This Economic Nationalism: Where Is It Leading Us?
I
WHILE the London Conference staggered on from crisis to ‘adjournment,’ one general conviction that began only as a prophetic and pessimistic surmise has quietly grown to a certainty. Put brutally, it is that — barring a political miracle — the whole world is in for the worst dose of economic nationalism that it has ever seen. Worst, because it will be deliberate; because the tools are at hand to make it more absolute than ever before; and because the conditions are present that will probably make the resulting dislocation of existing national economies more painful than ever before. Mr. Roosevelt has already shown that political miracles are not impossible. But if he is pushed so far along this path that there is no turning back, what effect will this deliberate autarchy for national systems have on the political institutions which we have inherited from liberalism?
There are a number of different sorts of people who are prepared to take a most cheerful view of the prospect of each nation fending for itself in a programme of what might be called, paradoxically, universal isolation. The Saturday Evening Post has been exerting all the power of its most skillful propagandists in playing on the fears of the American people that they are being sold out by a doctrinaire ‘freetrader’ from Tennessee. Without naming names, it is made clear to any patriotic reader that here is a tragic reversal of the old order: a remorseless, free-trade Simon Legree about to sell our poor old unemployed Uncle Tom, still a staunch protectionist, not ‘ down the river,’ but ‘over the water.’ All the bogeys of protectionism have been agitated, and most effectively, to show how the honest American workingman would have to remain forever workless if Secretary Cordell Hull had his way. The most remarkable economic analyses — what one of our most acute critics has called ‘a commercial traveler’s economics’ — have been produced to prove to the lay mind that no part of America’s treasure came from foreign trade: it was all, like a waiting opportunity, to be found on our own doorstep, in that endless storehouse of wealth, the United States itself.
Nor do these efforts lack support from other quarters. It is fitting and natural to find Mr. Garvan of the Chemical Foundation doing a little patrioteering along these lines. The Chemical Foundation, it will be remembered, was Mr. Garvan’s post-war creation to consolidate in the public mind the gains in a national chemical industry which he had been able to engineer as Custodian of Alien Property. The origins of the Chemical Foundation would lead one to suspect, therefore, that all Mr. Garvan’s ideas, both of prosperity and of property, are overcast with the rich emotional hues of nationalism.
But the importance of this propaganda does not depend on its backers. Since the American farmer embraced the tariff, the case for freer trade has seemed hopeless. Nationalism is a good vote-getting lure, and Mr. Roosevelt, a shrewd politician, is necessarily not blind to that fact. Whatever concessions he makes to the school who hold that a restoration of world trade is necessary to national revival, it is certain that he will have to talk in the most nationalist tones in doing so.
The challenge to the ‘economic internationalists’ takes on an air of academic respectability, to add to its political appeal, when the Dean of the Harvard Graduate School of Business Administration joins forces with the advocates of economic isolation for the United States. In a speech which was distributed widely by the patriotic Mr. Garvan, Dean Donham recently set himself to analyze ‘International Idols and National Ideals,’ much in the isolationist vein of his previous writings. Dean Donham wants controlled economics. To him that means national self-sufficiency as nearly as may be, for only inside the nation can planning be effective.
The march of events seems quite likely to bring about the hopes of the economic nationalists of all camps. The question then becomes: What will that state of fact — namely, the practical cessation of the exchange of manufactures between countries which are capable of producing them at any cost — mean to the political set-up of those countries and of the world? And on the economic level will this result, at least for the United States, in a more stable internal economy, without any substantial reduction of living standards? Finally, is it true that nations will go on exchanging basic commodities just the same, since these are raw materials and ipso facto on the ‘free list’ even of protectionist countries?
II
At the outset one ought to note that the doctrine of national self-sufficiency is not as much without the support of academic economists as its advocates seem to think. Dean Donham, for instance, feels, on good evidence from the volume of published work, that Sir Arthur Salter is the common prophet and guide of the academic economists; and it is against Salter’s well-known arguments that he himself is mainly tilting. But he has a doughty enough champion of his own among the economic theorists in Mr. John Maynard Keynes, though it is true that Mr. Keynes has been considered a heretic as much as a prophet by his brethren of the academic robe.
Not only has Mr. Keynes been the enthusiastic partisan of so ‘managing’ the dollar and pound as to raise world prices. In a recent contribution on ‘National Self-Sufficiency’ to the Yale Review, he announced a conversion that is most revealing of what has been gradually happening all over the world. He offers his apologies to Mr. Baldwin for having, in 1923 and later, denounced the Tory policy of tariff protection and inter-imperial preference as merely muddle-headed and stupid. He would no longer charge the Conservative leader with being ‘a victim of the Protectionist fallacy in its crudest form.’
