International Economic Disintegration

CHAPTER XIV POSSIBILITIES OF ALTERNATIVE POLICIES

CONSTRUCTIVE PROGRAMMES FOR RESHAPING AGRICULTURE IN THE INDUSTRIAL COUNTRIES

WHOEVER comes to the conclusion that the policy of agricultural nationalism as practised to-day cannot be the last word in economic wisdom—nay, that a thorough revision of this policy is of strategic importance in any programme of international economic reconstruction—must now consider the problem of how such a revision could reasonably be made. It should be said at once that it is here more than ever necessary to think radically, that is to say to consider the problem, not as the object of a day-to-day policy, but with due regard for ultimate implications and consequences. The world to-day has made more than enough short-sighted concessions to expediency and opportunism, but all too seldom had the courage to tackle the principles involved and leave details and refinements till later.

For this reason, we should have little use for the opportunist and conservative school of agricultural policy, which is content to seek revision in matters of mere detail and technical expediency, while accepting the general trend of modern agricultural nationalism without demur. One obvious characteristic of this school of thought is its narrow sectional outlook or, as it were, what the Germans call “aufgeklärter Ressortpartikularismus” (“enlightened departmental particularism”), in other words what might, perhaps, be the attitude of a well-informed agricultural engineer. The basic question to which this school tries to find the answer is this: How should a thoroughly efficient system of agricultural nationalism and planning be constructed so that, without too much attention being paid to what it means for the rest of the community, it should form a coherent whole free of contradictions, possess a stable equilibrium, and attain with a minimum of effort and a maximum of effectiveness those aims of agricultural nationalism which we take for granted?

Such a question reflects a mode of thinking familiar in every sphere of economic policy to-day: everywhere there are areas and branches of production which are faring badly; everywhere there are distressing conditions which, it is only too easy to describe in heart-rending words and which may lead us to the conclusion that this really is a case of exceptional emergency, which must be dealt with by the extraordinary means of planning, restriction of production, contrived monopoly, quotas and so on. The more enlightened advocates of this policy will concede, more or less as an afterthought, that the methods employed to carry out the policy should be as reasonable as possible. It goes without saying that this whole trend of thought is of very little help indeed, especially as it only amounts to preaching a policy which is everywhere being put into effect without our scientific assistance. That is not to say, however, that even within this narrow circle of “enlightened departmental particularism” it would be impossible to do some fruitful work and achieve some mitigation of agricultural nationalism by demonstrating possible ways of making it more rational. As a matter of fact, modern agricultural nationalism has this in common with other aspects of contemporary economic policy that, far from being a rationally planned system well thought out in detail, it is an agglomeration of improvisations and hit-or-miss emergency measures, which ends by coalescing into something more consistent that ambitious governments can easily represent as the result of a preconceived plan. It is evident that such a complexity of measures needs to some extent to be rationalized and mutually harmonized. Admitting these possibilities, though at the same time stressing the danger of overrating them and the still greater danger of being satisfied with them, let us turn to the more promising prospects for an alternative programme.

Having considered the most conservative attitude, it may be well to turn now to the most radical programme, which is that of unmitigated free trade and laissez-faire and the ruthless destruction of agricultural nationalism. At first sight, this would seem even less helpful and constructive than the opposite extreme. While the conservative method fails by being too “practical” and in making next to no change in present policies, the fault of the radical free trade programme seems to lie in the opposite extreme of being far too theoretical and divorced from the realm of practical politics. Moreover, it would seem that one of the main reasons for its impracticability is that it is believed to involve disaster, not only for agriculture, but also for the national economy as a whole. It is necessary, however, to be on one’s guard against lightly accepting such impressions or dismissing this alternative possibility a limine as utterly unhelpful and destructive. This would only be justified if it could really be proved that to do away with, present agricultural nationalism altogether would mean the definite ruin of agriculture. It would be altogether too rash to take this for granted. On the contrary, there is every reason to suspect that this is one of the most promising problems we still have to explore.

