International Economic Disintegration

Chapter IX: Account of the Post-War Development

CHAPTER IX ACCOUNT OF THE POST-WAR DEVELOPMENT

BEFORE starting to discuss the all-important question of present-day agricultural nationalism in industrial countries, it will be best to define our position in regard to the whole enquiry. It is the purpose of this enquiry to give a morphological and causal interpretation of the total process of international economic disintegration and to derive from it some indications for a constructive programme of alternative policies. The preceding chapters gave first a description and definition of what is meant by international economic disintegration (Part I), and then an attempt was made to explain one after another the working of the principal causes of that process; in Part II, the socio-political disintegration of world economy; in Part III, the non-economic aims of economic nationalism, with special reference to the military aspect of economic nationalism. We have now reached the point where we must determine the part played by the agricultural nationalism of industrial countries, and thus analyse a cause of international economic disintegration which, many think, eclipses all others in importance.

Agriculture in general is so much a special sector of economic life that we very often have the highly unsatisfactory situation that the general economist deals with agricultural questions in an off-hand manner and without due regard to the special nature of agriculture as distinguished from the more familiar sphere of industry and commerce, while the agricultural economist tends to view all problems more or less exclusively from the angle of agriculture, without paying sufficient regard to the broader aspects of economic life. The one, very often, knows too little about agriculture; the other too little of general economics. Therefore it seems advisable to open this part with a short survey of the special position of agriculture in the modern market and money economy, a position determined by the peculiar features of agriculture as a branch of production and a mode of life.

The first point to be stressed is the singular character of agricultural production, in that it is, throughout, an organic process in which nature plays the predominant part. However important the part played by man in applying labour and capital, he cannot get away from the decisive influence of such natural factors as climate, the physical-chemical conditions of the soil and the peculiarities of organic life in general. It is this salient point which determines a number of peculiarities distinguishing agriculture from industrial production; the limits set to mechanization, division of labour and use of machinery; the constant need of soil preservation by a complex combination of measures; the ever-present tendency toward diminishing returns; the irregularity and precariousness of its output; the unchangeable rhythm of seasonal or longer production periods; the difficulties of storage; the usefulness of combining different lines of agricultural production horizontally or vertically; and the tendency toward a lower optimum size of the unit of production than exists generally in industry. All this also explains the well-known fact that there are very narrow limits to the specialization of agriculture, and that, where those are ignored, there ensue serious consequences which force such excessive specialization to be abandoned. In this respect, it is particularly instructive to contrast the development of the European and the colonial type of agriculture. “Whereas the European type, especially as represented by the traditional peasant farm,1 developed out of the historical type of the primarily self-sufficient farm which comprised all kinds of production and for this reason only gradually came to lay stress on specialized money crops, the colonial type was based from the beginning on the demand of big markets for special crops. Consequently, the colonial type has become representative of a kind of farming which is highly specialized and therefore almost totally dependent upon the market for its special products.

This specialization, along with the large supply of the proper soil in those overseas countries, made it possible to develop a highly mechanical technique of agricultural production, which was largely inapplicable to the European type of farming and which, therefore, made it difficult for the latter to compete with the former in the products in question. The European type, on the other hand, was forced by tradition and the need of highly intensified agriculture to perfect the development of mixed farming, and to preserve the fertility of the limited soil by the rotation of crops and the extensive use of animal manure and artificial fertilizers. This development of the European type makes it quite clear that intensification of production does not lead to more, but to less specialization, involving as it does the necessity for combining crop cultivation and live-stock farming, for extending crop cultivation to a greater variety of plants, and thus for establishing a complex balance of production within the farm itself. This greater complexity of intensive production leads, at the same time, to a higher degree of economic self-sufficiency for the farm on the one hand and, on the other, to an increase in the quality and value of the products sold on the market. Moreover, since the greater variety of production brought about by greater intensity also leads to a better balance of natural and economic risks, this type of farming proves much less sensitive to crises and cycles and much more resistant to economic shocks than the highly specialized and more extensive colonial type of farming, the existence of which depends almost entirely upon the price of its marketed products.

These two types, then, represent methods of farming which in many respects are totally different. It has to be observed, however, that the difference has become much smaller recently and will become still smaller in the future, the more it is realized that the colonial type has been highly speculative and soil exhausting and that, if it is to continue, it must adopt more and more of the features of the European type of farming. This only testifies to the fact that agriculture, however mechanized and industrialized, must in the end acknowledge the peculiarity imposed upon it by the laws of nature and organic life.

