Economic control

“ The government has pursued a moderate program of economic reform and privatization, resulting in a gradual lifting of state controls over economic activity and a shifting of assets into the private sector. Nevertheless, government control over key sectors of the economy remains strong. ”

“ The workers in a given industry should all be combined in one autonomous unit, and their work should not be subject to any outside control. The state should fix the price at which they produce, but should leave the industry self-governing in all other respects. In fixing prices, the state should, as far as possible, allow each industry to profit by any improvements which it might introduce into its own processes, but should endeavor to prevent undeserved loss or gain through changes in external economic conditions. ”

“ The Government took to itself, by defence regulation, specific powers to requisition stocks of goods and materials, to pay manufacturers on the basis of cost and a fair profit, to license dealers, to enforce priorities of distribution, and in other ways to establish State control over trade. ”

“ Economic conditions require readjustment, important matters of trade must be regulated, vital questions of finance and taxation must be handled, in fact, the whole country must settle down to production, manufacture, distribution of merchandise, and the transaction of the nation’s regular business. ”

“ It is the soberer, less dramatic business of administering resources and plants already in hand, of seeking to reestablish foreign markets for our surplus production, of meeting the problem of under consumption, of adjusting production to consumption, of distributing wealth and products more equitably, of adapting existing economic organizations to the service of the people. ”

“ The mechanical interest can have no aversion to it, when they are informed that an efficient government will protect and encourage commerce, which is the very soul of mechanism. ...Nor can the honest farmer have any objection; the increase of commerce will naturally increase the demand for such articles as he may have for sale; he will be enabled to pay his taxes and, if economy shakes hands with industry, increase his farm and live independent of troublesome creditors. ”

“ Economists argue against government restrictions on trade and manufacture.
The economists wrote treatises on taxation, scattered pamphlets about, and conducted a magazine or two. They not only brought the existing economic evils home to the intelligent reader, but suggested remedies for them. ”

“ The question of the play of economic forces thus generally reduces itself to a problem which may be thus stated: What are the conditions of industrial equilibrium? How must prices, rates of wages, and profit be related in order that the various classes concerned may receive such proportions of produce as are compatible with the maintenance of the existing system of organisation? If any specified change occurs, if production becomes easier or more difficult, if a tax be imposed, or a regulation of any kind affects previous conditions, what changes will be necessary to restore the equilibrium? ”

“ Our courts of justice, our financial institutions, our methods of trade, and our schools of all grades are examples of social harmonies which found their form by long conflict, and settled down to smooth action by custom. The financial institutions and the methods of trade belong to the economic system. The system of production is modern and new. ”

“ The fundamental basis for the maintenance of national standards of living is adequate production, economical distribution, and fair apportionment among the various economic groups which constitute our society. ”

“ Fair exchange above laws.—Under perfect freedom of exchange, the general law of supply and demand already illustrated is more effective than any laws can be in adjusting wages or profit to efforts in production, and in adjusting interest or rent or both to the capital employed or to other means of production controlled. ”

“ Capital offered facilities for the planting of new industries, the development of trade, and the opening up of mines and other natural advantages; so that the means lay at hand for promoting material progress of every kind. Hence new questions of economic policy came to the front. The efforts of traders were no longer confined to retaining exclusive commercial rights; but they began to consider how the various resources within a given area might be developed, so that by the interaction of different interests the greatest material prosperity might be attained in the community as a whole. ”

“ The urgent requirements of our industrial progress in the past may have justified the creation of holding companies, but gross irregularities and gigantic losses which have occurred through them demand definite control. ”

“ Resources of government.—All expenditures of government are as subject to economic laws with reference to consumption of wealth as are those of individuals. Actual result in welfare is the only reason for such expenditure. Hence the same tests of economy are applied. Government makes but few expenditures for the immediate purpose of reproducing and increasing wealth. So far as its investments sustain productive industry, and the products of that industry enter into the world's market, they are subject to the same economic laws of supply and demand that govern all production of wealth. ”

“ Under the rule of an unrestricted commercial intercourse throughout the world, the principle of supply and demand would control the movements of commerce without the aid of legislation; and, when once fully established, it would give stability and security to production everywhere. The products of the world entering into commerce would localize themselves where they naturally belong—where most could be produced with the least labor; and, population obeying the laws of equalization, would adjust itself to the demands of the respective interests of productive labor. ”

“ There may be a serious question as to the wisdom of many of those devices to control production, or to prevent destructive price cutting which many business organizations have insisted were necessary, or whether their effect may have been to prevent that volume of production which would make possible lower prices and increased employment. ”

“ I saw a business system which had grown up under free competition and equality of opportunity passing into trusts and other combines derived from the acquisition of lands containing the best supplies of coal, iron, oil, and other important raw materials, supported by railroad and banking connections and by tariffs directed against outside competition. ”

“ What the state can do is something which an instinctive judgment of the people is impelling it to do; namely, to adjust rates directly and bring them gradually toward the standard to which competition, if it were working as it elsewhere works, would automatically bring them, namely, that at which wages and interest are fully covered. A surplus above these outlays could always be temporarily secured wherever a special economy had been effected, and the source of legitimate profit would be open to carriers as it is to producers generally. ”

