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ABC of Economics (1933), Part 1

[1]2,306 words

Part 1 of 5

The aim of this brochure is to express the fundamentals of economics so simply and clearly that even people of different economic schools and factions will be able to understand each other when they discuss them.

After about forty pages I shall not ‘descend’, but I shall certainly go into, ‘go down into’ repetitions and restatements in the hope of reaching this clarity and simplicity. 

Chapter I

I shall have no peace until I get the subject off my chest, and there is no other way of protecting myself against charges of unsystematized, uncorrelated thought, dilettantism, idle eclecticism, etc., than to write a brief formal treatise.

1. Dissociations: Or preliminary clearance of the ground.

I beg the reader not to seek implications. When I express a belief I will say so. When I am trying to prove something, I will say so. At the start I am attempting merely to get the reader to distinguish between certain things, for the sake of his own mental clarity, before he attempts to solve anything.

I shall use the term property as distinct from the term capital.

‘Capital’ for the duration of this treatise implies a sort of claim on others, a sort of right to make others work. Property does not.

For example. My bust by Gaudier is my property. Nobody is expected to do anything about it.

My bond of the X and Y railroad is capital. Somebody is supposed to earn at least 60 dollars a year and pay it to me because I own such a bond.

Therefore: it would be possible to attack the ‘rights’ or ‘privileges’ of capital without attacking the rights or privileges of property.

Once again, please do not imply. Please do not think I mean one whit more than what I have written. When I want to mean something further I will say it.

Dissociation 2. Overproduction did not begin with the industrial system. Nature habitually overproduces. Chestnuts go to waste on the mountain side, and it has never yet caused a world crisis.

Chapter II

1. Sane engineers and wise men tell us that the question of production is solved. The world’s producing plants can produce everything the world needs.

There is not the faintest reason to doubt this.

2. As mechanical efficiency increases, the above-mentioned production will require progressively less human time and effort.

3. Sane economy demands that this effort should be, for various reasons, apportioned to a very considerable number of people. This is not absolutely necessary, but it is advisable. It is not necessary, since a few million slaves or temperamentally busy human beings could indubitably do the whole work for the lot of us. They did it for the Roman Empire and nobody objected save an occasional slave.

4. Objections to slavery are in part ideal and sentimental. Openly avowed slavery has nevertheless gone out of fashion.

5. It is pure dogma to assert that an adult human being should be ready to do a reasonable amount of work for his keep. It is empiric opinion that a man who is constantly trying to sponge on others and who is unwilling to do anything whatever conducive to the general comfort or to the maintenance of civilization is a mere skunk and that he ultimately becomes a blasted bore not only to others but to his own blasted self.

6. I assert a simple dogma: Man should have some sense of responsibility to the human congeries.

7. As a mater of observation, very few men have any such sense.

8. No social order can exist very long unless a few, at least a few, men have such a sense.

Democracy implies that the man must take the responsibility for choosing his rulers and representatives, and for the maintenance of his own ‘rights’ against the possible and probable encroachments of the government which he has sanctioned to act for him in public matters.

9. These encroachments in so far as they were political; in so far as they were special privileges handed down from mediaeval chaos and feudal arrangements have been from time to time more or less put in order. Jefferson and John Adams observed that in their young days very few men had thought about ‘government’. There were very few writers on ‘government’. The study of economics is a later arrival. An economic library in 1800 could have been packed in a trunk.

10. Some economic problems could perhaps be considered via political analogy, but a greater number cannot.

Probably the only economic problem needing emergency solution in our time is the problem of distribution. There are enough goods, there is superabundant capacity to produce goods in superabundance. Why should anyone starve?

That is the crude and rhetorical question. It is as much our question as Hamlet’s melancholy was the problem of the renaissance dyspeptic.

And the answer is that nobody should. The ‘science’ or study of economics is intended to make sure no one does.

There is Enough

How are you going to get it from where it is, or can be, to where it is not and is needed?

I spare the reader the old history of barter, etc. Apples for rabbits; slips of paper from the owner ordering his servants to give to the bearer two barrels of beer; generalized tokens of gold, leather; paper inscribed with a ‘value’ as of 16 ounces of copper; metal by weight; cheques with fantastic figures; all serve or have served to shift wealth, wheat and beef from one place to another or to move wool cloth from Flanders to Italy.

Who is to have these Tokens?

Obviously certain men deserve well of humanity or of other limited numbers of men.

Those who grow wheat, those who make cloth and harness, those who carry these things from where they are in superfluity to where they are needed, by pushcarts and airplanes, etc.

AND ALSO THOSE who know where things are, or who discover new and easier means of getting them ‘out’, coal from the earth, energy from an explosion of gasoline.

Makers, transporters, facilitators and those who contribute to their pleasure or comfort or whom it pleases them favour . . . usual sequence of children, if they have or want children, aged parents who have earned their affection.

All of which would seem perfectly simple and idyllic, but then we come to the jam.

Some of these people who work or who could and would work are left without paper tokens.

Someone else has got all the tokens; or someone else has done all the work ‘needed’.

CURIOUSLY ENOUGH, despite the long howls of those who used to complain about being oppressed and overworked, the last thing human beings appear to wish to share is WORK.

The last thing the exploiters want to let their employees divide is labour.