The second point to be kept in mind with regard to the special character of agriculture is the peculiar nature of the social conditions of agricultural production and supply. The great number of production units (farms), the special mentality of the agricultural producer, the complex nature of the process of agricultural production, the relatively long periods of production, and a number of other factors, result in the fact that agricultural production tends to be highly irregular and does not lend itself to rational control and swift adaptation to changed conditions. For these and a number of other reasons the different elements of the cost of production are usually less elastic in agriculture than in other industries. All these facts explain the well-known experience that, in times of change, adjustment takes place in prices rather than in output; that agricultural crises are mostly processes of very painful and long drawn-out depression; that, in those periods, elasticity of supply may easily become inverse, and that the most elastic element in this situation remains the standard of living and the endurance of the farmer and his family. Unemployment; closing-down of factories; cartels and trusts; advertisement and high-pressure salesmanship; price stabilization by restriction of output carried through by the producers; sudden changes in management, organization and technique of production; horizontal or vertical combinations of enterprises; intricate financial manœuvres and the floating of stocks and bonds—these and a host of other phenomena familiar in the sphere of industry have usually no parallel in agriculture.

A third point to be considered is the peculiar character of the demand for agricultural products. In general, it is relatively inelastic with regard both to income and to price elasticity. It must not be forgotten, however, that in this respect important differences exist between the different groups of agricultural products, especially between staple products like wheat and other cereals and those of higher quality and value like meat, dairy products, eggs, fats, vegetables, and fruits. Whereas the elasticity of demand for the former group is, indeed, very small, it is quite considerable in the case of the latter. This is a fact which can hardly be stressed enough and one which must be kept in mind for later consideration. But the fact is so well known, and has been studied lately in such detail, that there is no point in going into it here more deeply.2 This much is clear: the co-existence of relatively low elasticity and high irregularity of supply with a low elasticity of demand for many important agricultural products, is bound to lead to large fluctuation of prices and thus to make agricultural production and marketing a special problem of economic policy, a problem which does not exist in the same form in the sphere of industry.

There is another point which must be mentioned in this respect, because it has some bearing on the present situation and future trends of agriculture. It concerns the shifts in demand which are likely to concur with the industrialization and growing urbanization of a country. There are three phases in such a development: a first phase in which the growth of industrial centres leads to a strongly increased demand for staple products (cereals, potatoes, &c.); a second during which the change of nutrition habits imposed by urban life and the special food requirements of the industrial worker shifts the demand from the coarser to the finer staple products (e.g., from rye to wheat) and from the cheaper to the more valuable animal products; a third phase in which a further refinement in nutritive habits changes demand definitely from the staple products to those of high quality which, owing to their richness in vitamines and other ingredients, are sometimes called “protective foods.”

A fourth point, which explains the special position of agriculture in modern economic life and is closely connected with the other three, is that agriculture has its own peculiar problem of credit, as well as specific ones of ownership, succession and land tenure. The tendency towards mortgaging the farm in the acquisition of ownership by purchase or succession and towards overvaluing it in times of prosperity or real estate speculation, the danger of short-term credits (especially in the commercial form unsuited to agriculture), the usual lack of working capital on the part of the farmers, the ever-present economic and natural risks in agricultural production which are not easily mitigated by insurance, the difficulty of settling over-indebtedness by orderly bankruptcy and subsequent change of ownership and / or management, the lack of easy access to the central money and capital markets and other factors are apt to involve agriculture again and again in serious over-indebtedness, which aggravates agricultural crises in the most dangerous manner and frequently calls for special intervention.

There is a fifth point which requires to be mentioned, namely, that agriculture, in addition to the aforementioned difficulties, has also to contend with a special labour problem. Inasmuch as the existence of the rural proletarian is, for comprehensible reasons, even less attractive than that of the industrial proletarian, as agricultural work is not only for the most part strenuous, but also unevenly distributed over the seasons, and as agriculture cannot hope to compete on equal terms with the industrial labour market, it finds difficulty in securing hired labour on suitable conditions and in the necessary quantity. The drift to the cities, especially in times of industrial prosperity, has become a phenomenon familiar to all industrial countries, and it is rare for those who desert the land to return to it during a subsequent industrial depression. There is, therefore, likely to be a constant drain on the labour reservoir of the open country—unless forms of agriculture can be developed which will make the life of those who work on the land less proletarian in character.

