CONTINUED FROM LAST WEEK
Again, the entrepreneur who takes advantage of over-supply of labour, coupled with a short-supply of the commodities which he produces, makes an extraordinary profit or an unearned and unjust gain which he is perfectly entitled to keep as his private property under this postulate.
The extent to which a person may employ his energy and property as he likes depends on the state of supply and demand, which is quite outside his control. And it is a grand deception to suggest that a worker, whose labour-power is so awfully perishable and who, for various reasons, is himself very immobile, can ever contract on the basis of equality with his employer. In circumstances where the demand for land (or for any commodity for that matter under conditions of limited supply) is great, it is absolutely idle to talk of equality of contract as between land-owner and the tenant or the purchaser of land.
Apart from being a contradiction in terms, the postulate of egoistic altruism has never achieved the laudable ends which the formidable Adam Smith, who without using the same terminology was the first proponent of the postulate, ascribed to it. Adam Smith’s invisible hand has led mankind to the realms of incalculable waste and disaster. For every single entrepreneur who succeeds or survives, there are probably more than a thousand or ten thousands that have gone completely under, never to rise again. In other words, the invisible hand is the blind umpire of a fierce and savage struggle in which the casualties in dead far outnumber recorded survivals.
As a result, the entire productive paraphernalia of capitalist countries in Western Europe and America are in the hands of a few families – about 60 in all in the United States of America- who, by a system of highly complicated interlocking companies and directorates, control all the oligopolistic and semi-oligopolistic enterprises in all these countries.
We admit, before the contention is loudly urged, that small businesses do still exist side by side with the giant concerns to which we have just made reference. But it must be conceded, in all honesty, that these are nothing but mere puny satellites in the orbits of the few families who control gargantuan oligopolies.
Because everyone is always pursuing his own self-interest as dictated by his personal greed, and because of the resultant lack of co-ordination among producers inter se, and between producers on the one hand and consumers on the other, the capitalist system, under the guidance of the invisible hand, is always either breaking down or threatening to break down. From the birth of the industrial revolution, in Europe in the last quarter of the eighteenth century, Britain has witnessed more than twenty-five trade cycles, and innumerable strikes and labour disputes and strifes; which means that those countries with which she had trading intercourse were also afflicted by the same maladies to a greater or less extent. As we know, trade cycles are alternating periods of rising and falling levels of economic activity with similar characteristics in fluctuating output, prices, etc., from one cycle to another. A typical cycle consists of a period of expansion, a downturn or recession, a period of contraction, and an upturn or revival. In common parlance, it consists of alternating periods of boom and depression, or of prosperity and slump.
Lord Overstone, quoted by Marshall gives a vivid and accurate description of a trade cycle which cannot be improved upon, in the following words: “First, we find a state of quiescence — next, improvement — growing confidence — prosperity — excitement — over-trading — convulsion — pressure — stagnation — distress — ending again in quiescence.” It is a vicious circle which begins with quiescence and ends with quiescence, begins again with quiescence and ends again with quiescence, over an average period of roughly seven years at a time.
It goes without saying that the periods marked by boom and depression, prosperity and slump, have diametrically opposite effects. The period of boom is characterized by high, hopeful, and confident business expectations and activities, and by full —culminating in over-full — employment of natural and manpower resources. The period of slump, on the other hand, is accompanied by a thoroughly depressed economic outlook, considerable slowing down of business activities, widespread unemployment of manpower resources, and under-employment of natural resources.
Various causes have been suggested to explain the phenomenon of trade cycle. Beginning with Jevon’s crude Sun-spot Theory, there are the Climatic Theories, the Under-Consumption Theory, the Competition Theory, the Psychological Theory, the Monetary Theories, the Over-investment Theories, and Keynes’s Theory.
A careful examination of all these theories reveals that the basic cause of trade cycle is economic MALADJUSTMENT: maladjustment of supply of goods to demand, of supply of money to available goods, and of savings to investment. This maladjustment is recurrent and endemic because of the complete lack of co-ordination: (1) among the producers inter se; (2) between the producers and consumers; (3) between the producers on the one hand and the monetary authorities and banking institutions on the other; and (4) between savers and the institutions which handle savings on the one hand and the investors or buyers of savings on the other.
The injustices which arise from production, exchange, and distribution are too inherent and deep-seated in the capitalist system for such injustices to be eliminated or even satisfactorily minimized.
Land and labour are the primary agents of production. In the beginning, all capital flows from the union of labour with land. This is done by the combined processes of deliberate and inevitable abstentions from consumption. As time goes on, however, more and more capital is produced by the union of labour with land, aided by the agency of pre-existing capital set aside for the dual purpose of assisting these two primary agents in producing more wealth and capital.
CONTINUES NEXT WEEK
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