The politician, he confesses, was really guided rightly where the economist erred. By the same sort of instinct, one gathers, which guides pigs to truffles, Mr. Baldwin followed his nose to the right national policy. For, concludes Mr. Keynes, it is no longer in our complicated world of industrial nationalism just a question of producing goods where they can be made most cheaply and exchanging them on that basis. There is also the question of maintaining a socially useful balance of population, of farmers as well as industrial workers, and so forth. There is furthermore the necessity of shielding the great industries of a nation from the dislocations and upheavals attendant upon changes in foreign tariffs and monetary policy. For over these, as England’s painful experience proves, it has no control. Further, there may be a real danger from goods produced by ‘coolie labor’ in modern factories. Japan can undersell Manchester and throw hundreds of thousands out of work. Even in the realm of international peace and security, Mr. Keynes finds, there is more to be hoped from fairly self-sufficient national or imperial systems whose stake in loans and foreign trade has dwindled to a minimum. They will not be so imperialistic in protecting foreign interests. It is interesting to notice that Dean Donham had closely paralleled these arguments for several years in urging his policies on the United States.
This recantation — or, as Mr. Keynes would call it, ‘reorientation’ — is interesting enough if only as showing that at least one economist has become aware that his science depends upon hypotheses which are conditioned at every turn by motives which are political rather than economic. It would be unfair to suggest that Mr. Keynes, who has been right more often than most in post-war prophecies, was unaware of this fact. His past record lends an added interest, as an interpretation of tendency and an apology, to his present restatement of the case for economic self-sufficiency for nations. His views have the greatest practical interest for Americans, since it was quite obviously on the economic theory associated with Mr. Keynes that Mr. Roosevelt acted in refusing to give any comfort to the London Conference about stabilizing the dollar in terms of gold.
The administration has already moved definitely some distance along the road marked ‘Autarchy.’ Mr. Roosevelt did not ask Congress for those blanket powers for tariff bargaining which alone could have been effective in pulling down some of the walls against our exports. The assistance of the Department of Commerce to our exporters, which bulked so large under Mr. Hoover, whether from motives of economy or of policy, seems to be marked for budgetary destruction. If we are to follow this road to the sacrifice of foreign trade and the complete closing of our own market to others, where will it take us? Why, indeed, should we take it? Is it a fatal necessity?
III
As to the necessity of isolation, we are told that it follows inevitably from the present impossibility of foreign trade. First of all, it is commonly held, the breakdown of the gold standard, the continuance of which was a condition of the stability of international trade, is merely symptomatic of the failure of international laissez faire. Now it might be pointed out that what has broken down, contrary to the views of the isolationist school, is certainly not international laissez faire and a free world market; for that hardly existed in fact at any period, and the remnants of what did exist disappeared with Britain’s acceptance of thoroughgoing protectionist tariff policies, after our own Smoot-Hawley folly. What really has broken down was an effort to combine international trade and lending, and the gold standard for exchanges, with an increasing degree of national self-sufficiency. In any event, the facts being what they are, we are told that the cure is more thoroughgoing national self-sufficiency. On that basis we cannot even hold out a promise to stabilize foreign exchanges till we have settled our own domestic difficulties. Mr. Roosevelt appears to have accepted this reasoning.
Where does this lead, and how far? Those who think in economic terms, like Dean Donham and Mr. Keynes, have no doubts that this involves planning in the national or imperial systems under economic autarchy. Remove the control of world prices along with the gold standard, and one must ‘manage.’ But what one may call the Saturday Evening Post school does not dream that this economic isolation will require anything that might be called real state capitalism, much less socialism. This school would allow internal prices to be governed by the purely economic forces of the domestic market, with some aid from statistical forecasting services and the like, and from combinations of producers. This would not require a dictatorship, because it is assumed that within the national system uniformity of monetary policy and freedom of exchange would be assured. Free business once more of restraints on industrial combination, and it will manage itself. It is really only a new version of the Republican Party’s faith, ‘Protect the domestic market, and we will take care of the rest — including prosperity.’ But it is a new version, since it begins to recognize that we cannot at the same time either lend abroad or be repaid for past loans. The administration has taken the matter further by blanket codes under the National Recovery Act, though it still depends on the pressure of propaganda. And it has hardly begun to face the struggle with labor or with the evasions of employers.
