Now the myth of “politically impossible” is easy to recognise. That’s the aim of this compilation.

These fundamental essays on the “politically impossible” assertion are bewilderingly neglected. The first, a Helmut Schoeck speech at the 1957 Mont Pelerin Society Meeting, was a major influence — (along with an earlier masterpiece by longtime Mont Pelerin Society Treasurer Clarence Philbrook) — on W.H. Hutt’s Politically Impossible …?: An essay on the supposed electoral obstacles impeding the translation of economic analysis into policy; or, Why politicians do not take economic advice (London: The Institute of Economic Affairs, 1971). Hutt is already digitised and easy to find, but there were a few inaccessible yet interesting reviews further exploring the “politically impossible?” question, including: in The Economist with a reply by Hutt, then in The Spectator, Indian Journal of Economics and, the most positive review of all by the biggest name of all, Henry Hazlitt in The Freeman.

1. Helmut Schoeck, “What is Meant by ‘Politically Impossible’?,” Pall Mall Quarterly, vol. 1, no. 1 (Spring 1958), pp. 48-53.
2. [Anonymous book reviewer], “The inseparables,” The Economist, July 17, 1971, p. 55. Retorted in the following item.
3. W. H. Hutt, “The inseparables,” The Economist, July 31, 1971, p. 6, as a letter to the editor.
4. John Biffen, “John Biffen on W. H. Hutt,” The Spectator, August 7, 1971, pp. 216-17.
5. M. C., “The politics of money,” Indian Journal of Economics, vol. LII, issue no. 205 (October 1971), pp. 191-93.
6. Henry Hazlitt, [untitled book review], The Freeman, vol. 22, no. 1 (January 1972), pp. 58-60.

1.
Helmut Schoeck, “What is Meant by ‘Politically Impossible’?,” Pall Mall Quarterly, vol. 1, no. 1 (Spring 1958), pp. 48-53.
(Adapted, with Dr. Schoeck’s kind permission, from a paper presented at the 10th Anniversary Meeting of the Mont Pèlerin Society, St. Moritz, Switzerland, September 7th, 1957)

We all know the saying, “Politics is the art of the possible;” first phrased, of course, at a time when statesmanship was less subject to democratic sensitivities. If we accept, for the moment, this definition of politics, then the popular phrase that describes the “politically impossible” is absurd.

Something may be impossible for any number of reasons (military, physical, economic, psychological, geographical and so on), but not primarily for political reasons. Of course, a specific political objective may be impossible because of any combination of non- or pre-political reasons, but that is a different problem. Perhaps we could define the current meaning of the “politically impossible” as anything we know in the depths of our hearts to be morally (or economically, or militarily, etc.) sound and proper, but at the same time as something we don’t care to do (or to propose) for fear our parliamentary opponents could misrepresent it to parts of the electorate to our own personal future disadvantage.

The Fear of Unpopularity
In other words, whenever a man declares this or that to be “politically impossible,” he really means that it is possible (economically, fiscally, physically, organizationally, etc.) but that he doesn’t dare or care to do it. This becomes quite clear once we realize that “politically impossible” is rarely equated with “unconstitutional” or “illegal”. On the contrary, the phrase “politically impossible” comes to the lips of a legislator or politician precisely at the moment when he could act in accordance with common sense, morality, the law: indeed, when he inwardly feels a mandate to act in accordance with his “better self,” but just can’t face the threat of unpopularity.

This fear of political unpopularity is not the same as the kind of fear which governed or motivated political action in other times. It is not just another name for an old fear. A former monarch or prime minister might have been afraid of any number of persons, groups or forces, but he would rarely try to justify or explain away his actions or non-actions by referring publicly to his private fear.

The new phenomenon is that the fear behind the phrase “politically impossible” is a respectable fear. It is an institutionalized fear or a ritualistic fear, which a statesman can admit without losing face, at least among his fellow statesmen. Perhaps we should call it an anxiety rather than a fear because it is a very generalized fear, not a specific dread.