It is well worth while finding out what changes in the structure of agriculture would be involved by restoring international division of labour in this sphere, and ascertaining whether the new structure would in reality be so disastrously different from what would appear to be desirable from a comprehensive point of view that stressed the importance of a populous and socially sound agricultural system. This is why so much importance attaches to a thorough study of the natural factors of the international localization of agriculture, as outlined in Chapter X. There is good reason to believe that, under a free trade régime, European agriculture would finally reach a new state of equilibrium not very dissimilar to that which will be described below. Thus, even a radically liberal policy would in all probability not bring about any results which could be called disastrous. But that is no reason why we should not try to find a more satisfactory policy, which would avoid the cruelties and hardships of transition, and improve the efficiency of agriculture in every possible way.

If the radical programme, therefore, is to be considered as a good starting point from which to develop a constructive plan for an alternative policy, we must hasten to add that this should be done in a spirit altogether different from what was and still is rather characteristic of the traditional laissez-faire outlook, so different, indeed, that not a few advocates of this traditional outlook will look askance at our approach. It will be generally recognized to-day that the most urgent need of our time is to find, instead of the sterile alternative of either laissez-faire and collectivism or reactionary interventionism, that Third Way which will provide a solution on a new plane, which is not mere compromise.1 This is what we must bear in mind in defining our new approach to the special problem of agriculture, which is really the major one to-day. This will become clearer if we show how far our position departs from laissez-faire on the one hand and its antithesis on the other.

On the one hand, we wholeheartedly accept certain of the ultimate aims and fundamentals of agricultural nationalism; we recognize that agriculture represents a branch of production with a structure of its own and its own special laws, and is, therefore, a section of economic life which has to contend with peculiar difficulties, difficulties which, though at all times latent, make it especially necessary to-day, with the disorganization of world markets, to proceed with caution and consideration. We stress the fact that there is some scope for rational state intervention in agriculture, and an even wider one for better organization of agricultural markets aiming at greater stabilization of prices and cheaper distribution of agricultural products. If it is the aim (or even merely the pretext) of agricultural nationalism to achieve a populous and socially sound agriculture, we emphasize that this is an aim which we are making our own without qualification or fear of expressing an unscientific value-judgment.

On the other hand, we do not admit that for attaining this end, about which there can hardly be any dispute, there is only a single solution, to wit, that of actual agricultural nationalism, and we do not even admit that this is a satisfactory solution at all. Agricultural nationalism means rather giving exclusive preference to that solution-which aims at rigidly preserving or even strengthening the status quo and the vested interests connected with it. In clinging to the status quo against the forces of change, agricultural nationalism is reactionary; in combining its undisputed fundamental aims with individual and group interests it is particularist, sectional and even hypocritical; in either case it leads to economic, social and political disintegration. Like all policies and ideologies which exploit crude alternatives (e.g. Communism versus Fascism, inflation versus deflation, laissez-faire versus planning, &c.), the advocates of agricultural nationalism have the utmost interest in presenting their case in such a way as to give the impression that there is no other alternative than agricultural nationalism or ruinous free trade. It is all the more necessary to unmask this view, and the most effective way to do this is to develop an alternative programme.

The very essence of this alternative programme is to find out what structure of agriculture will make it possible for the industrial import countries to attain a maximum of these undisputed fundamental aims with a minimum of protectionism and collectivism. If the intention is to preserve the agriculture of industrial countries as it is, on the principle of the national park, then there is indeed no other way but that of actual agricultural nationalism. Yet the increasing radicalism of this policy is at the same time an exact measure of the resistance which the natural development opposes to such a conservative and reactionary policy. In this manner agricultural nationalism is forced in the end to follow a course requiring ever more violent measures. The irony of it all is that by this development agriculture will finally be transformed radically and in a fashion likely to prejudice the attainment of the ultimate aim of making agriculture an economically and socially sound sector of national economic life, and the stronghold of free and vitally satisfied men like the peasant or the craftsman. If by this road of reactionary agricultural nationalism we are to arrive finally at a more or less collective system of agriculture with a Russian aroma, we are entitled to ask what further justification there is for talking of the ultimate sociological aims of agricultural nationalism, as the subtle human qualities of agriculture—as it were, the “humus of peasantry”—will be destroyed just as surely as the gloomiest pessimist could expect from free trade.

