The capitalist system

CONTINUED FROM LAST WEEK

Rent and Price Controls: Again, in order to relieve the burden of the working class, and to prevent the making by capitalists of excessive, unearned, and unjust gains in the face of scarcity, some governments have occasionally instituted rent and price controls by pegging or freezing rents and prices at certain levels.

But the forces of supply and demand have constantly refused to obey any laws or regulations which seek to set any limit to their normal, natural, but cruel operations under conditions of short-supply of houses and goods in the face of increasing demands. At any given time, there is a point at which the Demand and Supply curves meet. This is the point of equilibrium at that given time; and the precise and inexorable price, at that given time, is indicated at that point at which a line, drawn from the point of equilibrium parallel to the horizontal quantity axis, m~ets the vertical price axis. Any rent or price fixed below this point will not be maintainable, simply because it is not in strict accordance with that which is dictated by the forces of supply and demand.

No wonder, then, that those governments which, in peace time, have attempted rent and price controls have recorded nothing but uniform failure. If houses and goods are in short supply, there is only one answer to the problem: to build more houses and produce more goods.

In some instances, rent and price controls have been accompanied by rationing. Except in war time, or in times of grave emergency, rationing has never been tolerated by the generality of the people. Everyone – even the working class, in the pursuit of his self- interest, believes he can fend for himself, and do much better than the State essays to do for him by rationing.

But since more profits are made under conditions of scarcity of houses and goods than under conditions of plenty of these commodities, it is in the interest of the capitalist that scarcity should pjevail. It is true that some States have entered the field of housing by building houses for low-income workers. It must be stressed, however, that such States have done so only falteringly and half-heartedly, and never in a big and conscientious way. Reason: the capitalists who are in control of power, though obliged by the forces of public opinion to do something about and pay lip-service to it, never in their heart of hearts like the policy of cheap houses for all. And so the shortage of houses and goods – particularly of houses – continues, with unpleasant consequences for all concerned.

 

Public Utilities and Social Services: Public utilities such as elect ricity, gas-works, water supply, telecommunications, and railways require heavy capital to get them started at all. They also require a very large number of consumers to make them viable and profitable. As a result, they are not amenable to any form of sane or sensible competition. For certain, those who engage in any competition in these fields can only end up in destroying one another; and while they last, they will disgracefully and woefully fail to provide dependable services for the people. Whoever goes into any of these essential enterprises, therefore, must either have monopolistic control or, in combination with others, oligopolistic control. On the other hand, if permitted by the State, private monopoly or oligopoly in the provision of any of these highly sensitive and socially indispensable amenities will amount to a dastardly surrender of the consumers to the rough mercy and ruthless exploitation of the producers. In such a circumstance, the prices of these utilities might be so high that only a limited number of people would be able to afford them. For all these reasons, therefore, it is the practice in almost all the countries of the world for many public utilities to be provided by the State, or some of its agencies, at prices which are well within the financial capacities of most of the working class.

For instance, in many under-developed countries, public stand-pipes are provided from which the ordinary man in the street, who cannot afford to have water installed in his premises, gets a regular supply of good and potable water. When and where this is the case, the taxable population is made to pay a per capita water rate. Social services such as sanitation, hospitals, and health facilities, education, and the care of the infirm and handicapped, are palpably unprofitable and, in any case, require too much expertise and personal attention and devotion on the part of the proprietors to make any of such enterprises viable at all, let alone profitable. For these reasons, these services have been absolutely shunned by the capitalists and left severely to the State which, because of its subservience to the capitalists, is, in advanced countries, only recently awakening, and in developing countries, still about to awaken to its imperative and inalienable responsibilities in these matters.

At this juncture, it must be observed and emphasised that the success of the State, in the fields of public utility enterprises and social services, is a pointer to what it is capable of doing in other spheres of social activity.

Planning and Control: It is now recognised by practically all economists, and by all the Governments of the world, that economic forces must be controlled and channelled, at least to some extent. Various methods have been adopted to effect the desired control. Some of these methods amount to direct control and others to indirect control. In some countries these direct and indirect controls have been given the fascinating name of PLANNING, after the fashion of the Soviet Union which first introduced comprehensive periodic economic planning. We will now consider some of these methods.

In the first place, monetary and budgetary controls are now a common and permanent feature of the economic activities of all the governments of the world.

CONTINUES NEXT WEEK

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