At any rate, this generalized fear or anxiety, lacking clearly identifiable foci of threat, is extremely susceptible to manipulation by opinion-makers: for instance, columnists. The pundits do not warn presidents or prime ministers to fear this or that; they simply write five columns about a new “political impossibility.”

One+One=Three
To avoid electoral punishment, politicians apparently avoid what they believe, or have been made to believe, to be politically impossible. For example; from repeated opinion-polls in the United States, we know that about 80 per cent of all Americans look with favour on profits and big business; the same per cent is apprehensive of big labour. Yet, many successful politicians in the United States consistently talk and act as if 80 per cent of all voters hate big business and love strong labour unions.

On the other hand, certain types of public-opinion surveys tend to create the impression of political impossibilities in situations which did not bother anyone prior to the poll. The new concept of what is or is not “political dynamite” was injected into the gauging of possible political action by means of the public-opinion poll which focusses attention on viciously-asked questions. The politician, being familiar with the “slanted” results of this poll, is now likely to imagine that there exists in the consciousness of his constituents a new preference or animosity which did not exist or scarcely existed before the opinion survey was taken. Thus, a new limitation has been put on the sphere of action in which the politician can follow common sense instead of imagined fancies.

Conventionally, people mean by the phrase “a political impossibility” some measure of provision which offends the “sense of social justice.” Without going into an adequate critique of that concept here, I merely submit that what is supposedly demanded by a sense of social justice is usually impossible to begin with. Whenever we try to adjust laws, actions, administrative provisions, etc., to this sense of social justice, such actions are doomed to failure by psychological, economic, organizational or other pre-political impossibilities. As a matter of fact, restrictive laws aiming at an equitable distribution of goods, or accommodations made in accordance with the so-called “sense of social justice,” usually cause a greater scarcity than would have prevailed otherwise. Thus, the very attempt to ration and allocate in accordance with what is deemed politically possible (i.e., acceptable the vaguely imputed sense of social justice) makes it even less possible to increase the sphere of the “economically possible.” The manipulations of rents and housing in most countries and cities offer an illustration.

When a shortage of a commodity occurs that permits charging of prices that are considered “socially unjust,” most times it is already too late to distribute the commodity in accordance with any real concept of social justice. The political authority will then ration and distribute the commodity in compliance with what is thought to be politically possible (i.e., in egalitarian fashion), but actually it may make more people resentful than might have been resentful under a free, though unequal, distribution of that scarce commodity. But since the political authority already has set up an overall system of suppressing regulations, nobody ever finds out that the gesture of compliance with the “politically possible” is a mere farce.

The Great Unknown
Earlier this year, in Washington, when the Congressional investigation of labour union irregularities got under way, reporters were told by amazed legislators that it was a new and hardly believable revelation to them that they could touch big labour without immediately being hit by that great unknown, the “politically impossible.” Probably, they had that power all along, without realizing it. The late Senator Robert Taft’s re-election in 1950, of course, might have suggested that we had reached the beginning of a political era, in some nations at least, where major breakthroughs to political success could fall to those who dared curb the union monopoly of power and that they could indeed live long enough to sustain the attack.

Politics is essentially a realm of affairs in which we can never know in advance what surely will be possible. It is the nature of politics to permit the most unorthodox challenges of real or potential opponents. We can perhaps say: what is “politically possible” is what our opponents will put up with. And that entity can never be known before the actual test. If we could know it beforehand, if it were amenable to scientific prediction, it would be pointless to engage in politics. Success in politics comes to those who make their opponents believe that they know definitely what is politically possible, without actually knowing it, but risking the desired action anyhow.

It is the misfortune of our time that the Hitlers and Nassers always seem to know what is politically possible (e.g., re-occupation of the demilitarized Whineland zone by Hitler, seizure of the Suez Canal by Nasser). They sense uncannily the actions that will be acquiesced in by their opponents. Often those opponents are really the stronger powers, but they doom themselves to inaction by conjuring up the spectres of the “politically impossible.” One of these spectres, of course, is the Hegelian monster of a one-way irreversible historical process on which fearful statesmen graft whatever they choose to shrink from. Today it is above all the world-wide trend to self-determination which will not tolerate any deviation from its thrust. To the United States, for instance, everything that hampers “self-determination” of non-Western peoples is, at least in the long run, “politically impossible.” Thus, in a sense, Woodrow Wilson put brakes on the foreign policy of the United States for the rest of this century.