As a matter of fact there is no reason whatever why the agriculture of the industrial countries should be identified with the structure of agriculture formed by actual agricultural nationalism, or why just this structure should be the only one suitable to them from the point of view of the fundamental aims referred to. In other words there is no reason whatever why the existing structure should be just as sacrosanct as the fundamental aims in question. There is, moreover, a very strong suspicion that one must choose between the policy of conserving the existing structure and that of effectively attaining the fundamental aims. We decide for the latter and now proceed to look for that new structure of agriculture which may be considered the optimum one for industrial countries.

The best approach for defining that optimum structure is to give to the agriculture of industrial countries its natural place in the rational scheme of localization of the world’s agriculture. This place is roughly determined by the now familiar fact that in the industrial countries the preference should rationally be given to the production of agricultural high-grade products in contrast to the staple products, the natural localization of which is to be found more in the peripheral zones of the world economy, a statement which is subject to all due qualifications concerning the limits of any specialization in agricultural production.2

The main considerations on which the foregoing statement is to be based may be arranged under the following points:

(a) The high-grade products are those in the marketing of which the agriculture of the industrial countries has a natural “transport protection,” and in the production of which it has already at the present moment in many countries a certain superiority which, while based to-day largely on a traditional technique of production, is certainly capable of being further improved by a development of agricultural technique.

(b) The high-grade foodstuffs are those toward which the nutritive wants of urban-industrial populations (as determined by physiology and habit) tend to be directed more and more.

(c) The production of high-grade foodstuffs, if done in a proper way, implies an agricultural technique which serves to keep up the fertility of the soil, a task that has become a very serious problem under a long-run aspect, particularly in those countries with an old-established intensive agriculture.

(d) It involves, further, a high degree of variety of production on the individual farm and, therefore, a better distribution of the risks in production or marketing. This diversification means a better balance in the biological process which farming represents, and at the same time a better economic balance which is bound to make the farm less cycle-sensitive.

(e) This greater shock-resistance is much enhanced by the fact that both the higher degree of self-provision in foodstuffs (sustenance farming), and the smaller dependence of the family peasant farm on hired labour, are bound to diminish the dependence of the farm on the oscillations of the market and to give it a high degree of elasticity, which sometimes may be still further improved by some combination of agriculture with handicraft or other sidelines.

(f) It is wrong to suppose that such an orientation of agriculture in industrial countries must necessarily defeat a policy of securing the national food supply for war time. It has to be borne in mind that cereals and sugar—which now would be imported in greater quantities—are particularly suitable for long storage, so that large war reserves can be accumulated in peace time. On the other hand, the live-stock staples which would increase under such an orientation of agriculture represent a further important war reserve which has the additional advantage of automatically solving the problem of storage, while the technique of agricultural production implied by the development of high-grade production is bound to improve the fertility of the soil and thus provide a further most important reserve for time of war.

(g) It is exactly in the case of high-grade foodstuffs that there still exist reserves of potential demand which must not be underestimated and which could be tapped (1) by price decreases made possible by corresponding reductions in the cost of production, (2) by an increase of the urban-industrial purchasing power, and (3) by nutrition policies acting for a change in consumption habits.3 It is important to note that conditions (1) and (2) would be largely fulfilled automatically by the far-reaching repercussions of the new orientation of agriculture.

It is very likely, moreover, that much can still be done towards reducing the cost of production of high-grade foodstuffs by developing better methods of technique.

(h) Mobilizing these large reserves of demand for high-grade foodstuffs will necessarily involve some increase of the derived demand for agricultural staple products. In this connexion, it is of great significance that the production of high-grade foodstuffs is largely a process of refining staple products and substituting quality for quantity. In order to produce a given amount of calories, therefore, the production of high-grade foodstuffs, reaching through all stages of production from the staple fodder to the final product sold on the market, claims a relatively large soil surface compared with the production of the staple foodstuffs.4 An extension of the production of high-grade foodstuffs by mobilizing the existing reserves of demand, in the manner indicated above, should be a promising means of making the agricultural problem in its widest sense—internationally and for the whole range of products—less insoluble than it appears to be at present, considering the actual tendencies toward general overproduction in agriculture as a whole.