Dean Donham has moved several points beyond that. He sees the necessity of more governmental action than tariff walls provide in order to isolate and insulate the domestic producer. He is even prepared to talk of planning, and to contemplate the regulation of ‘home-produced crops,’ apparently along the lines of the present National Industrial Recovery and Farmers’ Adjustment Acts. He is willing to set up a National Planning Board, though he conveniently fails to say just what coercive powers and sanctions he would place in its hands. War measures seem to be in order ‘for the emergency’ instead of ‘for the duration,’ but he obviously looks to a resulting ‘equilibrium’ when these powers will no longer be needed, one which ‘will free the energy and initiative of individuals.’ Apparently one wing of the economic advisers connected with the New Deal rather hopes that ‘recovery,’ once accomplished, can be left alone in this way.
Even Mr. Keynes, who has written a brilliant obituary for laissez faire, still has a faith that economically selfsufficient nationalism may leave some remnants of the old nineteenth-century liberalism untouched. He admits that state planning will become state capitalism, and that the price mechanism will have to be politically controlled. But he still hankers for some sort of economic limits to the ‘managed currency’ of the state. In his recent Road to Recovery he reintroduces, strangely enough, a revised version of the international gold standard. Rather wistfully he looks also toward some lowering of tariff barriers as the condition necessary for the working of his revised ‘gold standard.’ The fact is, as the London Conference has shown, that one cannot have one’s cake and eat it too. Once destroy the stability of exchanges through embracing divergent currency policies, and there is no way to come back to the economic stability of a gold standard except by giving up this divergence and agreeing to limit domestic policy to fit a world market and a world price level. The essential conditions of any workable gold standard lie in renouncing national sufficiency and ‘managed’ price levels.
IV
Here, however, I am more concerned to show, by analyzing the American position, and incidentally the British, that neither Dean Donham nor Mr. Keynes really has the faintest comprehension of what a fundamental change this deliberate economic nationalism will mean to political systems. They both expect representative institutions to survive and constitutional protections for personal liberty to be preserved. Mr. Keynes voices some pious warnings against national ‘silliness,’ too much haste, and against allowing national self-sufficiency to destroy the freedom of thought and the scientific attitude which the old liberalism cherished. With Hitler and Mussolini in mind, and with what he regards as the horrendous example of Russia before him, he inveighs against letting ‘planning’ turn into dictatorship.
Can it avoid this metamorphosis? Is not the very essence of control the ability to coördinate by coercion?
One can, on the evidence available, be assured that the genii of national self-sufficiency, once loosed, are not to be rebottled by any preachments of liberal social ethics. They become identified with a programme and a party that must not be opposed. National prosperity becomes an end in itself. With all the world actuated by similar motives, survival means war measures, war attitudes, suppression, and dictatorship. Since the standard of economic life depends upon the success of state management of the domestic economy, the main function of the state comes to be that of forcing the recalcitrant elements into line. Since it must assure its own control of raw materials, instead of depending upon an accessible world market, it must extend political control over the whole economic system, as Japan has done in Manchuria. One is no longer protected from state force by having price levels left to the general play of economic factors. Prices become the perpetual plaything of politics. The issues involved become too crucial to be left to settlement in the democratic manner of counting heads. Heads must be bowed — or broken.
National self-sufficiency leaves no room for the domestic luxury of liberalism. It means, if this analysis is correct, national state capitalism or socialism. The ruling class may be Communist or Fascist in its class sympathies or its technique. But it will, in either case, certainly enshrine étatisme as a political religion and will tolerate no free critics like Mr. Keynes.
For the ‘home market’ interests, these results would be like digging one’s own grave. The hand of government in business will not — indeed, cannot — stop at occasional guidance and interference. It will necessarily have to take over control along with responsibility for results. Politically, the ‘coördination’ which Dean Donham wishes to see undertaken is very unlikely to be guided by the Harvard Business School. A more active and a more political lot of oligarchs will do the ‘planning.’ And as planning is necessarily a highly centralized performance, and an executive function, if it is to be done efficiently, it cannot be the sport of Congress.
V
What elements in the economic situation of the United States produce this somewhat harsh political forecast? First, the fact that even the United States is far more dependent upon foreign trade and the world market than the usual figures would lead one to believe. It is customary to treat the stake of the United States in foreign trade as very slight, since our exports normally do not run to more than 10 per cent of our per capita production, and were in 1931 only 6 per cent of that production and only 4 per cent of our per capita income. The bulk of the post-war period is dismissed as ‘exotic,’ probably the product of the artificial stimulus of a competition in foreign lending. Without artificial aid, it is asserted, we could not have attained a total foreign trade in exports and imports of almost ten billion dollars a year. Granted an unwillingness to take goods in return for our exports, this thesis is probably true.