Impotentia Excusat Legem
In reality, I suspect, what some men mean when they declare something to be “politically impossible” is their desire to be well thought of by “progressive” newspapers and journals.

Perhaps an extremely interesting topic for a doctoral dissertation would be a history of “political impossibilities” which proved to be quite possible when fearlessly attacked.

Even well-informed scholars seem to have fantastic ideas about the realm of the possible in human groups. In May of 1954, shortly after the now famous decision of the U.S. Supreme Court regarding racial mixing in public schools in the southern states, I asked privately a number of outstanding American sociologists and anthropologists whether they expected any disturbances in the states affected. They all assured me that everything would be calm and agreeable. The Court would never have handed down such a decision, they said, had it not had sound knowledge that this change was now “politically possible.” The South is ready for it, I read a hundred times — not only in the most competent newspapers, but also in the scholarly journals. Obviously, it was not. So much for the imposition of the supreme law of the country.

What of its repeal? In the same journals of the late twenties, for instance, we can read again and again that, of course, the Prohibition Amendment is here to stay because a repeal would be politically impossible.

Or, in another sphere of life, is it a mere coincidence that those who hid behind the phrase “politically impossible” are so often the very people who refuse to accept economic or fiscal impossibilities, especially in the field of so-called social security legislation?

Or let’s look at another illustration. At about the same time in the early thirties, under Mr. Hitler and Mr. Roosevelt, it became a crime to own gold. At any time, I believe, most observers would have predicted that this state of affairs would remain in force much longer in Germany than in the United States, haven of personal freedom. Obviously, freedom to possess gold in any form would remain “politically impossible” much longer with the German people. But it turned out just the other way around.

It belongs to the curious political possibilities in the United States today that personal antics in the form of Communist activities are much better protected (by the Supreme Court) than personal antics which take the form of stowing away gold. Why? Again, it seems, we have before us one of those arbitrary assumptions of “political impossibility.” The “liberal establishment” in the United States has convinced just about everybody that in our age private possession of gold is “politically impossible.” Incidentally, when The Economist in London, a few years ago, reviewed the new English edition of Ludwig von Mises’s Theory of Money, the reviewer also used the expression, I think, that any return to the gold standard is, of course, a complete “political impossibility.” On the other hand, a recent issue of the prominent West German bi-weekly, Die Gegenwart, ran a forthright editorial declaring that any government which does not at least move towards the gold standard is little better than a band of thieves.

How can we explain these different developments?

The “Progressive” Standard
The main sources of “political impossibilities” it seems to me, are not genuine and real constellations of political power within a given electorate. Predominately, the real forces of “political impossibilities” are imaginary self-imposed social controls for which legislators, cabinets and supreme courts take their cues from each other, from the prevailing press, columnists, radio commentators, and from “socialistic” professors.

Especially, I am inclined to explain the completely unexpected re-appearance of sound political (socio-economic) possibilities in West Germany after June 1948 with the relative absence of those free-floating intellectuals (Karl Mannheim’s term) who are prone to declare everything “politically impossible” which they deem politically unprogressive. For a number of reasons, which we have to leave unexamined here, after 1948 the intellectual climate of West Germany was not nearly so pervaded by “socialistic” progressivism as the climate in the United States and possibly England still is. Generally, in the United States, when I meet for the first time a professor or editor, whose age is between 25 and 50, I spontaneously prepare myself for conversation with someone who stopped thinking for himself when Harold J. Laski gave his last lecture. Consequently, I am still amazed when I meet the corresponding type in West Germany who, after my first cautious probing, turns out to be sound and sane in his mind.

