ABSTRACT
In these wonderful days of high-power machinery, labour-saving devices and organization, a small group of intellectual business men, economists and philosophers are advocating increased consumption as the best economic method of combating general trade depression. They argue that it is under-consumption, itself, which is the cause of poverty, excessive competition and the struggle for existence amongst producers. They urge that a higher standard of living all round would eliminate this struggle for existence in the severe form we know it, and that here lies the only road to the physical, mental and spiritual progress of the human race. Whether they are right or not, it is certain that economic pressure is now forcing man to choose between, on the one hand, some system of general restriction of production, and, on the other hand, consuming and utilizing with freedom and regularity all that can be conveniently produced. The latter alternative has been referred to as the doctrine of “Consumptionism,” and to many people appears economically fallacious, basely materialistic and in every way as objectionable as it sounds. Facts have been told us by many practical business men about consumption being the necessary complement to production; and Mr. Henry Ford, in particular, has developed ideas on the same lines, pointing out that improved standards of living and progress are dependent on high consumption drawn from mass production. All this kind of reasoning, however, is so contrary to daily experience in the poorer countries, and to traditional conception in the richer countries, that considerable opposition to it is only to be expected in a world largely ruled by sentiment. The truth is that such opposition is vast and powerful, and, although it misses the point altogether, it cannot be ignored. It comes, not only from the man in the street, but also from the orthodox economist linked to the Victorian era, and even from the Church. It has fallen to the Church, in fact, to produce an eloquent advocate of the general sentiment; for we fi nd no less a person than Dean Inge writing a long letter to The Morning Post, blissfully ignoring the omni-present problems in connection with the necessity of smooth and painless means of adjustment between productive activity and the utilization and consumption of what is produced, and pleading for the precept of St. Paul: “Having food and raiment, let us therefore be content.” The Dean very truly says that we have to balance our account with our environment; that we require to bring what we have, and what we want, into line with
each other; and that we may bring them together either by increasing what we have, which is the wisdom of the West, or by diminishing our wants, which is the wisdom of the East. He tells us that the higher interests of life-art, science, philosophy and religion-should be aimed at, and not mere getting and spending; he warns us against developing tendencies that may end in our recklessly using up the natural resources of the planet, as well as defacing its beauty beyond repair; and, fi nally, he urges that it is desirable and necessary to strike a balance between the ideal of the West and the ideal of the East. All this is just; but we are not told how the producer is going to earn a living in a world of competing producers equipped with powerful labour-saving machines, if it is to become the fashion amongst consumers to be content with “food and raiment.” The question of the determination of market prices-of the basis of the bargaining power of the producer in markets governed by demand and supply-is not mentioned. We are not told how consumers are to determine what constitutes a reasonable balance between the ideal of the West and the ideal of the East. And, assuming that this is successfully accomplished, we still do not know whether producers are to restrict production, and to what extent each one is to do so, or whether they are to resort to dumping abroad regardless of the ideals of foreigners. The point is that without adequate consumptive demand the present system of competitive production breaks down altogether. In a country where there are many idle factories, many full warehouses and a million unemployed, to propose reduced consumption as the remedy is merely comical. But what is the remedy? A consumer might say: “Economy in production, reduced costs, lower prices, increased exports.” But the producers will reply: “Why lower prices? In producing the goods, we pay out their gross money cost in wages, rent and interest, as well as the cost of living of all those who take profi ts or losses in passing them along to market in different stages of production. We reckon that we put into circulation by the process of production the necessary quantity of money to buy all the goods in question without a fall in prices. We cannot produce a greater quantity than you are prepared to buy with the money that our activities put into your hands; and all your economy talk means that you want to force us to sell at a loss. Our reply to you is: Buy all we are able to produce, and you will have a lot and so shall we.” A philosopher, however, might argue that the remedy does not lie either in increased production or increased consumption. “Strike a balance,” he might say, “between the ideals of West and East. Reduce the consumption of the rich, and there will be suffi cient for the consumption of the poor.” To him the producers will reply: “It is immaterial to us who buys what we produce; but, actually, we are able to produce in excess of effective demand, and it is excessive competition for limited markets that keeps most of us poor. Is it suggested that systematic restriction of production must be resorted to? If so, you must allocate the quantity and kind of work to be done by each of us and give us fi xed prices. Only then can we ‘be content.’ ”