As the sixth and last point mention should be made of the sociological peculiarity of agriculture to which we have already referred several times. With due regard to the difference between the European and the colonial type of farming, it may be said that—in the former more than in the latter—agriculture is not only a business like any other, but a mode of life and a type of existence to which the farmer is bound by more than mere considerations of profit and into which people are “born” perhaps more than into any other field of production. This also explains why agriculture is so much characterized by traditionalism and conservatism, and why the agriculturist—especially if he happens to belong to the peasant type—sticks to his soil even under almost unbearable conditions of life and work. It further explains why, in agriculture, selection among producers is less intense and less likely to eliminate the unfit than in industry, so that we find here an unusually wide range of skill and success and, accordingly, a greatly varying level of subsistence. Instead of a profit and money economy, agriculture, especially in the European peasant farm, is largely a “want and surplus economy.” Then, there is also the special mentality of the farmer, which characterizes the problems of rural education, of rural community life, and of the professional and economic organization of agriculture.

All these special features—which by no means exhaust the subject—must be kept in mind if one is to understand the recurrence and the special character of agrarian crises and cycles, and the peculiar place of agriculture in the development of occidental capitalism during the nineteenth and twentieth centuries. It may well be asked whether agriculture is not generally handicapped in sharing the economic advantages of this development, and how far it really fits into this economic system. Without answering these questions on the present occasion, it may safely be said that, with the exception of some relatively short periods, the agriculture of industrial countries has, under capitalism, always been more or less a child of worry giving rise to special problems with which agricultural policy has had to cope. In the past, all kinds of solutions of this problem of harmonizing agriculture with capitalism have been tried, but it must be said that at the present moment we are, perhaps, still further than ever from any definite and reasonably satisfactory solution, although it is to-day more important than ever to find one.

The problem with which we are most concerned in this connexion is that of agriculture’s share in the process of the international economic integration of the past and in that of the present. As for the past, it is clear that the growing importance of international trade in agricultural products, based equally on the growth of population in the industrial countries and on the extension of colonial agriculture overseas, has been one of the most essential elements of that scheme of international division of labour, in accordance with which world economy developed in such a stupendous fashion, though it would be wrong to regard the world economy of the past as merely, or even predominantly, an international exchange of industrial against agricultural products, instead of a mutual exchange within the industrial sphere itself. If, however, we want to go beyond such trivial statements and give a detailed picture of agriculture as an element of the complex structure of world economy, it must be realized that we are facing a highly intricate problem. To understand this, the reader must be referred to a previous chapter (Part I, Chap. III), where a distinction has been drawn between the quantitative and the qualitative aspects of international economic integration and disintegration. Thus, if we want to define the past or present function of agriculture in the structure of world economy, it is not enough to make statistical measurements of international trade in agricultural products as a percentage of total world trade, of total production or of consumption of the agricultural products in question. To do this is not altogether unimportant and far from easy, but what is wanted in addition is a study of the qualitative-functional relationships as exemplified by the part played by agriculture in the multilateralism of the world economy of the past and in the present tendency toward bilateralism, in the relatively steady character of world trade in the past and in its more erratic character to-day, in the interdependent and intercommunicating character of world economy before the Great War and in the present trend toward compartmental development and formation of economic blocs. The complex repercussions of agricultural changes on world economy and of changes in world economy on agriculture must be disentangled. Though some preparations for undertaking such a study have already been made, it is not possible at this juncture to do more than state the problem as such and to underline its importance.

These considerations lead us to the central problem of the probable place of agriculture in the causation of the present process of international economic disintegration. It is common knowledge that, in the agricultural sphere of world economy, important things happened during the ’twenties which prepared the breakdown of the ’thirties. In large sections of agriculture, especially in the production of cereals and cotton, an acute depression had started long before the outbreak of the industrial depression, and many have adopted the view that it was just this concurrence of a more or less cyclical industrial depression with a long agricultural depression which explains the intensity and the obstinacy of the general depression of the ’thirties. It is an undisputed fact that the way in which the agricultural policy of important industrial-import countries responded to the agricultural depression with protective measures of growing ruthlessness, had a share of the responsibility for the dislocation of world trade which, in its turn, was bound to react further on agriculture; and there are even a few authorities who put most of the blame for the breakdown of world economy on the agricultural nationalism of the industrial countries.

