1930s >> 1930 >> no-307-march-1930
Socialism and the Economic “Experts”
Many people to whom Socialist teachings seem unanswerable and in every way satisfactory, are still reluctant to accept the Socialist case because they cannot believe that Capitalist theories can be unsound and yet be accepted by so many clever men, economists, financial and industrial experts, professors, scientists, and so on. They ask us how we can be so confident that we are right when so many apparently great economists say that we are wrong.
Our answer is two-fold. We claim in the first place that the only final test of a theory is that it should explain the facts and not be out of keeping with the facts. So, for example, we can quite confidently assert that the various theories which try to prove that permanent unemployment is impossible are shown to be wrong by the facts of permanent unemployment. Secondly, we ask you to remember that great reputations can be, to a large extent, created out of very little substance and that universities and such places, being dependent on the financial support of Capitalist Governments, wealthy companies, etc., do not shower honours on and give prominent posts to men whose ideas clash violently with the accepted ideas of Capitalism.
When we come to examine the theories of the learned men with whom we are especially concerned, the economists, we find that there are one or two facts which alone should justify the abandonment of that attitude of worshipping their declarations as If they were above criticism. Firstly, we observe that these “great” men rarely agree among themselves; secondly, their inability to give useful advice in practical problems is notorious; and thirdly, they themselves on occasion admit the unsatisfactory nature of their whole body of doctrines.
We give below two quotations which illustrate these points. The first is taken from a review, published in the New Statesman, of a recent book by Professor Edwin Cannan, who is one of the most famous of living economists. The book is his “Review of Economic Theory.” The reviewer calls Professor Cannan the “Economic Socrates,” and says :—
Let no one, then, go to this Review of Economic Theory in the hope of discovering in it new truth of a positive sort. It may help readers to new truth, but only indirectly, through the exposure of old error. This, however, it achieves with signal success. Professor Cannan has no difficulty at all in proving his case that economic theory has been throughout its life, and is still, in a state of deplorable confusion, and that not only do the text-books talk a great deal of utter nonsense, but even the classical practitioners of the art or science are in a terribly muddled condition. His handling of Marshall is as devastating as his handling of Mill; and his comments on Marshall’s living disciples are mostly to the effect that they have made the confusion worse. This is a real service; for economics stand in real need of an iconoclast, and an economic Socrates may well be the indispensable forerunner of an economic Plato. (The New Statesman, Oct. 19, 1929.)
Our next quotation is taken from “The Founders of Political Economy,” by Jan St. Lewinski, D.Ec.Sc., Professor of Political Economy in the University of Lublin, Poland. The book was published in 1922 by P. S. King & Son, Ltd. :—
The Great War has clearly shown of what little use all our economic knowledge has been where most simple theoretical problems had to be solved. When, for instance, the question if after the war the rate of interest will be high or low became acute, writers began to discuss what capital really is, and each gave a different definition and different solutions of the problem. In Germany economic writers of high standing, as, for instance, the Vice-Chancellor and former Professor of Political Economy at the University of Berlin, Helfferich claimed that Germany can wage war indefinitely because “money remains in the country.” They imagined that money expended in financing military operations would return in form of war loans, and that this circle could last for centuries. Almost all economists in Germany believed in the truth of this absurd doctrine, and only the University of Breslau, which was a little doubtful about it, organised an inquiry on the subject.
All the rich economic literature which had been accumulating for more than a century could not afford a solution of a problem which really belongs to the A B C of our science. Could anything illustrate better the deplorable state of political economy? (Page 167.)
The next time somebody tells you that Socialist theory must be unsound because this or the other professor of economics says so, you may reject that the views of these gentlemen on the subject of Socialism would carry more weight if they had first succeeded in reducing to order the chaotic jumble of theories which make up their own department of study.