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World economy: a reason for optimism

There's a remarkable development unfolding on a worldwide scale, it seems to me, to which little or no attention has yet been paid. Everywhere the demand grows for a decent standard of living -- good housing, useful jobs, enough food, a civilized standard of welfare, and an equally civilized standard of personal liberty. Our world by now is rich enough.

Yet no single country seems rich enough, possibly not even the United States and certainly not the Soviet Union, to support the costs of modern weapons of defense, free education for all, high levels of welfare, and at the same time a high average standard of living and acceptable standards of liberty.

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There is clear evidence of this in, for instance, recent events in Poland. The demand is for both better pay (a reasonable standard of living) and more union freedom. But it will be extremely difficult for the Polish authorities to grant such claims in full, not only because they may appear to threaten the Soviet communist system but because the resources do not exist yet in Poland that could support a higher average standard of living along with current levels of arms, welfare, and bureaucracy.

Events in Great Britain, too, furnish similar evidence, although there's no problem here about individual or union liberties. But a government elected to increase defense spending is going to have to reduce it. All other government spending of course is already being drastically cut. And while the standard of living for the majority in employment or with index-linked benefits may not yet be affected, the average standard is falling, the main burden being taken by those out of work, those on fixed incomes, investors, savers, and the low-paid. The fall results from falling production.

It may be significant that the formerly moribund Campaign for Nuclear Disarmament has suddenly taken on a new lease of life and energy. Along with the precifist idealists, environmentalists, Marxists, Trotskyites, revolutionaries, liberals, and moralists who make up the heterogenous CND there's now a new group of economists who have become convinced simply that the cost of nuclear defense has become excessive.

In the USSR not only are political dissidents more and more vocal but it is becoming obvious that even the present low average standard of living could not possibly be maintained without American wheat, cheap European butter and other foods, and advanced Western technology. Without these things the only alternative if living standards were to rise would be to cut defense spending, reduce the bureaucracy, and vastly improve th eSoviets' industrial and commercial productivity.

For the fact is -- and it is becoming increasingly obvious from the experience of all advanced countries -- that the average standard of living depends on the total output of marketable goods and services. I repeat "marketable."

One knows that this is not everywhere accepted as true. Aren't good social services part of a high standard of living? Yes, of course they are. And defense is imperative. But social workers, soldiers, nuclear physicists, teachers, bureaucrats, hospital staff, and others have to be paid. And when they are, two questions have to be answered: Where does their money come from? And what will they spend it on?

They money comes either from taxation, or from the withholding of higher wages that would otherwise be paid, of from inflationary increases in the total money supply. And it can be spent only on whatever marketable goods and services are being produced.

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This "law" is absolute.There is no way of avoiding compliance with it, not even with the most rigid planning and dictatorship. A dawning understanding of this can be seen in the trends in communist countries as far apart as Hungary and China, where great efforts are being made to increase marketable production and encourage small-scale enterprise.

Personally I find these encouraging developments and a cause for fresh optimism about world economic affairs. Production, in the widest sense of the word, is the basic answer to poverty. And all free or nonproductive services are seent o depend on it. An understanding of this should give a powerful impetus to genuine multilateral strategic arms limitation while at the same time spreading throughout the world the knowledge of the value of "the free market."

Problems of distribution and social justice remain, of course. But their solution, too, depends on adequate levels of production and commerce.

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