Though all these facts cannot be denied, it is still an altogether open question what relative weight should be given to them and in which direction the causal threads really run. It is not to be wondered at, therefore, that we find a variety of theories and causal interpretations which conflict with or supplement each other. While a survey of these theories cannot be given here, we venture to give a tentative sketch of the most probable way in which the different elements may have worked together. It is unnecessary to say that such attempt at causal interpretation is highly necessary, though open to serious divergences of judgment.

To begin with, the combined effect of the Great War, speculative extension of the areas under cultivation, a number of technical advances in agriculture and possibly of some amount of underconsumption in large parts of the world, resulted at an early date in serious overproduction in certain lines, especially in wheat and cotton. At the same time there was, in the industrial countries on an agricultural import basis, an intensification of agriculture up to and even beyond the pre-war level. This development was furthered by the resumption of agricultural protectionism, which was intensified the more the tendencies toward overproduction in the agricultural-export countries and the cost-decreasing effects of the new techniques of production made themselves felt on the world market. It is important to note that these happenings were, in the beginning, almost exclusively (cotton excepted) confined to cereals, and more especially to wheat.

This progressive agricultural nationalism of the industrial countries was tantamount to an attempt, carried through with a good deal of ingenuity, to shift the full burden of the world’s agricultural overproduction—as far as it existed at that time—to the agricultural surplus countries. This policy was very tempting, since the idea, however dubious, suggested itself that a country on an agricultural import basis only had to shut the door in order to protect itself against the impact of agricultural overproduction. The very fact that these countries were on an agricultural import basis seemed to make it just as reasonable as easy to use protection to secure an equilibrium of their national agriculture, in the midst of a world agricultural depression, and so let the agricultural-export countries stew in their own juice. In addition to this, there was an obvious lack of any acceptable alternative policy, so that agricultural nationalism appeared the only reasonable way out. Without opening the question of guilt and responsibility, there is no denying the fact, however, that this policy of shifting the burden of agricultural overproduction to the export countries only, was bound to lead to the most serious repercussions on all sections of the national economy and world trade.

In the agricultural export countries the result of this was partly that they further extended their staple production by still more rationalization and mechanization, by subsidies and valorization schemes and by endeavouring to counteract price reductions by an increased volume of sales; partly a change from staple production to the production of more refined foods, with the result that the depression spread to this sector of agriculture too (e.g., the development of dairy farming in New Zealand to the detriment of Denmark, Holland and similar countries); partly that the agricultural countries further industrialized themselves, and partly a sharp reduction in the total purchasing power of the agricultural population which, in its turn, largely contributed to the international collapse of credit in industry.

In the industrial import countries the chain of effects consists of (1) a contraction of general purchasing power due to the industrial depression (which, as we saw, was much aggravated by the repercussions of agrarian nationalism on the agricultural countries), (2) a diminution of the general purchasing power available for high-grade foodstuffs because of the relative increase of the prices of the staple foodstuffs, (3) a subsequent depression on the markets of the high-grade foodstuffs, which were not originally affected by the agricultural depression, and (4) an adverse effect on the cost of production of those high-grade foodstuffs, since the grain protection made fodder more expensive. This chain of effects made it increasingly difficult for the producers of high-grade foodstuffs, in the industrial countries which practised grain protection, to compete with countries like Denmark or Holland which, on the base of free imports of fodder, had specialized in the production of high-grade foodstuffs and under the influence of drastic cuts in the prices of imported fodder and of growing competition from overseas in the high-grade foodstuffs, were already drifting into overproduction in this branch of agriculture. The result, therefore, was that in the industrial countries on an agricultural import basis, the agricultural depression spread from cereals to high-grade foodstuffs, a development which could be observed particularly well in a country like Germany.3

In this situation, these industrial countries were only following the line of least resistance, when they extended their policy of intense agricultural nationalism from cereals and other staple products to high-grade foodstuffs, a tendency which became more and more marked from the end of the ’twenties onward. In following this course, however, they were embarking on a policy which was bound to lead to a host of unforeseen complications and to dangerous repercussions on the widest scale. It is impossible on this occasion to study these repercussions in detail. Let it suffice to say that the point had now been reached where the traditional methods of tariff protection no longer seemed adequate, so that a new and powerful machinery of protective intervention had to be built up to deal with the new situation—a development for which Germany is again the most interesting and important example. In this latter country, particularly, this new development of agricultural nationalism proved an especially crude interference with the old multilateral network of world economy, since those neighbours of hers like Holland, Switzerland and the Scandinavian countries, were most important buyers of her industrial products and purchased these to an extent in excess of their exports to that country. This was another reason why this new course of agricultural nationalism was bound to lead to great difficulties and complications in commercial policy, especially as the more drastic methods of protection (import quotas, exchange control, &c.) conflicted with the most-favoured-nation clause, thereby causing much friction and resentment. Thus the snowball grew until finally those countries, which specialized in the production of high-grade foodstuffs, felt compelled to adapt their economic policy to changed conditions by themselves having recourse to agricultural nationalism and planning, and thus departing from their traditional liberal policy. As they are losing their markets for high-grade foodstuffs in the neighbouring industrial countries, they are now turning to a policy of increased staple production and also of industrialization. It can hardly be denied that England’s definitive turn toward protectionism and the Ottawa treaties contributed to this development.