(i) As a last, but very important point, it has to be stressed that, in general, agricultural high-grade production involves in some of its branches an unusually great degree of labour intensity, which would greatly increase the employment capacity of agriculture, i.e. its capacity to absorb part of the population, to relieve the industrial labour market correspondingly and to place people under the conditions of life and work imposed by agriculture and rural surroundings.5 Therefore, if it is the sincere aim of agricultural nationalism to make possible a populous agriculture, instead of having a maximum number of workers for the production of synthetic rubber and petrol or for erecting concrete fortifications, and, furthermore, if we make this aim our own as we have every reason to do, then it becomes clear that here is perhaps the strongest and the most convincing argument for the alternative programme which we have in mind.

We could conclude this chapter here, but there is one last aspect of a general character which should be mentioned in order to meet possible objections, and which will also fortify our main argument. The thought suggests itself that, in our alternative programme, special emphasis should be laid on the necessity of progressive changes in the technique and organization of agriculture. In this way, we may be tempted to construct in our mind a new form of agriculture which, by paying due attention to certain permanent and definite peculiarities of agriculture, will nevertheless re-establish it on that technically rational base which characterizes modern industry. Is it not true that agriculture is still lingering in the primitive stage of handicraft which, being less productive and efficient, is no longer to be tolerated in our age of machine and mass production? And is not a programme of reform which lays stress on peasant agriculture inimical to progress and typical of a romantic and reactionary mind?

It is to be hoped that enough will have been said already to dispel those doubts. Especially, it should be clear now that the notions of “progress” and of mechanized maximum production, whatever their value in industry, should be applied with the utmost caution to agriculture. What is more, it is just the peasant-farmer type of agriculture in its traditional structure which represents a form of human work and life whose value is inestimable from a higher sociological point of view and especially with regard to the ultimate conclusions of the whole present enquiry. As will be shown in the last part of this book, international economic disintegration and economic nationalism are in the last resort connected with certain degenerative developments of our society which go back to the process known as “the formation of masses” and which, therefore, make it imperative to put a policy directed toward the unmaking of mass society at the head of our list of desiderata. If we come to the conclusion that our whole economic and social system has become highly pathological and that the disease afflicts all sections of our society, this cardinal point should dominate all our thinking in whatever field and on whatever problem. There is no denying the fact that the peasant world to-day presents, together with the sector of handicraft, the liberal professions, the civil service, and other smaller branches outside of agriculture, a last great island not yet inundated by mass society; here we have still the solid rock of a form of human life and work which is inherently stable and vitally satisfying. It is an immeasurable benefit if this form still exists, as in the greatest part of continental Europe, and it is a great misfortune for a country if it has been destroyed, as in England, to such a degree that the loss is not even felt any more.6 If we agree that we should try to elaborate a comprehensive programme for the reform of our moribund society, there can no longer be any doubt that to preserve, strengthen, and, if need be, restore peasant agriculture is a consummation devoutly to be wished. It is, therefore, extremely fortunate that that structure of agriculture which, for the reasons adduced above, is the most suitable for the industrial countries is so completely identical with the peasant structure of agriculture. It is a miraculous coincidence of circumstances which has brought it to pass that the economic optimum structure of agriculture for the industrial countries is at the same time so largely its sociological optimum structure.7

The foregoing consideration should by no means preclude a discussion of the large and necessary potentialities for mechanizing and rationalizing peasant farming without prejudice to its sociological structure. Just as in handicraft proper the essential feature of peasant farming does not lie in the technical fact of manual labour, but in the specific form of life and work, whereas it is just the possibility of applying modern technical devices in handicraft as in peasant farming which, fortunately, makes it easier for both to preserve their existence. In so far, however, as the economic optimum structure of agriculture does not completely coincide with its sociological optimum structure, it is obvious that a price has to be paid for preferring the latter. In so far the productivity of peasant production will be less than that possible under another structure of agriculture. Now, first, it may be seriously doubted whether such a gap can be considerable; and in this respect everything could be repeated which has been said earlier on this subject. As far, however, as there is some gap, it must be stressed, secondly, that man does not live by bread only, and that the preservation or restoration of peasant farming is a goal which is worth the price of some sacrifice in technical rationality.