IT IS NEVERTHELESS UNDENIABLE that if no one were allowed to work (this year 1933) more than five (5) hours a day, there would be hardly anyone out of a job and no family without paper tokens potent enough to permit them to eat.

The objections to this solution are very mysterious. I have never yet seen a valid one, though I have seen some very complicated ‘explanations’ about increase in costs.

I would be willing to set it out as simple dogma that the shortening of the working day (day of paid labour) is the first clean cut to be made. I admit it is not the whole answer, but it would go a long way to keep credit distributed among a great part of the population (of any country whatsoever), and thereby to keep goods, necessities, luxuries, comforts, distributed and in circulation.

It is not the whole answer; not the whole answer to the present emergency nor does it constitute the whole science of economics.

Chapter III

When goods are produced, some recognition of that fact must be made, let us say in the certificates of goods in existence.

Can we say that perfect money consists in true certificates of goods extant?

Or must we limit that statement?

Does perfect money consist in a potent order: Deliver these goods?

Or is it a conditional? A compromise between a certificate of existence and a request or a promise of proportional concession?

Or is it an abracadabra? A fake having no strict correspondence with goods extant?


A hard-headed Scotchman has for some years been telling us that money (credit) as we actually find it at present is a more or less irrelevant product; that it acts as a very strong imperative: Have thou the weight of wheat at such and such a place and deliver it!

But an increasingly large proportion of goods produced never gets its certificate. Some fool or some skunk plays mean, out of stupidity, out of fear, out of craven and cringing malice.

We artists have known this for a long time, and laughed. We took it as our punishment for being artists, we expected nothing else, but now it occurs to the artisan, and there being a lot of artisans, clerks, etc., this devilment has led the world into misery. There was room for the artist to dodge through the cracks, a few thousand artists could wangle or make a haul now and then, but the cracks won’t pass men by the million.

So there has got to be some fairness in the issuing of certificates, or at any rate something has got to be ‘done’ to keep people from, etc. . . .

Chapter IV 

CALL IT A DOLLAR, or a quid or ten shillings or anything else you like. If a quid is a certificate of work done (goods produced) and if you produce twice as much as you did yesterday, you have either got to have more quids OR you have got to agree, all of you, that the quid that meant one bushel now means two bushels. That is to say if you, in any sense, mean to play fair.

To put it another way, if money is scarce and an ox sells at four pence you can conceivably have economic justice at four pence per ox. But you can not have social justice at four pence per ox and ten shillings per beefsteak.

If ox is four pence, beefsteak must be some small fraction of a farden.

At some agreed ratio the certificate must function. From 1914 to ’24 bar chocolate remained, as nearly as I can remember, stationary in respect to gold. Nations rose and fell, currencies and commodities became dearer or cheaper. We have had fifteen or more prime years for empiric observation. Nobody remembers the 1830’s (eighteen-thirties), anything men learned then in America has been long since forgotten. The civil war wiped it out.

Chapter V

Inflation and Deflation 

I am all for controlled inflation, if by that you allow me to mean that more certificates must be granted when more goods are produced.

All the inflation wangles and all the official governmental schemes for inflations yet proposed, leave out the question of control. That is to say, the place of control is a dark room back of a bank, hung with deep purple curtains. No one must see what happens. What happened in the Bank of the U.S.A. before Mr. Van Buren set up an Independent government treasury? What happened?

Inflation for the benefit of the few.

Chapter VI

Every economist has to start somewhere. I start on the proposition that every man who is decent enough to be willing to work for his keep or that of his helpless dependents (immature or senescent) ought to have the chance of doing a reasonable amount of work. This is highly American and anti-English.

THE FIRST STEP is to keep the working day short enough to prevent any one man doing two or three men’s paid work.

THE SECOND STEP is the provision of honest certificates of work done (goods produced, or transported, discoveries, facilitations, etc.).

Nobody can be left free to fill in cheques with large figures regardless of services rendered.

Yes, yes, I have a cheque book, but if I get fanciful the bank doesn’t pay for my cheque.

But there be some, alas my brother there be some who can write cheques for great figures and for mysterious reasons. Who, my brother, controlleth the bank?

In one country the east wind, and in another country, the west wind. In England a private firm has for so long done it so quietly that the world has forgotten it. All that our great grandfathers did for the liberation of the American treasury before our fathers were yet in the egg, has been allowed to slip into oblivion, and we are so little taught economics (a dry, dull and damned subject) that there are not ten thousand Americans who are the least aware that a similar movement, a similar step toward liberty or democracy or individual responsibility and state control of the national finances simply never occurred in England. So clever was the British clique, so astute and so prudent that the ‘issue has never arisen’. The American in the street knows that England has a ‘curious old institution called royalty’ (funny old thing out of the poker deck), but he supposes that the two nations have the same fiscal system (that is, if he ever stops to consider it).

 Chapter VII

It may not be a matter of names. A free private company may administer a nation’s credit as justly and with as little graft as a board nominally of government officials, bribed or ‘influenced’ by cliques of friends and acquaintances.

The economist is the man who knows WHAT the board, official or unofficial SHOULD do for the continued well-being of the nation. In other worlds, where and how it should allocate its certificates of work done or its orders to do further work and to deliver such and such products.