However, a little study of this method of reckoning the unimportance and the artificial character of our export trade shows its inadequacy, even its distortion of reality. For a twenty-five-year period our exports increased steadily, running some thirty-four billions ahead of imports. It is true that the war and loose lending were tremendous factors. But national economic growth was the essential cause. Had we been prepared to open our markets more widely, the growth would have been normal.
Nor do the blanket figures for total production reflect anything like the true importance of the change in our national economy that cutting off this flow of exports and imports would mean. Cut off this fertilizing stream, and not only the railroads and transportation system are seriously affected; all the indirect contributors suffer also.
What is more important, once we lose our markets in the growing countries of South America, in the Far East, in Canada, they are hard to win again. Almost deliberately we renounce our natural share in the certain future expansion of world trade. Contrary to the views of the isolationists, the gradual industrialization of the world in the last half century has not diminished the flow of international trade. Rather, it has shifted the character of exports and imports, but tremendously increased their value through the rise in purchasing power that accompanies elementary industrialization in countries like India and China.
The case for exports of manufactures sums itself up about like this: in many fields, such as the automotive and radio industries, and those which have to do with electrical equipment, machinery, typewriters, cash registers, and office appliances, the superiority of the American products had won natural markets. These will in large part be permanently lost if we cut ourselves off from imports from the countries to which we sell. If we will not buy Swiss watches, or the products of the Argentine, we must cease to sell automobiles and machinery. And while the export of manufactured products runs under 10 per cent of our total production of all articles, on many articles it was the profit-producing margin whose loss has meant serious curtailment and even failures. In important lines of machinery it averaged for many years almost half the total production. The dislocation resulting from losing these markets means more unemployment and lowered standards of living.
But it is in the field of commodities that the isolationist arguments are most seductive and most fallacious, since they fail to take into account political repercussions in the economic sphere. The argument is that basic commodities, being the raw material and not the manufactured articles, will continue to flow in international trade without serious interruption. We are told that 65 per cent of our imports remain on the free list. Of course, the higher the tariff, the more nearly this figure might approach 100 per cent, since under complete ‘ protection ’ only free-list goods could be imported. But the protectionist theory for thus closing up our ‘Chinese Wall’ tariff system is that foreign countries must still continue to take such things as wheat, wool, cotton, and metals duty-free from us since they need them for their domestic manufactures. This, of course, is based on an assumption which rising costs in the United States have already rendered untrue for wheat and most of the minerals — that we can still compete in these products.
Yet, there was much truth in this picture so long as we continued to invest capital in countries which could not pay us in goods for our exports. We could always ‘dump’ surplus in order to lend. But that system broke down when it became evident that we should not be able to collect even the interest without taking more goods.
Another factor of major importance has intervened. We were once able to clear through Great Britain, who acted as a sort of general triangulator of trade. To a smaller degree, France and Holland performed similar services. They sold us enough as brokers of services, or in the way of tropical and quality products, to take up some of the strain. And we invested heavily in their industries and in their colonies, which were indebted also to the parent countries, and so helped to clear the balance. But it could never be righted as long as we had an export surplus that not even our hordes of tourists could collect abroad. And when Great Britain began to close up her Empire as best she could, the possibility of anything like general trade triangulation vanished.
Even more unfortunate for the isolationist thesis that commodities will not be affected was the effect of the Ottawa Conference on Great Britain. England did put tariffs on most of the important commodities, and deliberately turned to her Empire in the hope of developing there what she had bought from us. Even where tariffs were not imposed, as they were not for cotton, she has strained every nerve to develop her total needs within the Empire. Egypt and the Sudan are being supplemented by cotton culture in other parts of Africa, in the middle East, and particularly in India. The demand for American cotton in England has dropped until she lags behind Japan and Germany, and will soon take less than half her former share of our crop. When we complete our exclusion of her manufactures, she will be forced to rely on her Empire and on other sources that are even now being rapidly developed. France has just called a Colonial Conference to imitate the British example.
The countries of Europe which have no colonies cannot develop sources of their own, but neither can they so readily pay for wheat, sugar, and cotton from us if we will not trade in return. They are being steadily forced into costly farm production and to the use of substitutes of every conceivable sort. And Japan, who is just beginning her imperial schemes, will follow England toward a self-sufficient Empire, perhaps carrying a large part of China and the Pacific countries in her wake.