“ Thus it proposes that the control of industry should be in the hands of the producers, and not, as at present, in the hands of consumers through capitalists catering for their custom, or through co-operative societies of consumers, or through the State acting on behalf of citizens who are consumers. ”

“ The Economic Function.—The nation has an economic function. It is its business to encourage trade by means that seem most likely to help, whether by subsidies, tariffs, or expert advice; to protect all producers, distributers, and consumers by just laws and tribunals, so that unfair privileges shall not be enjoyed by the few at the expense of the many, and to provide in every legitimate way for the spread of information and for experimentation that agriculture, mining, and manufacturing may be improved. ”

“ By protective duties and bounties on exportation, by subsidies of all sorts to manufactures and national navigation, by the acquiring of transmarine colonies, by the creation of privileged commercial companies, by the inspection of manufacturing processes, by the perfecting of means of transportation and the suppression of interior custom-houses, every state strives to increase its means of production, to close its market to its competitors, and to make the balance of trade incline in its favor. ”

“ This monopoly of money has also given, to the holders of it, a control, so nearly absolute, of all industry—agricultural as well as mechanical—and all traffic, as has enabled them to plunder all the producing classes in the prices of their labor, or the products of their labor. ”

“ These economic laws of production are modified by the different stages of this form of production. But generally speaking, the entire period of civilization is dominated by these laws. To this day, the product controls the producer. To this day, the aggregate production of society is managed, not on a uniform plan, but by blind laws, that rule with elementary force and find their final expression in the storms of periodical commercial crises. ”

“ Trade had developed under the new rule, and had expanded with improved means of communication. Capital had begun to accumulate, and the moneyed classes were in favour of a government that would support public credit and refrain from extortion. The mass of the people were contented, prices being cheap, wages on the rise and employment brisk. ”

“ Every practical economic problem that confronts us calls in some degree for the exercise of state activity. It is necessary for us then, if we are to render sound judgment on these questions, to have a clear opinion as to the proper sphere of government action, as to how far the State should interfere in the economic activities of private individuals. We cannot do better than to state first the main functions of a modern state. The modern industrial system, as we saw in the first section, is based upon certain fundamental institutions—personal liberty, competition, and private property. ”

“ The state must counteract numerous market failures , provide some public goods, establish and run institutions, tutor everyone, baby-sit venture capitalists, enhance innovation, enforce laws and standards, maintain safety, attract foreign investment, cope with unemployment and, at times, establish and operate markets for goods and services. ”

“ They are pre-eminently qualified to stimulate a brisk traffic in goods under conditions hitherto determined by natural economy and both are significant in economic history as mile-stones along the route of rapid dissolution of old economic organisations, of social crises and of the development of modern conditions, that is to say of the development of commodity economy to begin with, and further of the production of capital. ”

“ PRODUCTION.
§ 1.⁠But money, no more than commodities in general, has its value definitively determined by demand and supply. The ultimate regulator of its value is Cost of Production.
We are supposing, of course, that things are left to themselves. Governments have not always left things to themselves. They have undertaken to prevent the quantity of money from adjusting itself according to spontaneous laws, and have endeavoured to regulate it at their pleasure; generally with a view of keeping a greater quantity of money in the country, than would otherwise have remained there. ”

“ The degree of protection which will be required for domestic industry beyond 1842, depends upon the reduction of wages, the accumulation of capital, the improvement in skill, the protection of machinery, and the cheapening of the price, at home, of essential articles, such as fuel, iron, and so forth. ”

“ Combinations of capital organized into trusts to control the conditions of trade among our citizens, to stifle competition, limit production, and determine the prices of products used and consumed by the people, are justly provoking public discussion, and should early claim the attention of the Congress. ”

“ Under the power to regulate commerce, they assume indefinitely that also over agriculture and manufactures, and call it regulation to take the earnings of one of these branches of industry, and that too the most depressed, and put them into the pockets of the other, the most flourishing of all. ”

“ But if, on the other hand, growth in the supply of money does not keep pace with the economy's current production, then prices will fall, the nations's labor force, factories, and other production facilities will not be fully employed, or both. ”

“ Such a plan must include the right of the people to avail themselves of those methods of combining capital and effort deemed necessary to reach the highest degree of economic efficiency, at the same time differentiating between combinations based upon legitimate economic reasons and those formed with the intent of creating monopolies and artificially controlling prices. ”

“ The stability of trade, the money value of every description of vested interests, in fact, the industrial, commercial, and financial welfare of the country, all are directly involved in the rapid manipulation of such vast sums. ”

“ These three things, natural resources, labor, and capital must be brought together, furthermore, and kept working in unison. This is where organization, the fourth factor in production, comes in. It borrows the capital, buys the raw materials, sets the labor to work, and markets the products. Government is not commonly looked upon as a factor in production, but it ought to be. Without the protection and regulation which government affords we could not carry on production at high efficiency. ”