To sum up, I do not believe there are an real supra-individual historical processes which determine what is “politically possible.” In our age, “politically possible” and “politically impossible” will be, with few exceptions, what the prevailing intellectual establishment in classrooms, textbooks, press, radio, and more and better manipulated opinion polls, etc., declares it to be. Today in English speaker countries we find “politically impossible” mostly what Fabian Socialists want branded as “politically impossible.” What we now need is old style Fabian liberalism.

Of course, the task will not be simple. After all, even the best and most rational intellectual climate is of little use if the legislators lag behind, remembering political truisms of the previous generation.

“Planned Freedom”
The spectrum of measures labelled “politically impossible” grows apace with any of the alleged increases in predictability of “voting behaviour,” as the political scientists so atrociously call the act of casting a vote. Empirical political science must be blamed for a good part of the respect paid to existing theories of “political impossibilities.” The more we claim to know about the voting process itself, the less freedom we retain for rational, long-range political and economic action. In other words, the more alleged or real correlations between voting and specific issues have been isolated by political scientists, the more courage it takes to resist sure vote-getting and to act rationally or morally (and “inner-directedly”) as an elected office-holder.

Owing to these alleged correlations, any future loss of voters to the office-holder’s own party can now be blamed on a specific action or series of actions.

I keep stressing the word “alleged” because I believe that to some extent all this is just cultivated political timidity. There is a small school of empirical sociologists who doubt that anyone can establish a real relationship between what people reveal about their attitudes when polled or interviewed, and what people will do in a future real situation. Eventually, of course, and I dread this day, it could be possible to persuade the electorate that it has a duty to vote in accordance with what its previously investigated sampled attitudes suggested. Then we shall arrive in the age of “planned freedom” of which Karl Mannheim dreamed so prolifically.

*****
2.
[Anonymous book reviewer], “The inseparables,”
The Economist, July 17, 1971, p. 55.
Responded to in the following item.

__________
POLITICALLY IMPOSSIBLE …?
by W. H. Hutt
Institute of Economic Affairs. 110 pages. 75p paperback.
__________

The latest product of the Institute of Economic Affairs sets out to tackle the question of why politicians so often reject good economic policies on the grounds that their implementation would be politically impossible. Professor Hutt believes that politicians never get the unvarnished facts. He argues that too often economists implicitly embody assumptions about politics in their economic advice. They recommend second best policies, having dismissed the most desirable economic policy on political grounds. If only they would make their political assumptions clear, it would be easier to challenge them, and thus adopt the best economy policy.

He takes policy in the 1930s to illustrate the thesis. Real wage cuts, he says, were rejected by Keynes on supposedly economic grounds. But the real reason was that it proved difficult to implement wage cuts in practice. Now, argues Professor Hutt, if only this assumption had been made clear, it would have been easier to challenge, since it would be clear that the obstacle to wage cuts was practical, not economic.

The argument is attractive, but is based on a fundamental misunderstanding of what economics is about. It is not a value-free science, nor are the assumptions on which it is based fixed. To decide what is the best economic policy, it is necessary to decide priorities — for example, is inflation or unemployment worse? This is essentially a political decision. And to decide economic policy, assumptions must be made, by no means apolitical, about the way people behave or can be made to behave.

To extract all political opinion from economic advice would leave no advice at all. Professor Hutt destroys his own thesis by his illustration of what he regards as economically desirable policies: among them, abolition of both the welfare state and progressive income tax. The suggestion that all economists would be bound to accept such policies on purely economic grounds is clearly wrong.

*****
3.
W. H. Hutt, “The inseparables,”
The Economist, July 31, 1971, p. 6,
as a letter to the editor.

Sir — Your review of my Politically Impossible …? (July 17th) charges that it “is based on a fundamental misunderstanding of what economics is about.” Economics, I am told, “is not a value-free science …” Let me assure you that the apparatus of “theoretical economics” is as value-free as a corkscrew or a slide rule. What is true, indeed platitudinous, is (your words) that “to decide what is the best economic policy, it is necessary to decide priorities.” But the review I am criticising leaves the impression that I am recommending economists to shut their eyes to the fact that different people (including economists) will rank their priorities differently. Your review says that “to extract all political opinion from economic advice would leave no advice at all,” while, through advocating such a procedure, “Professor Hutt destroys his own thesis.”

