinction might be drawn between the established, old-line industries where technical achievement approaches standard practice, and new, developing industries. Steel is an example of the former, airplanes of the latter. Planning should keep its hands off the new industries so far as is consistent with public health and safety, and let them work out their own salvation in the domain of laissez faire, allowing the profits and losses to fall where they may. Only when the youngster has matured should he be admitted into the control area.
Up to, say, 1920, motor cars were in the pupa stage; now they are fully adult. With four million jobs dependent upon them, overproduction and excess plant capacity have worked frightful havoc, as the mayor of Detroit can tell you in most painful detail. Electric refrigerators are still developing, but radios are reasonably well matured. Already, according to Senator Couzens, their potential output is fivefold the market demand. Some day, somehow, in this connection, we shall have to come to terms with the grave waste and friction imposed by patents and secret processes. In Russia a new invention is immediately put to use over the whole industrial front. The War Industries Board followed the same course. These locked safes, these interminable legal actions, are ripe for master planning.
We turn last to the political area. How shall the planning mechanism be set up? We are forced to admit that history points strongly to the state. The Incas, the Pharaohs, the imperial trade of Rome, the War Industries Board, the Supreme Economic Council, the Gosplan, have all been agencies of the central government, although the War Industries Board was run largely by business men in coöperation with regional groups of business men. In the United States there are more ability and energy in the business community than in any other group. If industry itself chose to take charge of the planning machinery, and really marched on overproduction, unemployment, business cycles, and low standards of living, I for one would raise no objections. Even if profit ranges here and there and from time to time were excessive, one could not complain too bitterly if the main objectives were being achieved. We do not care who controls the wild horses, so long as they are effectively controlled.
All this is rank treason to the young idealist and the orthodox socialist, who have been taught that business men are committed to the longest hours, the lowest wages, the vilest working conditions, and the most gorgeous profit ranges they can possibly enforce. This accusation was largely true up to a decade or two ago when mass production made its real bow. Mass production demands mass consumption. As a matter of cold fact, the ablest business men in America to-day are committed to high wages, short hours, and admirable working conditions. They find that such measures aid mass consumption, provide leisure time to consume leisure-time goods, keep operating costs down. For the first time in history, business men have a genuine stake in the abolition of poverty. This hardly converts them into angels, but their horns and tails have visibly receded. The difficulty is, of course, that they are still animated to a large extent by the lure of profits to-morrow rather than public well-being in ten or twenty years. Master planning means longswing operations like national afforestation, and like conservation of the petroleum supply, primarily in the interest of lubricating oil. Lumber men and oil men have the greatest difficulty in seeing their operations in such terms. Private profit is bound to clash with master planning in many fields, though not necessarily in all.
The control we are considering must pass through two stages — the drafting of the plan, and its administration after adoption. The first is passive, the second active. I see no future for master planning without mandatory powers in the second stage. In Russia, the Gosplan is theoretically an advisory body, but it is incorporated in the extremely powerful department of Labor and Defense; its suggestions are immediately drafted into law and executive action. In America an advisory commission, drafting a plan and submitting recommendations to President, Congress, state and regional authorities, trade associations, labor unions, would undoubtedly be a move in the right direction, but would accomplish, one suspects, little beyond oratory and beautifully bound reports. Witness the New England Council. Somewhere there must be a set of teeth, perhaps not too many teeth to begin with, but at least two or three sound and articulating molars. The War Industries Board, you remember, controlled fuel supply and freight cars, without which most business men are helpless.
V
Master planning, then, means a geographical area large enough to cope with economic self-sufficiency, with due regard for the psychological considerations implicit in regional planning. It means that all essential industries are comprehended, and their interrelations closely followed, failing which the problems of specialization cannot be confronted. It means first a paper programme, and then executive action clothed with more than advisory power. It probably means the state — with as much coöperation from industry as the government can secure. But there is no objection — save from embittered Marxists — to industry’s taking the lead if it has the will and the intelligence.
Probably the most important feature of master planning is the orderly control of new investment. In so-called prosperous years in the United States, we may release as much as ten billion dollars. This sum goes anywhere, on a glorious hit-and-miss basis — into woolen mills when there are already three times as many woolen mills as the market needs, into highly dubious foreign enterprises where the size of the banker’s commission is the primary magnet, into surplus cement plants, into new oil pools when we have a 50 per cent excess of producing wells, into miniature golf courses, into skyscrapers and subways to compound the discomfort and danger of existing in Megalopolis, into land reclamation projects when bankrupt farmers are streaming from the land, into a huge advertising campaign to make us athletes foot-conscious, into developing house lots in the swamps of Florida. (At the peak of the boom there were more house lots for sale in the palmy peninsula than there were families in the United States.) It will be a long day before a planning board can tell a man what he shall do with his surplus funds in this Republic, but at least his sturdy individualism might not be outraged if there were an authority to tell him where his money had a chance of secure earning power over a term of years, and where it would simply be thrown away. The mere knowledge, now unobtainable, of where capital is genuinely needed and where it is not would be a long step forward. A certain amount of capital would have to be conscripted — at fair rates of interest — for great public improvements, like slum clearance, where the profit would mature beyond the patience of the private investor.