It is here, moreover, that a remarkable coincidence is to be noted: that, generally, the peasant farm is rather insensitive to crises and that the peasant will sometimes let his economic situation and conditions of work deteriorate to an incredible degree before he gives up farming, which proves conclusively that he finds a non-material equivalent for the sacrifice in material well-being. That is not the case everywhere, but only where it is a question of the true peasant type in the broad sociological sense and in contrast to the type of the commercial farmer, the agricultural entrepreneur, and of the corresponding agricultural proletarian. Our sociological appreciation of the peasant form of work and life, therefore, is shared by the peasant in a very practical and individual manner; and this is just the reason why our sociological appraisal of peasantry appears so justifiable, since it is the appreciation of a vitally satisfying form of life and work. Consequently, the peasant himself is largely prepared to assume the sacrifice involved by a possibly lower degree of efficiency of peasant farming as compared with other modes of farming or with non-agricultural ways of production. For this reason it is by no means unjust to leave such a possible burden principally to the peasant farmer himself, but it is all the more imperative to do everything possible to diminish that burden by making farming economically and technically more rational. That is precisely the aim of what we understand by a constructive programme of an alternative agricultural policy.

*

PRESENT SITUATION AND FUTURE PROSPECTS (NATIONAL AND INTERNATIONAL) OF DEMAND-SUPPLY EQUILIBRIUM IN AGRICULTURE

It is not intended to elaborate this subject at the present stage, because it will be premature to anticipate the probable results of special enquiries which must of necessity be rather comprehensive and painstaking. We must confine ourselves, therefore, to making clear the meaning of the problem envisaged here. This can be done rather briefly because it is largely self-explanatory. The idea is that our efforts at interpreting the agricultural problem of to-day, and at suggesting constructive solutions, must be crowned by an investigation into the factors which at the present time influence and are likely in the future to influence the demand-supply equilibrium of agriculture as a whole and in its component parts, both nationally and internationally. Is it really true and, if so, to what extent, that the world is more and more facing a situation in which an increasingly smaller part of population, capital and human effort will be needed for supplying the food of nations? Must the present situation already be interpreted in these terms? And must, in the future, the agricultural base of the world production become smaller and smaller, relatively and perhaps even absolutely? Is, therefore, the agricultural problem of the present, and still more of the future, a problem of long-run redistribution of productive forces between agriculture and other industries in favour of the latter? And does not this possible necessity of a fundamental change dominate, in the last resort, all other aspects of the problem? Is the agricultural problem perhaps only a part of the more general problem of maldistribution of productive forces, in the sense that undue resistance is being offered to changes in the direction of production made necessary by changes in technique or demand? If so, where is the place of agriculture in the new and more rational scheme of the distribution of productive forces?

Although such questions are liable to crop up continually in the course of this whole part, it will be agreed that the prospects to which they give rise should be elucidated in toto. For this purpose, it will probably be found convenient to divide the factors in question into those working (a) on the side of production (e.g. the development of the technique of production, the prospects of soil fertility and others), and (b) on the side of consumption (e.g. population trends, nutritive habits, &c.).

 

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8 W. Röpke, Die Lehre, von der Wirtschaft, Vienna, 1937, pp. 187-195. (French version under the title Explication économique du monde moderne, in the press.)

9 The programme evolved here has much in common with that set forth for England in the Report on International Trade, published by PEP (Political and Economic Planning), London, 1937, pp. 207-210.