When all the producers produce all they can, they are forced to sell at lower prices; when some of them restrict production, they lose business to those who have produced abundantly; and when all of them restrict production, they do make profi ts, but they are abused by the consumers and the money merchants who wail for lower prices and invoke the aid of the law. This is well illustrated by recent history in the rubber world. As the result of free production of rubber caused by the big demand and high prices of 1910, a glut began to manifest itself as soon as the after-war consumptive demand for rubber became normal; and the pressure to fi nd a home for all this rubber became so acute that, in many cases, it had to be literally given away in relation to its cost. In these circumstances it was inevitable that rubber estates should be losing money heavily. Things got so bad that, apart from the general check administered to normal activity on new plantation work, the Stevenson scheme was set up in order to regulate the quantity of rubber thrown on the market by British-owned plantations, in a manner compatible with market conditions. This brought relief to the estates, but not soon enough to enable planters, and induce capitalists, to provide for an eventual increase in the consumption of rubber. Meanwhile, in spite of the cheapness of the article, producers and distributors were refusing to carry any stock and would only deal on a “hand-to-mouth” basis. This sort of thing was bound to end in a shortage sooner or later, and 1925 found manufacturers and distributors desperately short. But when the price started going up by leaps and bounds, everybody wanted to stock rubber; and American manufacturers, who did not buy when the market was weak, started crying for State intervention against the wicked Stevenson scheme and the British profi teers. It is always the same. When the producers restrict production they are anathema; but it is worth nothing that on such occasions, far from any likelihood of a “buyers’ strike,” there is a general scramble by everybody, consumers or otherwise, to buy all they can, more or less regardless of price, for these are occasions when the wisdom of the West is rampant. But let the producer be caught with a plenitude for market, and there will be a reaction towards the wisdom of the East, visible in the market-place as the “buyers’ strike,” and no mercy will be shown to the producer. The truth is that we are all consumers and most of us are producers; and that, under modern conditions, there is normally greater necessity and pressure to sell than to buy. It is certain that, whilst producers or dealers must sell their goods for money, those who have good gold standard money may buy what they like, when they like, or not at all. It is, therefore, quite recognised that buyers with good money have every advantage over the sellers, and that the immediate object of trade is to realise money, in much the same way as the object of a vessel is to bring its cargo into port. Everybody wants to increase his wealth by producing all he dare; but he dare not produce all he can; for often, in spite of the greatest caution, he cannot sell all he produces except at a loss. At the back of the desire to produce and sell there is well-grounded fear as well as ambition. People must produce and sell, and effect an adequate turnover, otherwise they cannot escape the economic millstone that is continuously crushing a certain number of them. On the other
hand, for the individual, there is often a real advantage to be obtained by abstaining from consuming or buying. Hence production, under existing conditions, normally overhangs consumption; hence the economic necessity that demand should be stimulated to balance supply; and hence the call for “Consumptionism” in a country with vast resources at home and abroad. It remains for the philosopher to consider the possible results of the removal of the check on production now exercised by the rich fi nal buyer both abstaining from consuming to the full extent of his income, and waiting for the consumptive demand of others to increase before he undertakes the purchase and operation of new productive equipment.69 The philosopher might argue that over-production and over-consumption would tend towards the exhaustion of the world’s resources, or that over-consumption would bring about the degeneration of the human race; but he would have to remember that degenerates do not shine as producers, and that it is unlikely that they could exhaust anything. On the other hand, he might argue that both the extremes of scarcity and the extremes of plenty have the effect of restricting population and reducing effi ciency in production; that, with the removal of all present and future danger of want for the individual, the fi rst orgy arising from any unlimited abundance would rapidly subside as it became more and more realized that to consume often entailed effort and sometimes certain kinds of losses which were by no means always worth while even when the goods and services used could easily be obtained; and that it is only by this route that the mind of man can rise above mere getting and spending, and direct itself to the higher interests of life.
