The Fruits of Victory. Norman Angell
and on the other a generally increased habit and standard of expenditure, due in part to a stimulation of spending power owing to the inflation of the currency and in part to the recklessness which usually follows war; and above all an increasingly insistent demand on the part of the worker everywhere in Europe for a higher general standard of living, that is to say, not only a larger share of the diminished product of his labour, but a larger absolute amount drawn from a diminished total.
This created an economic impasse—the familiar ‘vicious circle.’ The decline in the purchasing power of money and the rise in the rate of interest set up demands for compensating increases both of wages and of profits, which increases in turn added to the cost of production, to prices. And so on da capo. As the first and last remedy for this condition one thing was urged, to the exclusion of almost all else—increased production. The King, the Cabinet, economists, Trades Union leaders, the newspapers, the Churches, all agreed upon that one solution. Until well into the autumn of 1920 all were enjoining upon the workers their duty of an ever-increasing output.
By the end of that year, workers, who had on numberless occasions been told that their one salvation was to increase their output, and who had been upbraided in no mild terms because of their tendency to diminish output, were being discharged in their hundreds of thousands because there was a paralysing over-production and glut! Half a world was famished and unclothed, but vast stores of British goods were rotting and multitudes of workers unemployed. America revealed the same phenomena. After stories of the fabulous wealth which had come to her as the result of the War and the destruction of her commercial competitors, we find, in the winter of 1920–21 that over great areas in the South and West her farmers are near to bankruptcy because their cotton and wheat are unsaleable at prices that are remunerative, and her industrial unemployment problem as acute as it has been in a generation. So bad is it, indeed, that the Labour Unions are unable to resist the Open Shop campaign forced upon them by the employers, a campaign menacing the gains in labour organisation that it has taken more than a generation to make. America’s commercial competitors being now satisfactorily disposed of by the War, and ‘the economic conquest of the world’ being now open to that country, we find the agricultural interests (particularly cotton and wheat) demanding government aid for the purpose of putting these aforesaid competitors once more on their feet (by loan) in order that they may buy American products. But the loans can only be repaid and the products paid for in goods. This, of course, constitutes, in terms of nationalist economics, a ‘menace.’ So the same Congress which receives demands for government credits to European countries, also receives demands for the enactment of Protectionist legislation, which will effectually prevent the European creditors from repaying the loans or paying for the purchases. The spectacle is a measure of the chaos in our thinking on international economics.[1]
But the fact we are for the moment mainly concerned with is this: on the one side millions perishing for lack of corn or cotton; on the other corn and cotton in such abundance that they are burned, and their producers face bankruptcy.
Obviously therefore it is not merely a question of production, but of production adjusted to consumption, and vice versa; of proper distribution of purchasing power, and a network of processes which must be in increasing degree consciously controlled. We should never have supposed that mere production would suffice, if there did not perpetually slip from our minds the very elementary truth that in a world where division of labour exists wealth is not a material but a material plus a process—a process of exchange. Our minds are still dominated by the mediæval aspect of wealth as a ‘possession’ of static material such as land, not as part of a flow. It is that oversight which probably produced the War; it certainly produced certain clauses of the Treaty. The wealth of England is not coal, because if we could not exchange it (or the manufactures and services based on it) for other things—mainly food—it certainly would not even feed our population. And the process by which coal becomes bread is only possible by virtue of certain adjustments, which can only be made if there be present such things as a measure of political security, stability of conditions enabling us to know that crops can be gathered, transported and sold for money of stable value; if there be in other words the indispensable element of contract, confidence, rendering possible the indispensable device of credit. And as the self-sufficing economic unit—quite obviously in the case of England, less obviously but hardly less certainly in other notable cases—cannot be the national unit, the field of the contract—the necessary stability of credit, that is—must be, if not international, then trans-national. All of which is extremely elementary; and almost entirely overlooked by our statesmanship, as reflected in the Settlement and in the conduct of policy since the Armistice.
2
Britain’s dependence on the production by foreigners of a surplus of food and raw materials beyond their own needs
The matter may be clarified if we summarise what precedes, and much of what follows, in this proposition:—
The present conditions in Europe show that much of its dense population (notably the population of these islands) can only live at a standard necessary for civilisation (leisure, social peace, individual freedom) by means of certain co-operative processes, which must be carried on largely across frontiers. The mere physical existence of much of the population of Britain is dependent upon the production by foreigners of a surplus of food and raw materials beyond their own needs.
The processes of production have become of the complex kind which cannot be compelled by preponderant power, exacted by physical coercion.
But the attempt at such coercion, the inevitable results of a policy aimed at securing predominant power, provoking resistance and friction, can and does paralyse the necessary processes, and by so doing is undermining the economic foundations of British life.
What are the facts supporting the foregoing proposition?
Many whose instincts of national protection would become immediately alert at the possibility of a naval blockade of these islands, remain indifferent to the possibility of a blockade arising in another but every bit as effective a fashion.
That is through the failure of the food and raw material, upon which our populations and our industries depend, to be produced at all owing to the progressive social disintegration which seems to be going on over the greater part of the world. To the degree to which it is true to say that Britain’s life is dependent upon her fleet, it is true to say that it is dependent upon the production by foreigners of a surplus above their own needs of food and raw material. This is the most fundamental fact in the economic situation of Britain: a large portion of her population are fed by the exchange of coal, or services and manufactures based on coal, for the surplus production, mainly food and raw material, of peoples living overseas.[2] Whether the failure of food to reach us were due to the sinking of our ships at sea or the failure of those ships to obtain cargoes at the port of embarkation the result in the end would be the same. Indeed, the latter method, if complete, would be the more serious as an armistice or surrender would not bring relief.
The hypothesis has been put in an extreme form in order to depict the situation as vividly as possible. But such a condition as the complete failure of the foreigner’s surplus does not seem to-day so preposterous as it might have done five years ago. For that surplus has shrunk enormously and great areas that once contributed to feeding us can do so no longer. Those areas already include Russia, Siberia, the Balkans, and a large part of the Near and Far East. What we are practically concerned with, of course, is not the immediate disappearance of that surplus on which our industries depend, but the degree to which its reduction increases for us the cost of food, and so intensifies all the social problems that arise out of an increasing cost of living. Let the standard alike of consumption and production of our overseas white customers decline to the standard of India and China, and our foreign trade would correspondingly decrease; the decline in the world’s production of food would mean that much less for us; it would reduce the volume of our trade, or in terms of our own products, cost that much more; this