The foregoing tentative picture of the intertwined causes and effects gives a groundwork on the basis of which a discussion of the questionable points could be conducted. Hard as it is to see how the active and important role of the policy of increased agricultural nationalism in European industrial countries like Germany could be disputed, it would surely be an over-simplification to let the matter rest here, instead of explaining the reasons behind the growth of agricultural nationalism in Europe. In this respect, special emphasis should be laid on the great speculative extension of grain cultivation to the semi-arid areas in the United States, Canada, and South America which, while being one of the principle causes of overproduction in cereals, was driven much beyond the point at which the initial low cost of production could be maintained over a longer period, since this expansion of cereal production brought with it a rapid exhaustion of the soil.4 This development is typical of the sudden and largely speculative increase of production which occurred generally in this sphere of the colonial type of agriculture after the war; and viewed from this angle the growth of agricultural nationalism can be conceived, if not excused, as the outcome of the clash of two types and conceptions of agriculture, i.e. the highly capitalistic, speculative and industrialized type on the one hand and the traditional European one on the other. Consequently, the tension will slowly diminish as the difference between these two types decreases for the reasons given at the beginning of this chapter.

There are a number of other moot questions contingent on the problem of the course of agricultural depression. Of these, those of the monetary and financial causes of agricultural depression, of the consequence of good crops occurring at certain periods, of the effect of the slackening rate in the growth of populations and of the change in nutrition habits, should at least be mentioned, though it seems certain that they are merely accessory factors.

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5 The author is fully aware that the word “peasant,” having clearly disparaging connotations, is no real equivalent to the French word “paysan” or the German word “Bauer.” It is clear, however, that the word “farmer” must be reserved for a special type of agriculturalist who often is not a “paysan” or “Bauer.” Other terms which have been suggested to the author by his Anglo-Saxon friends—like “agricultural freeholder” or “farmer yeoman”—sound too artificial and laborious. The only possibility left, then, would seem to be to retain the word “peasant” and to ask the Anglo-Saxon reader to forget for the moment its pejorative sense until a better term is suggested. That this is not an insolent demand is proved by the fact that good English writers like G. K. Chesterton have used it before in a clearly laudatory sense. It has been shown, therefore, that it can be done. The reader should be also reminded that no less an author than J. Stuart Mill wrote, in his Principles, special chapters which bear the title “Of Peasant Proprietors” (Book II, ch. vi-vii) and which, from beginning to end, are a real panegyric on peasantry in the continental sense. “The generality of English writers,” he says (Principles, ed. by Ashley, London, 1929, p. 256), “are no better acquainted practically with peasant proprietors, and have almost always the most erroneous ideas of their social condition and mode of life. Yet the old traditions even of England are on the same side with the general opinion of the Continent.” Nor should it be forgotten that William Thornton published in 1848 his Plea for Peasant Proprietors, to say nothing of Wordsworth and other poets. So we feel in very good company. It is, of course, not without deep significance that it is so difficult to find an English equivalent of “paysan” and “Bauer,” for if the thing itself existed there would be a word for it. The rather disreputable sense of “peasant” arises surely out of the fate of peasantry under British feudalism, and the Anglo-Saxon settlers transplanted this sense to the United States and the Dominions. It seems that in the United States the word has fallen still more into disrepute by the fact that there the reminiscences of old-world feudalism have been freshly supplemented by the new feudalism in the Southern States, which was based on the subjection of people belonging even to another race of a different colour. It is more than probable, however, that in the United States there are more real peasants in the very respectable French, Scandinavian, Swiss or German sense than the habit of abhorring the term itself would suggest. It is equally probable that on the average they are quietly prospering, which explains why we hear so little about them. At all events, the whole question is badly in need of a thorough investigation.