10 Among the vast literature on this subject which has found more and more attention to-day, the Nutrition Report of the League of Nations should be particularly stressed. See also F. L. McDougall, Food and Welfare, Geneva, 1938. An outstanding example of the new possibilities and physiological necessities of nutrition favouring intensive agriculture is given by the rapidly increasing importance of fruits in national diets and in world trade. The total value of world exports of fruits was, in 1938, greater than that of wheat and meat. The per capita consumption of fruits in England rose, from 1909-13 to 1934-35, by 89 per cent, and is still far from having reached saturation point, although it is already much higher than in most other countries (Ernst-Wilhelm Tessin, “Welthandel mit Früchten,” Internationale Agrar-Rundschau, March, 1939, pp. 47-54). Much the same thing can be said about vegetables.

11 Several estimates have been made for arranging the different products according to the acreage needed for producing a given amount of calories, or according to the amount of calories produced on a given acreage. We give here only Baker’s figures (quoted from “Internationale Konferenz für Agrarwissenschaft,” Leipzig, 1934, p. 363):

Acres necessary for producing the average annual food want per man (=1.4 mill, calories)

sugar beet	-	-	-	-	0.28
sugar cane	-	-	-	-	0.34
potatoes	-	-	-	-	0.76
corn flour	-	-	-	-	0.79
wheat flour	-	-	-	-	1.45
tomatoes	-	-	-	-	1.47
apples	-	-	-	-	2.35
pork and lard	-	-	-	-	3.10 + 0.1 pasture
milk	-	-	-	-	2.35 + 1.6 pasture
beef meat	-	-	-	-	11.30 + 2.5 pasture

12 See Karl Brandt, “The Employment Capacity of Agriculture,” Social Research, February, 1935, pp. 1-19, and his article on the “Potentialities of Agricultural Reform in the South,” Social Research, November, 1936, where he applies this reasoning for the especially burning problem of agriculture in the Southern States.

13 See the strong remarks in Hilaire Belloc’s Essay on the Restoration of Property, London, 1936, pp. 20, 37-40.

14 It ought to be mentioned that the optimum structure of agriculture in industrial countries as described above has already been clearly hinted at by J. H. von Thünen in his famous Der isolierte Staat in Beziehung auf Landwirtschaft und Nationalökonomie (Hamburg, 1826), where he states that that kind of agriculture belonging to the “inner ring” will at the same time favour “Güter von geringem oder mässigem Umfange” (p. 141 of Waentig’s edition, Jena, 1921). Werner Stark (“Niedergang und Ende des landwirtschaftlichen Grossbetriebs in den böhmischen Ländern,” Jahrbücher für Nationalökonomie und Statistik, vol. 146, 1937, pp. 416-449) has shown in an interesting way how the simple necessity of adapting agriculture to the conditions of an industrialized country brought it about that, in 1848, feudal Bohemia was turned into a country of prosperous peasants, in striking contrast to Eastern Prussia where the dissolution of the feudal system and the “peasants’ liberation” ended in the disappearance of the peasants and in the triumph of the large estate.

Furthermore, it is to be noted that a division of labour in agriculture as it is envisaged here on an international plane will be considered as altogether natural and rational within the politically controlled area even in countries which are leading in agricultural nationalism. A good example for this is a passage taken from the semi-official German periodical Der Deutsche Volkswirt (No. 29, 21st April, 1939). There it is said that in the new German “Grossraum” the whole agricultural production must be rearranged so that the best division of labour will be achieved. “If, for instance, a peasant in the old Reich were encouraged by certain methods to cultivate at high cost plants which could be had in the Danube basin in large quantity, with security and low cost—instead of adjusting his production to something we need—it would be a faulty investment from the point of view of the peasant and from that of the whole community of the people. For if it became possible to lower the prices of certain foodstuffs because it would be no longer necessary to keep them high in the interest of the subsistence of the peasant and for the sake of food autarky, it would be possible at the same time that consumers pay more for other foodstuffs which, like dairy products, vegetables, and fruits, could be produced in greater quantity in the old Reich.” That is exactly the argument used in this report, and only political reasons could be adduced for restricting its validity to the politically controlled or affiliated area.