I advocate exactly the opposite. I say that “it is the economists’ duty to treat the electoral system as an integral part of the world of markets, prices and incomes, with the vote-gathering activities of politicians recognised as an influence similar to the activities of entrepreneurs …” (page 98). Further, I quote with approval (early in my book) Professor T. W. Hutchinson’s comment that, “in the nineteenth century political economists … took and were often highly qualified to take, much account of the political consequences of economic policies,” whereas today we often have “a complete and possibly disastrous disregard of political values and processes, … especially from Oxford and Cambridge” (page 25).

You communicate to the reader neither my central argument nor my crucial proposals. I recommend that it is the duty of economists to make their political assumptions explicit, and habitually to explain what they regard as ideal side by side with what they suggest could be made politically acceptable. — Yours faithfully,
W. H. Hutt
Stanford, California

*****
4.
John Biffen, “John Biffen on W. H. Hutt,”
The Spectator, August 7, 1971, pp. 216-17.

Politically Impossible …? W H Hutt
(IEA Hobart Paperback 75p)

Politicians are never short of advice. It comes from all quarters and is rarely dispassionate or disinterested. Occasionally it has the virtue of candour. “Take your tanks off my lawn, Hughie,” Mr Harold Wilson is supposed to have said to the Secretary of the AEF in their tense discussions over the trade union reform outlined in In Place of Strife. Businessmen and academics more often temper their warnings and exhortations with considerations of what they deem to be politically practicable. There seems to be a universal itch for everyone to play at least part of the role of politician; and since the professional standards of that trade are not easy to define, it is not very surprising.

Surprising or not, it is painful to Professor Hutt, who makes this clear in the first of a new series of Hobart Paperbacks. The book contains a plea and an analysis. The plea is that economists should present their conclusion and advice in two stages; one that offers the best solutions that economics can teach, and the second, and inferior, stage that offers conclusions explicitly diluted by political judgement.

Hutt feels that economists have deserted their intellectual integrity in commenting on current economic affairs by advancing judgements conditioned by what they believed would be well received by the political group in power. The prime offender was Keynes, who, it is suggested, resisted the proposition that wage rates were kept too high by the collective bargaining pressures of the 1920s and 1930s. Keynes thought such a view would be politically suicidal, and instead advocated the maintenance of effective demand by a mild inflation. The use of mild inflation as a cure to unemployment has now degenerated — and particularly in recent years — to sharper increases. “The monetary experience of 1958 to 1970 amply confirms this inference. The expansionists are in time driven to advocating not merely more than mild inflation but rising rates of inflation, not only high but accelerating inflation.” The economic consequences of Lord Keynes seem dire indeed; but I have the impression that Professor Hutt is still treasuring a long established and lively controversy with Keynesian thought which he embodied in his pre-war book The Theory of Idle Resources.

The value of Professor Hutt’s book, however, lies not only in his plea but in his analysis of some of the contemporary political issues that are the subject of conflicting pressures and advice from economists and other opinion-formers. His subjects range widely and include monetary policy, the legal immunities granted to trade unions and the present system of welfare payments. It is the latter which dominates the book. This is appropriate since the publishers, the Institute of Economic Affairs, have done so much to challenge the established philosophy and institutions that comprise our own ‘welfare state.’ Hutt quite rightly perceives that “leadership in opinion-making will … have to be exercised from outside the vote-gathering process.”

The twentieth century has seen a rapid growth in welfare expenditure, sustained if not initiated by the emergence of a mass electorate. The government now possesses a patronage fund, from public sources, which would have excited the keenest envy of the Duke of Newcastle. Above all, this welfare expenditure has spawned institutional interests that are determined to preserve and extend the present centralizing and monopolistic structures in health and education. The danger is that the development will eventually atrophy experimentation and adaptability in the very area where flexibility should be paramount. Hutt fears that welfare on the current and prospective level will lead to abuse and a moral disintegration of society. In the context of current rates of inflation these warnings have a disconcerting validity.