We may expect, then, to see a huge staple crop like cotton, of which we export 50 per cent of our production, sadly hurt if we pursue the policy indicated. And the same thing applies to other commodities, though not to the same disastrous extent.
On the other side of the tariff ledger is the American ‘free list’ for imports: it would not be long before this list would be drastically impaired if we were really to ‘protect’ all our own possible producers of commodities. It is equally certain that we should no longer be content to depend on the British and Dutch East Indies for rubber, but would cast about to develop a supply under our own control. The era of ‘direct’ imperialism might well return. A real self-sufficiency could be obtained only in that way.
VI
What would be the economic results?
In the first place, we should have to write off, instead of writing down, the great bulk of our foreign loans, private as well as public. With a policy of anything like reciprocal trading, we can collect the greater part of them. With a policy of economic self-sufficiency, repudiation by the debtor is the only course open. Admitting that we have already, through political mismanagement of the same protectionist sort that saddled the whole world with tariffs, lost the bulk of our war loans, — something over ten billions, — it seems little short of madness to throw after them over fifteen billions (some estimates are nearer twenty billions) of capital privately invested abroad. The total of all our foreign lending is about equal to our national debt at its maximum. We arc invited, in fact, to forgo a sum that would approximately retire the national debt, and the greater part of which is certainly capable of being collected, even under a tariff structure like that of the nineteen-twenties.
But dislocation of a financial character would be less drastic in its results than would the other effects of a steady drying up both of exports and of imports. The estimate of the Department of Commerce that at least 2,000,000 workers were, even in 1932, directly concerned with foreign trade, and that another 1,250,000 depended indirectly upon it, can hardly be controverted. Some very sweeping action by the state would be necessary to absorb into employment the sailors who would be jettisoned, the cotton and wheat growers, the miners, the transport and industrial workers, who would have to look elsewhere for employment.
If we are really prepared to follow the route of a managed, isolated, and self-sufficient economy, we cannot go on forever patching up permanent shifts such as those would mean with ‘ public-works programmes.’ The programme would become so vast that inflation and taxation would destroy or drive away private capital. The state would have to assume ownership and operation; to reorganize on a gigantic scale comparable to that in Russia, and far more complex. I cannot see how the results would be readily distinguishable from those in Russia, since state-owned corporations divorced from the ordinary mechanism of price would inevitably have to reflect social policy in the allocation of workers and of capital. One might hope for more intelligence in the operation of the state corporations, and one could certainly count on starting the experiment farther from scratch than was the case in Russia. But the evils of bureaucracy and the need of an all-powerful state machinery of control would be the same.
Now variations on this theme may hold no terror for Mr. Keynes. But this sort of result is not, I feel certain, what the Saturday Evening Post hopes for. It is perhaps a little sweeping even for Dean Donham, who urges an empirical temper and a proper caution. But the momentum of an economically self-sufficient America, in a world already so inclined, would be overwhelming in that direction. How long our traditional institutions would stand in the face of a public always liable to hysteria in the pursuit of efficiency can only be surmised. Federation would disappear entirely. There would, of course, be struggles with the Supreme Court and with Congress; but an executive who proclaimed a national emergency and the need of undivided counsels and swift action could hardly be balked. Once it became evident that the ability of the government to borrow had vanished, the rest would follow rather swiftly. The certain way for Congress to dig its own grave and to prepare the way for some dictatorial council of national planners is to push forward to an isolated and managed national economy, free of all the checks imposed by the gold standard through world price levels and foreign trade. The danger lies precisely in the political seductiveness of crying ‘Down with international conferences and the tricky foreigners!'
So far Mr. Roosevelt has held his hand, except to indicate that he was not prepared to let the Gold Bloc in London dictate the price levels of stabilization in the United States. If that was strategy to force them to a bolder international programme for raising commodity prices, dangerous as it was, it may have been justified. The tone of his communication was taken abroad rather as an indication that he was unwilling or unable to put limits to the present speculation or the degree of inflation in this country. If that were correct, it would be a calamity, for he would then be forced by the ruthless pressure of the economic effects of such nationalism to adopt the self-sufficient attitude of a ‘planned’ economy.
Recent indications and the need of new financing operations by the Federal Government lead one to believe that Mr. Roosevelt is not unaware of the dangers involved in uncontrolled speculation, based on inflation. But if we cut off our economy from that of the rest of the world, a major check will have been lost.
