Evening star., 1934-08-26
COOPERATION NECESSARY
FOR SUSTAINED RECOVERY
Representation Must Come From In
dustry, Farmers, Workers and Con-
sumers as Well as Management.
BY REXFORD G. TUGWELL,

Qme OF prOOuCLlOn II decided
to maintain, were almost
wholly of private interest. For gov
eminent to express any concern over
them was unthinkable; for a rival
business enterprise to question them
was unnecessary-there were competi-
tive weapons waiting to be used, and
for consumers to object was human
but not serious-the forces of free
competition would soon bring relief
in most cases.
For generations, beginning a little
before Adam Smith, it was the con-
sensus of opinion that it could safely
be left to each individual enterprise
to adopt whatever price and produc-
ton policies seemed best. The public
interest was best served by the free
play of competitive forces. Sustained
recovery was the product of so-called
automatic forces, interrupted seriously
only by war, famine or some other |
natural disaster.
Because a fairly we'll sustained re-
covery was possible at one stage IN
history without resort to intricate. So
cial mechanisms, many people i'm
patiently inquire why history cannot |
be allowed to repeat itself. If free
competition worked once, why won't
1t work again?
Vast Change Necessary.
The answer is, of course, that it
would very likely work again if it
could be given a chance. But to pro-
vide that chance, it would first be
necessary to undo about all that has
{v. IItci ND industrial
organization during the last so years
at least. Those who ask for re-
sumption of free competition, those
who would restore to us this Keystone |
of laissez faire, therefore, must be
prepared to tell the world how to
make 1885 in the image of 1865.
Whether we like it or not, it Is a |
fact incontrovertible that during the
last century the whole character Of
economic organization has changed. A
hundred years ago the unit of busi- |
ness enterprise, as of agricultural
enterprise today, was the individual,
or at most the small company. This
highly individualistic economic activ-
ity had to be co-ordinated, OF course,
to add up to a common good. The |
market place did the co-ordinating |
by providing a place where buying and
selling might be done freely, openly, !
and in ways tolerably sensitive to
shifts in supply and demand. 1t was
far from a perfect system, but 1t met
the pragmatic test: 1t worked. 1t Suf-
feed for our period of territorial ex-
pansion and while our stock OF natural
resources was virginia..
Market Controlled Prices.
There was no control Of price or
production by either private or public
organizations. Rather, the control OF
production and price rested with the
market itself. It was in the market
place that the interacting preSsures OF
producer and consumer resulted IN
price and production policies un-
touched by human hands, so to speak.
Each individual acted in his own in
terest and the conflict Of these inter-
ests brought production and prices for
each product which may not always
have been satisfactory to any one in
terest. but which could be said to be
an acceptable compromise. Control
was neither solely in the hands OF pro-
+ ducers nor solely in the hands OF con-
sumers. If the decision on one day
+ favored one, the arbiter-the market
E place-might be expected to correct
the decision in favor of the other
h within a day or two. Control OF in
s dustrial and agricultural policy, let me
reiterate, then rested in the imperSonal
3 hands of the market and not in the
. hands of any single group of people.
When the factory began to replace
the one-man shop in industry, factory
Z owners had to hire workers. A new
element was injected into the free
market system, the So-called market
s for labor. Wage rates became an ele-
ment of industrial policy and factor
. influencing, and influenced by, the /
S course of prices and production.
But the coming of the factory made
E an even more significant change in
the market mechanism. BY altering |
the individualistic nature OF economic
enterprise, by subjecting the work OF
many wage earners to the direction
and coordination Of boss, or fore
man, the factory system by that much |
reduced the direct and impartial re-
sponse of the market place to an IN
dividual's efforts. The factorys price
and production policies might continue
to be determined impartially by the
market place, but that would not be
true of the many individuals working |
in that factory. For increasing thou
sands the free play of the competitive
market extended to them only in part.
Control Industrial Wealth.
Even this would not be so serious if
industry had continued to consist OF |
small multitudinous units, as farming |
has. But the last 100 years have seen
tremendous concentration Of indus
trial activity into bigger and bigger
units, until now 200 great non-bank-
ing enterprises control over half the
* industrial wealth and approximately
half the industrial jobs in the United
States.
Huge chunks of economic activity
as a result, have been taken away
from the control of the market-place
and put into the control of corporate
administration. In 1929 the Amer
ican Telephone & Telegraph Co. was
co-ordinating the activity of over
400 900 employees. The Great Atlantic
e. Pacific Tea Co. had $4,000 sepa-
rate stores and sold more than tenth
of all the groceries sold at retail In
the United States.
At once the advantages of this shift,
in terms of greatly increased technical
efficiency, must be admitted. Indeed
If we ever are to live in an economy
of plenty, it will be because we nave
learned to turn these efhciencies TO
account socially.
But the disadvantage Of this SHIFT
of control from market-place to cor
porate administrator is very real and
very sharp in an economy which is
neither wholly one thing nor the
other. wherein 6,500,000 farmers have
to sell on a freely competitive basis
while certain groups of corporations
sell at their own terms, and while still
other business men stand midway be-
tween the two extremes.
In this situation the automatic CO.
Nrdiposion of the market nlacp dis