We are told: “the Central Statistical Office … has presented figures showing that (over a wide range of incomes, and excluding only the very highest and the lowest) people pay in taxes more or less as much as they receive in benefits.” In this light, many of the institutional arrangements of our ‘welfare state’ seem an expensive overhead to promote such a modest re-allocation of resources. One wonders why this has persisted with so little challenge. Hutt, himself, offers part of an answer. He concludes that the alternative, a negative/reverse income tax, “ignores, firstly, the attractiveness of an appeal to the heart, and secondly, the offsetting disadvantage of a threatened loss to many civil servants (who are also voters) of their jobs or of prospects of promotion.” There is certainly a popular distaste for welfare benefits paid in cash, probably nowhere more evident than in the continuing hostility to family allowances. Hutt also concludes there are other potent arguments against the ‘negative/reverse income tax’ scheme of social welfare : “… it so resembles the notorious Speenhamland wage supplement of 1795 that it is impossible not to retain misgivings. The chief merit of the plan is one which he (Dr Milton Friedman) does not himself claim: that it exposes the vote-purchasing incentive for income transfers.”

The analysis that Hutt offers is a refreshing and succinct attempt to identify the economic consequences of present trends in welfare expenditure, and the political temptations and attractions he thinks are offered by the alternative policies available. He lives up to the strict standards he suggests for his fellow economists in the earlier section of the book. Where he has pioneered, how many will follow?

Economics is a very imprecise art; it abounds with value judgements and enables wholly opposed conclusions to be argued with intellectual integrity from similar economic data. Politicians are not wholly innocent in these matters; and I doubt if this side of Eden we shall attain the ideal outlined in the editorial preface: namely a “division of labour between the economist who analyses, the politician who judges, and the administrator who implements.”

John Biffen is Conservative MP for Oswestry

*****
5.
M. C., “The politics of money,” Indian Journal of Economics,
vol. LII, issue no. 205 (October 1971), pp. 191-93.

A review note on Politically Impossible …? by W.H. Hutt. Hobart Paperback No. 1. Published by The Institute of Economic Affairs, London, 1971. Pp. xi+99. Price 75 P.

Is the following of any value?

Professor Samuelson, the Nobel Prize winner (or, acceptor!) and the writer of Students’ Economics would not feel “too great concern” at a “mild steady inflation” of (say) (i) 5% (1948), (ii) 3% (1955), (iii) 2%, (iv) below 2% (1961) successively, finally omitted the reference to percentage in the seventh and eight edition of that book. Meanwhile U.S.A. has experienced inflation during 1962 through 1970 at 1.1%, 1.3%, 1.6%, 1.8%, 2.8%, 3.2%, 4.0%, 4.7% and 5.2%. After accepting a Nobel Prize, the Professor regarded recent decisions and advice as disastrous and perhaps U.S.A. inflation as too mild. He would look for “a better way than this cruel trade off between unemployment and prices” (Business Week, 21. 10. 1970, p. 90).

Perhaps ‘yes’: perhaps ‘no’. Yes, it shows how the economist, when he starts to seek political status, may change overnight from his stand for little inflation to accelerating inflation. ‘Politics’ affects his ‘Money’. Perhaps ‘no’, because it is not yet found out from Professor Samuelson why in the face of his reducing the limits of mild inflation to “below 2%” he thought that 5.2% was “too mild.” Maybe there is a reason — apparently political — whose economic aspect reveals any other attitude to have greater opportunity costs to contend with.