VII
At the present moment the only hope of saving something from the wreck of the London Conference is to join forces with the British Dominions and the ‘sterling’ countries, who hold a somewhat intermediate position. If England can be brought to support a wisely directed economic as opposed to a purely monetary inflation, through state expenditure as an agreed international policy, central bank coöperation with these powers to hold the dollar and pound at about their present purchasing level in terms of gold would force the gold powers to an eventual stabilization and perhaps to action in the same direction. France has indicated sympathy with at least the programme of public works. Great Britain’s hand, despite the orthodoxy of Neville Chamberlain, Walter Runciman, and Lord Hailsham, may be forced in this direction by India and the Dominions. The alternative of Empire planning runs into Walter Elliot, Minister for Agriculture, and the British farmer at home. France could, in that case, hardly resist the programme of raising prices, which Mr. Roosevelt holds essential. No doubt it is essential, but it must be controlled if it is to be of any use, and it cannot be effectively controlled without the international gold standard.
At the same time, within such countries as accepted this programme, a beginning could be made with really useful tariff bargains. Certainly agreements to examine and revise the crippling abuses of tariff administration are not impossible. We are in a position to make a strong bid for an extension of the Ottawa agreements that would restore our access to the great markets of Canada and the United Kingdom, especially, and to much of the rest of the Empire. With countries on the sterling level and with South America, we are now in a position, through the stimulus of commodity prices, to resume trading, lending, and the receiving of debts. Some domestic management through agreements like that of the wheat-producing countries is required. The N. R. A. has shown a proper concern to get consumers’ purchasing power once more to work. But we cannot, without disaster, attempt to cut ourselves off from the whole world, including our nearest neighbors and our natural customers. Above all, we cannot isolate our price levels from those of the rest of the world without economic dislocation and political absolutism.
The curious attitude of protectionism is that it must have the whole hog — that is, the total domestic market. But that market, which is rigid and even dwindling under the effort to cut it off, expands and fertilizes domestic as well as foreign trade under proper economic conditions. Trade is killed by trying to force uneconomic prices on purchasers. It can be revived by accepting products that cannot be economically produced here.
It would be idle utopianism and dangerous politics to try to remove tariffs wholesale. But considerations of total national advantage instead of merely sectional exploitation are in order. Unless Mr. Roosevelt can make them, we shall lose millions in Canada and all over the world in order to protect thousands in some Senator’s back yard.
VIII
Without regard to the wisdom or the folly of the adventure, only political genius can save us from what might be called the ‘isolationist policy.’ My main concern is to point out not only the economic but the social and political implications of such a policy. A national self-sufficiency, unchecked by the actions and policies of other nations, can only be ‘ managed’ by dictatorial methods. It can, however, be mismanaged either by a dictator or by an untrained bureaucracy, subject to Congressional veering and hauling, and to the pressure politics of Washington lobbies. The dangerous thing is that the failure of economic nationalism, which we have already experienced in a sufficient form for twelve years, produced only the demand for a more deliberate nationalism. Similarly, the failure of meddling Congressional ‘management’ of national interests, or even of the executive’s efforts to escape this meddling, is likely to produce only a hysterical demand for a more dictatorial ‘efficiency’ along the same lines.
It requires longer-run judgments of the effects of policies to sec the necessity to give and take in t he world’s economic life than it does to cry ‘Ourselves Alone.’ The annoying thing is that those are likely to be branded as pro-British or as internationalists who arc calmly arguing for longer-run national advantage; while they are hailed as patriots who, with the air of a boy with the sulks, and simply because we have made the mistakes of youthful inexperience, would have us withdraw from the world and play in our own back yard. This means the sacrifice, mainly to England, of most of the gains in national wealth and international advantage that the war and the years since have brought.
It is, of course, possible that events have already moved too far in the direction of ‘controlling’ domestic price levels, without international coöperation, to leave any valid alternative. That does not seem to me to be true, though the drift in that direction is plainly discernible. It may be, also, that we shall shortly have no real alternative to a bold experiment in a state-planned, self-sufficing economic system, simply because continual interferences with economic factors, which have been cumulative for twelve years, have made an integrated control necessary. I am not concerned here with the purely economic merits or defects of such a system, except to point out the necessary sacrifices and readjustments that it involves. I am concerned, however, to show good reason for believing that such a system is incompatible with the institutions and traditions of political liberalism. It would mean the end of a political era.