6 Cf. especially the Report of the League of Nations on the “Problems of Nutrition.”

7 Cf. W. Röpke. German Commercial Policy, London, 1934, pp. 40-66.

8 This point has been especially worked out by Vladimir P. Timoshenko in his book World Agriculture and the Depression (Michigan Business Studies, vol. v, No. 5, Ann Arbor, 1933).

1Cf. my paper “A Value Judgment on Value Judgments” in which I am explaining my attitude in this very important methodological question. It will probably be published in the “American Economic Review.”
2The following pages are largely based on a memorandum which the author wrote together with Professor Alexander Rüstow (University of Istanbul) in the summer of 1938.
3See also: W. Röpke, Die entscheidenden Probleme des weltwirtschaftlichen Verfalls, Zeitschrift für schweizerische Statistik und Volkswirtschaft, 1938, No. 4.
4In current literature there is already some evidence that the understanding of the scientific situation outlined above is growing. See E. F. M. Durbin, “Methods of Research—A Plea for Co-operation in the Social Sciences,” Economic Journal, June, 1938; A. Löwe, Economics and Sociology: a Plea for Co-operation in the Social Sciences, London, 1935: F. Akerman, Das Problem der sozialökonomischen Synthese, Lund, 1938. The essential things have been said on a wider scientific scale by A. N. Whitehead, Science and the Modern World, New York, 1926; and by Ortega y Gasset, El Tema de Nuestro, Tiempo, Madrid, 1923.
5The purpose of this book is to make a new and more promising approach to the diagnostics of that long-run crisis in international economic relations which is one of the most striking symptoms of the general economic, social, and political crisis of occidental society. I believe that the urgent necessity of such an approach has been enhanced rather than diminished by the outbreak of the war. However, I would betray my own philosophy if I regarded this book as anything more than a mere beginning, an invitation to constructive criticism, and a way of opening or furthering a discussion for which the world seems to be ripe. In submitting this book to criticism, I am not afraid to expose myself as one who believes not only in the scientific legitimacy but even in the utmost scientific necessity of employing a measure of judgments, which is ultimately based on a definite conception of what is wrong with the world, and of what should be done in order to put it right again. Those who are shocked by such an attitude may be reassured that I gave more thought to this methodological problem than I am able to explain on this occasion.
6(b) This crisis puts social science in a new situation, which is itself highly critical and which no partial investigation in any field of this science whatever can ignore without running the risk of missing its aim. Nobody conversant with the current development of the social sciences can overlook the fact that the feeling of being on insecure ground is becoming more and more widespread, until even the most tenacious followers of the traditional lines of approach sense the need for reorientation. The growing literature on methodological questions even in countries like England, where it was formerly distinctly unpopular, is a sure token of this scientific situation, as is also the fact that it has been felt necessary to open the present report in such a roundabout way as would have appeared rather strange even five years ago.
7As the present historical crisis finds its first, its most painful and its most conspicuous manifestation in the economic sphere, and since the nineteenth century has accustomed us to treat the economic problems as the main ones, it is easy to understand why the crisis is conceived primarily as an economic one and why, therefore, the traditional approaches of economics have been relied upon thus far. Whether or not this traditional conception corresponds to the inner convictions of our scholars and statesmen, it is at least exemplified in the character of by far the greater part of scientific activity in our field. Accordingly, men and means have been mobilized, during the last ten years, on an unprecedented scale. Facts have been piled up sky-high; conferences have been held in endless succession; economic analysis has been brought to an ever greater degree of refinement (and, incidentally, to an ever greater degree of unreality); vast and detailed programmes of research have been elaborated; a complicated machinery of institutionalized science has been set up; and questionnaires have been sent to almost every country and to every section of the population. It would surely be no pessimistic over-statement to say that nobody feels that this hectic activity has brought us any nearer the fundamental diagnosis which alone could serve as the basis for effective therapy.
8The real cause of this deficiency in the social sciences seems to lie just in the narrowness of our economic conception and the lack of courage and ability in really synthetic interpretation to connect the economic phenomena with the wider aspects of society. There is, in fact, increasing evidence that the real epicentre of the earthquake does not lie by any means in the strictly economic sphere, but rather that the economic disturbances are only the external manifestations of a deeper organic disease, of which overemphasis on economic matters—a legacy of the nineteenth century—is only one of the many symptoms. If that is true, then it becomes clear that the traditional approach is doomed to failure and that a new point of departure has to be found.