One therefore feels like asking himself with Schumpeter whether one would ever argue that in one’s own interest a certain fact must not be told publicly and that a certain time of reasoning would be undesirable. No wonder then that particular economists have made ‘slight’ adjustments so that the view would conform to the policy of a politician or a political party. Such an economist seems to study human behaviour as a relationship between ends and scarce means as constrained by what is politically (through voting and politics) feasible. If the people cannot be made to understand real issues clearly and convincingly, then the economist should raise only those issues and draw conclusions as advices which politicians would be able to get away with. But this is not right. Why should economic analysis be cast in the moulds of politically possible? Why should the economist not act as a disinterested expert?

If economists-to-be can rise above their anxiety to inhibit discussion and shun recommendations, which they think are politically impossible because of their concern with “repute” and “standing”, they would realise that as “onlookers” (which politicians are not) they can see “most of the game” and perhaps make better judgment even with regard to (i) what is politically possible, and (ii) particularly what is not, due to difficulty of communication. But such economists must be genuine lovers of truth.

Citing an example from Monetary Policy, the author has referred to the problem of gold standard: “the old fashioned gold standard would be a more expedient system solely because, under the kind of convertibility obligation that standard requires, politicians could be subjected to a simple understandable monetary discipline.” It may well be a ‘second best solution’, but it would perhaps render “politically impossible the creeping, crawling, chronic inflation which has plagued mankind since the 1930’s.” It is a pity that monetary policy too is being used in election winning: and governments would well be forewarned that the public is bound to see through the game soon and realise that inflation is being deliberately perpetuated by the ‘elected’ and that it cannot prevent ‘lay offs’ and ‘unemployment’, nor can it lead to a control of rentier’s exploitation nor even a check to the increasing pressure for devaluation due to worsening balance of payments situation. The recent crisis is a case in point: though trade and balance of payments situation. The recent crisis is a case in point: though trade and balance of payments concern mainly U.S.A., some European countries and Japan, the recent events cannot but affect the developing countries and lead to the strengthening of the emergence of power-blocs imaged in certain ‘Mandrake’ strips. At the economic profit, it results in controls which tend to repress productivity. Any wage-freeze, conversion-ban and import-surcharge, which may be resorted to, can, perhaps be managed in a manner to minimise “the prospective loss of votes.” A government may even resort to floating exchange rates, provided its officials and bankers do not behave with “pig-headedness” or are overrated. Floating exchange rates would not ensure best coordination of international economic activity as it amounts to an “abandonment of contractual relationships between national currencies.” One wishes that world economists state the case as boldly as this IEA paperback author.

Anybody who would support the monetary (inflationary) policy must be shutting his eyes to or trying to evade the issue of the almost-certain strong opposition by privileged actors of society (say, the labour unions or employers’ association) in case the government decides upon some other policy. Even in the 1930’s, Graham (Frank D.) had suggested that if unions acted anti-socially, they would have to be tackled. But “Keynes was silent on the point”, and so is the silence of many present day economic-experts.

Really, it is the lack of proper education of the labour force — both agricultural and industrial, unionists and non-unionists. Besides the fact that many of the unionists, who are constituting not more than a small fraction of voters, join the unions for fear of otherwise losing their jobs, the non-unionists are in majority and stand to suffer more, partly because non-membership precludes them from getting better jobs and partly because unionism adversely affect investment decisions of entrepreneurs.

A reference has been to incomes-policy as well, as a second best political alternative: yet the politicians may seek a pretence of impartiality and may prefer to tell the people that “both wage rate increases and ‘profit margins’ must be curbed.” But what should prevent the economists from making it clear to “students” and “press” that prospective yields must be allowed to increase and that market-selected price and wage-rate adjustments are the means to prosperity with stability and distributive justice!

Similarly, the continued acceptance of a strike-threat system causes not merely (i) loss of ‘plant’ and ‘man’ hours, (ii) perversion of workers’ psychology, (iii) sufferance for third parties but basically it helps distort (i) the production structure and (ii) the composition of labour employment and thus adversely affects demand for labour, real-income-growth, distribution of wages and income and even accentuates recession-creating effects.

