An Engineer in Blunderland
The Great God Waste, by Mr. John Hodgson (published by the author at Eggington, Beds., 1933, 127 pages, price 2s. 9d.), is a thoroughly bad book, the effect of which is likely to be the spreading of a vast amount of confusion. It is packed with snippets of information, most of them containing more or less of the truth, but used in a most unscientific way to back up a case which will not stand serious examination. The apparent reliability of the details is likely to deceive the uninstructed reader into accepting the false conclusions without examining them any more critically than the author has done.
He describes himself as a “Scientific Engineer” (his capitals), and claims to have evidence of truly stupendous unused or wasted productive powers which can only be released by adopting a currency scheme which he outlines. He sees more or less eye-to-eye with Major Douglas and the American Technocrats —who are also, be it noted, engineers who have lost their way through superficial dabbling with economic problems.
The essence of his scheme is the same as Major Douglas’s, i.e., that “ purchasing power be distributed as a gift . . . to consumers” (page 49). It is based, of course, on the familiar fallacy that there is an absolute deficiency of purchasing power (i.e., less “ purchasing power ” than there are goods). The idea is that this free distribution will raise the total of purchasing power to a level at which it equals the total of goods, thus enabling production to be increased to any desired level up to the maximum capacity of industry.
Mr. Hodgson is not opposed to capitalism, but only to what he vaguely describes as “Money Power.” For him, as for Major Douglas, the non-banking capitalist only wishes to serve the community “and to produce work that will be worthy of his reputation irrespective of the question as to whether he makes a money profit or not ” (page 32). Unfortunately, however, the wicked banker steps in and will not allow the industrial capitalist to “indulge this instinct.” Of course this is a purely mythical capitalist. The real industrial capitalist is not, as Mr. Hodgson imagines he is, a “craftsman,” except where an odd one is, quite incidentally. He is an investor or is in business primarily to make a profit, and he is willing to lay out his money in any direction, banking, brewing, armaments or anything else, provided that there is the prospect of profit. That is the capitalist system, and Mr. Hodgson’s dream world (or nightmare world) is only faintly connected with the reality.
One flaw in his scheme can be seen from his statement, on page 45, that what we need in order to rid ourselves of our present ills is to go back to “the days of the banks of private issue” when “credit power” was “widely diffused throughout the community.” As we are told on page 29 that the banks of private issue were suppressed by the Bank Charter Act of 1844, this means taking us back to the piping days before 1844. Does Mr. Hodgson then believe that the poverty problem, insecurity, unemployment, foreign investments, commercial wars, etc., have all come into existence only since 1844? Engel’s ”Condition of the Working Class in 1844 ” should enlighten him.
The main weakness of the whole argument contained in the book is that the figures used to show a stupendous increase in the productivity of industry are worthless; and as the whole case depends on them, it falls with them. A typical instance of this “Scientific Engineer’s” slovenly methods is given on page 101. He says: —
“The modern industrial efficiencies are exemplified by . . . brick-making plants which enable one man to produce many thousands of bricks a day.” (Italics his.)
This statement may appear to convey a precise meaning to Mr. Hodgson’s superficial view, but actually it tells us nothing at all about productivity because it does not tell us anything about the number of men needed to produce and maintain the plant. To give an obvious example, a changeover from ten men making 1,000 bricks a day by some laborious hand method, to a system by which one man operates a complicated plant also turning out 1,000 bricks a day, would only represent an increase in productivity if the plant itself, during its lifetime, required for its construction, operation, maintenance, etc., less than the labour of nine men on an average. The employers will be willing to introduce such a plant if they can save the labour of, say, one man out of the ten. The fact that machinery ordinarily does not increase productivity to the large extent supposed is shown by the slowness with which older methods of production are driven out. Often the margin of difference is so small that a slight fall in wages will be sufficient to check the introduction of “labour-saving” machinery. Mr. Hodgson is so busy piling up hundreds of instances of industrial development which he imagines support his case, that he has no time to examine any one of them properly. The real position is that an increase in productivity does take place, but only to a moderate extent in comparison with these fantastic guesses. Increased productivity in any industry cannot be measured by what happens in the last process only, but must take into account the whole of the processes from raw material to finished product, and must include the labour used up in the construction, operation, etc., of machinery.
The fallacy can be illustrated from another angle. From time to time figures are published showing how a boot-maker working a machine can turn out ten or more times as many boots as was possible by hand, or with a less elaborate machine, a few years earlier. These figures are assumed to prove that the productivity of the boot-making industry as a whole has been multiplied by ten, and that the amount of labour required in the making of a pair of boots has been reduced to one-tenth. One man who has swallowed this notion at a gulp is Mr. Johnston, Editor of Forward. He is a supporter of the Co-operative Movement. If the Co-operative Movement and other boot manufacturers can now produce boots with one-tenth or less of the labour required, say, ten years ago, why are they still selling boots at prices which are not much less than formerly? Why are not boots being sold at 2s. a pair.
The same holds good for all the other articles they make and sell and for which a vast increase in productivity has been claimed. (If there had been a vast increase in the productivity of gold-mining this would extricate them from their dilemma, but no such increase is even claimed.)
Mr. Hodgson supplies a still better illustration of his own fallacy. He says that he is engaged in engineering processes the effect of which is to displace labour, and he calculates that he alone has put 20,000 people into unemployment (page 13). He also tells us (page 8) that he is “only one worker, and quite a small worker at that, out of many workers in a world-wide field of endeavour which has for its objective the reduction of industrial waste.”
Now, if Mr. Hodgson, who is “quite a small worker” in this field, can put 20,000 men out of work, some of his engineering colleagues who are really good at their job can no doubt, in his opinion, claim their 50,000 or 100,000 victims. Suppose we take an average of 30,000. Then it only needs ten of them to produce 300,000 unemployed; and fifty of them will explain the whole of the 1½ million unemployed added to the unemployment register during the crisis years 1928 to 1932. So far so good. Mr. Hodgson and forty-nine colleagues are sufficient to explain the whole lot. But what were they up to in the years 1922 to 1928, when unemployment decreased by a million? Were they asleep? And what have they been doing during the past twelve months, during which the number of insured workers in employment is estimated to have increased by over 600,000? Mr. Hodgson has not even begun to understand capitalism and its crises.
His book does nothing to support his view that “specialists” and “experts” are better fitted than other people to handle the poverty problem. On the contrary, it is to be hoped, for the sake of human safety, that engineers do not treat engineering problems in the sloppy, hit-or-miss fashion that so many of them employ when they write books telling us what they think about economics.
The author replies to the review in the August 1934 issue of the Socialist Standard.