• 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.
• 5See Der deutsche Aussenhandel unter der Einwirkung weltwirtschaftlicher Strukturwandlungen, l.c., pp. 362-363.
• 6The vast literature on this subject has recently been enriched by M. J. Bonn, The Crumbling of Empire, The Disintegration of World Economy, London, 1938; and by Lionel Robbins, The Economic Causes of War, London, 1939.
• 7See my own approaches to these problems given in the article: “Kapitalismus und Imperialismus,” Zeitschrift für schweizerische Statistik und Volkswirtschaft, 1934, pp. 370-386; and in my book Crises and Cycles, pp. 4-6.
• 8The 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.
• 9(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.
• 10As 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.
• 11The 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.
• 12That the development of world economy has been, first of all, a process of intensification is as important as it is evident. It can be deduced from the fact that the most highly developed countries showed the greatest percentage of world trade, which, in view of the reciprocal nature of trade, proves that the bulk of world trade must have belonged to economic interchange within the high-capitalistic sphere itself. This deduction is corroborated by a number of calculations of the relative intensity of this “intraindustrial” economic interchange. One of these calculations, made by the Kiel Institut für Weltwirtschaft und Seeverkehr, shows that the commodity trade between the industrial countries of Europe (Belgium, Germany, France, Great Britain and Ireland, Italy, Austria and Switzerland) amounted in 1913 to 30.2 milliard RM (=$7.2 milliard), which was equal to about one-third of the total reciprocal trade between all industrial and agricultural countries of the world. The same story is told by the calculation that out of average total exports of industrial Europe (comprising the same countries) during the years 1909–1913 slightly more than one half (51%) constituted an exchange of goods among these countries themselves. It is also a well-known fact that such leading countries as England and Germany were practically each other’s best customers. In 1913, for example, exports from the United Kingdom to Germany formed 7.74% of the total export trade of the former (higher than the percentage of any other country except British India), while imports from Germany into the United Kingdom as a percentage of the total import trade (11.56%) were surpassed only by those from the United States. Another very interesting illustration of the same tendency is to be found in the development of reciprocal trade between the two leading industrial countries outside of Europe, i.e. the United States and Japan.
• 13There is no denying the fact that world economy and capitalism have been to a large extent forced upon the “new” countries by political pressure and in some cases—as in the opening-up of China—by undisguised war. The problems thus presented are, at the present moment, far from a universally accepted solution; but it seems clear that no satisfactory study of international economic integration and disintegration could evade them. This holds especially true for one of the many aspects of the problem of economic imperialism—the difficult question of whether and how far extensification and intensification of world economy were, and perhaps still are, correlated to each other. In other words, was it not just the spatial expansion of capitalism which kept the whole mechanism of dynamic development going, by providing more and more new markets for the surplus production which constantly increased as productive technique improved, by giving the necessary stimulus to entrepreneurial initiative and speculative optimism and by allowing the “play” essential for any working mechanism? Allowance must also be made for the possibility that the existence of an economic “frontier” in world economy may have been instrumental in providing that psychological atmosphere essential for the breadth of outlook, which is the basis of a liberal commercial policy. This refers not only to the exploitation of new markets, but also to the opening of overseas territories to human settlement. Thus the vast problem of international migrations would also have to be studied in this context.
• 14There is no denying the fact that world economy and capitalism have been to a large extent forced upon the “new” countries by political pressure and in some cases—as in the opening-up of China—by undisguised war. The problems thus presented are, at the present moment, far from a universally accepted solution; but it seems clear that no satisfactory study of international economic integration and disintegration could evade them. This holds especially true for one of the many aspects of the problem of economic imperialism—the difficult question of whether and how far extensification and intensification of world economy were, and perhaps still are, correlated to each other. In other words, was it not just the spatial expansion of capitalism which kept the whole mechanism of dynamic development going, by providing more and more new markets for the surplus production which constantly increased as productive technique improved, by giving the necessary stimulus to entrepreneurial initiative and speculative optimism and by allowing the “play” essential for any working mechanism? Allowance must also be made for the possibility that the existence of an economic “frontier” in world economy may have been instrumental in providing that psychological atmosphere essential for the breadth of outlook, which is the basis of a liberal commercial policy. This refers not only to the exploitation of new markets, but also to the opening of overseas territories to human settlement. Thus the vast problem of international migrations would also have to be studied in this context.