May the economists, their students and politicians in developing countries carefully read such I.E.A. paperbacks and get the inspiration to rise out of the rut into which they have been pushed or allowed themselves to be pushed. The West looks to them to rise to the occasion, cut off from the traditional streams of education and strike a new (more correct) line of exposition, education and action. It would not only help them jump the gap of material affluence but also enable them to lay the foundations of a better standard of life — better civilisation and culture.

*****
6.
Henry Hazlitt, [untitled book review], The Freeman,
vol. 22, no. 1 (January 1972), pp. 58-60.

W. H. Hutt is one of the outstanding economists of our age. Born in London, professor and later dean of the Faculty of Commerce at the University of Cape Town, and recently visiting professor at a number of American universities, he has published half-a-dozen books of which the two most influential have been his short Theory of Collective Bargaining in 1930 and the 446-page Keynesianism — Retrospect and Prospect in 1963.

His work has been distinguished not only for remarkable acumen but for no less remarkable independence and courage. The present paperback is devoted to trying to instill some of his own candor and courage into his professional colleagues.

For what Professor Hutt finds is that most of these colleagues, particularly in the last forty years, have become increasingly poor economists in the effort to become “realistic” politicians. Whenever an honest economist has come up with a recommendation, based on principle, for the outright repeal of some entrenched bad law or discontinuance of some other disruptive government policy, not only the political demagogues but his own colleagues have dismissed his recommendation as “politically impossible.” As a result, more and more economists have abandoned candor, refrained from even suggesting the “politically impossible” proposal, and instead have put forward compromise proposals that they think have a political chance of being adopted. Or they have sought a reputation for influence by recommending what they thought was going to be done anyway. Or they have resorted to outright demagogy in calling for some new form of inflation, control, socialism, or seizure. The result has been a deplorable degeneration in economic thought.

Hutt illustrates his thesis in four separate fields — monetary policy, income transfers, Keynesianism, and the strike-threat system. His comments on particular economists are candid and sometimes unsparing.

Keynes, for example, he points out, gained his great reputation among his colleagues as well as with the general public by pretending that he had found an easy way out of unemployment and depression. This consisted of cheap money, government deficits, and inflation. The word “inflation” itself was suspect. “But an inspired insight enabled the Keynesians to perceive that, if called something else, ‘the maintenance of effective demand,’ for instance, it can become respectable.”

Under no conditions did Keynes want to risk offending the unions by suggesting that they were even partly responsible for creating the mass unemployment of the 1930’s by pushing up and keeping up wage rates to unworkable levels. So he invented the untenable “unemployment equilibrium” theory:

“Keynes, perceiving that it would be politically suicidal to mention the unmentionable, saw a way out through the most successful conjuring trick in history which, deceiving an audience that wished to be deceived, led to its being hailed as a great discovery, as revolutionary and important as Einstein’s theory of relativity. I am not accusing Keynes of intellectual dishonesty. He deceived himself with his ‘conjuring trick.’ That is how I have come to regard his ‘unemployment equilibrium’ notion, together with the subsidiary theories with which it was bolstered.”

What is now commonly dismissed as “politically impossible” usually turns out on closer examination to be merely the politically difficult or politically unlikely. It is only made more difficult and more unlikely when economists lose the courage even to propose it. Hutt’s book is essentially a plea to his professional colleagues for more honesty and candor:

“No policy which is for the advantage of the people is incapable of being effectively explained to them. It will of course take time and persistence to convince a majority. In the meantime compromise will be needed whenever urgent steps are required. But compromise, while it is the politician’s privilege and necessity, is the scholar’s deadly sin — unless it is presented clearly and unmistakably as compromise and is always accompanied (a) by the noncompromising proposal and (b) an explicit explanation of the vote-procurement reasons for the compromising proposal.”

This “dual form of exposition,” as Hutt calls it, would certainly be a great advance compared with the present typical ambiguity and disingenuousness. Yet, while there is only one ideal course, there are usually an indefinite number of possible compromises. If each economist plumps for one of these, in accordance with his own amateur notions of its political feasibility, the conflict among their recommendations may only end by confusing public opinion. In the long run it seems better for the economist to point to the path of principle, and leave the compromises to the politicians.
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