The whole wheel of the Russian FiveYear Plan turns on the allotment of capital to new enterprises. This is what balanced economy means. Just enough coal mines and iron mines to supply the steel industry; just enough blast furnaces to supply the rails, structural shapes, tractors, and pitchforks that the plan calls for, year by year. In five years, some thirty billions of dollars will go flooding into mills, mines, railroads, power plants, houses, schools, mechanized farms. Nearly every kopeck of it has been allotted in advance. Russia, of course, has the great advantage of starting from scratch. She had no industrial structure worthy of the name to scrap or remodel; hers was a handicraft economy. She can put her new mills where they functionally belong with an eye to raw-material supply, transportation outlets, markets, as well as labor. In Western civilization we have ever jammed our mills down where labor could be most ruthlessly exploited, on the now-exploded theory that cheap men connote low costs. We have to rearrange a chaos, — imagine trying to unscramble New York City! — where Russia need only build fresh and clean.
We have, however, the advantage of a far higher standard of living to carry us through a transition period. We have the advantage, too, of having already started upon a programme of industrial decentralization, while Russia is heading, mistakenly I believe, for the Pittsburgh ideal of huge, smoky, roaring industrial blood clots. Worshiping the machine, she likes to see her god a towering colossus. She will have to learn better, if she is really to live with the brute.
The second great task of master planning is to bring purchasing power into alignment with the growth of the technical arts, to give citizens enough income to buy back the goods which citizens make. The failure to do this hitherto has been the bitterest paradox of the whole industrial revolution. It means tinkering with the credit system, tinkering with wages, tinkering with hours of labor. The first two must expand, the third contract. Sometimes, in a fit of desperation, one is prepared to cry a halt in the technical arts, giving society opportunity to catch up with its indefatigable engineers, the arts of consumption a chance to draw level with production — but this is begging the question, as well as desecrating all the sacred cows of progress.
The regional conception will not down. The conning-tower captains must leave no stone unturned in an endeavor to make economic regions more nearly self-sustaining, less susceptible to the ebb and flow of outside economic forces, than they now are. Specialization has gone too far for either human comfort or human safety. In our Northwest programme, we aimed at 70 per cent local self-sufficiency. The principle, of course, is that of a wheat farmer with a garden patch. If the crop fails, or the dumpers dump, he can still eat. In the regional idea, furthermore, things of the spirit receive more consideration: the beauty and order of one’s own countryside; a rebirth of craftsmanship aided by cheap electric power; a local literature, a local art.
VI
I have tried to state the major objectives and the major problems of the dawning concept of master planning. The objectives I can see with some lucidity; the problems I know not how to solve. I shall wait as eagerly as you, fellow reader, for the matured judgments of wiser men.
The difficulties are very grave. Primarily we lack, even in this period of profound depression and widespread suffering, the psychological imperative to seize the industrial system and forge it into an instrument fit for human use. As the months drag on, however, the imperative mounts. In another year we may even equal the emotional crisis which drove us almost willingly into the arms of the War Industries Board. Again, we have no means of gauging the resistance of the business world, except that we know it will be violent in many quarters.
Thorstein Veblen once drew an illuminating distinction between ‘business’ and ‘industry.’ The former, devoted to buying and selling, counts that day lost which does not offer speculative opportunity. ‘The highest achievement in business is the nearest approach to something for nothing.’ Business defined in terms of profitable speculation will never tolerate a master plan where security replaces speculation. Industry, on the other hand, is the engineering aspect of economic enterprise. It seeks the balanced load in plant operation, the steady market, the low-price-large-volume ideal; it relies heavily on research, expert management, quantitative analysis. It is profoundly distressed by upheavals beyond its control which throw production schedules out of joint — those same upheavals upon which the speculator thrives.
Is it unreasonable to hope that industry, so defined, will welcome master planning? Certainly if the conning tower is ever a reality it will have to be staffed by men from this industrial school.
The Northwest Project was a dream. Russia is no dream. Day by day her shadow falls sharper, bolder, upon the face of the world. . . .