Time Will Run Back

by Henry Hazlitt

  “But I’m afraid it wouldn’t work, Adams. This freedom of consumption, as you yourself pointed out to me not so long ago, would totally destroy our central planning. We wouldn’t be able to decide in advance what things to produce and in what proportions. We would have to depend upon the whims of individual consumers, and start to produce what these consumers asked for. And it isn’t difficult to see what would happen. Let’s say that out of every hundred workers, sixty-five are unskilled, thirty have fair skills and five have exceptional skills. Each would get the same amount of labor certificates for his week’s work. But everybody would demand first of all the product of the highly skilled or exceptionally endowed workers. And there just would never be enough of this to go around.”

  “Why not first come, first served?”

  “But then people would be rewarded solely in proportion to their luck or patience in being the first on queues to get the limited supply of fine products, while those who worked too hard to get in line on time would suffer.”

  In reply Adams simply shrugged his shoulders.

  “I get more disheartened every day,” said Peter at last. “We seem to be up against a stone wall. We must, of course, have socialism and central planning. Anything else is unthinkable. But we have been forced step by step to one depressing conclusion after another. We have been forced to conclude that under socialism and central planning we can have no economic liberty for the individual and therefore no liberty of speech or thought; that under socialism and central planning we can have no free, informed and unintimidated public opinion, and therefore no meaningful democracy. And now we are forced to conclude that we cannot even figure under socialism; we cannot even calculate; we do not know how to produce goods in proportion to human needs and wants; we cannot tell whether or when or how much we are misdirecting and wasting labor and materials and other precious resources.... We are working completely in the dark, by guess and by goose step.”

  Chapter 24

  COME in!” He had learned to recognize the timid little knock of the waitress bringing his tray.

  On most of the evenings when he did not have supper at his father’s bedside, Peter had established the custom of having it brought to his desk in the office. It had been his father’s former habit to eat his supper at this desk and to work late into the nights. Stalenin had explained to him that this in effect forced all the commissars in Russia to work at the same hours and to adopt the same habit. This got more work out of them, kept them out of mischief and did not give them time to conspire against him.

  Peter had adopted the custom chiefly because he found it impossible otherwise to get through his work.

  He watched the waitress, a plain-looking woman, as she spread the large napkin on the desk and placed the tray on it. She was dressed in a neat white uniform with a starched cap. She worked in a quiet, timid way, obviously trying to attract as little attention as possible. He noticed consciously for the first time her thin white hands and wrists, her drawn face, the pallor of her cheeks.

  He sat down to his lonely meal in a despondent mood. His mind turned again, as it had every night now, to Edith and her father. What step could he take to find them that he had not already tried?

  His thoughts stayed with him when he went to bed, and he tried to grapple once more with the dismal conclusions to which he had felt forced to arrive in his talk with Adams that afternoon. He felt almost smothered by multiple layers of despondency.

  But toward morning, as he kept turning the social problem over and over in his mind, he suddenly saw a light. It was with real eagerness that he launched upon his talk with Adams at their four o’clock conference the next afternoon.

  “We decided, you remember,” he began, “that Marx was wrong in concluding that labor was the only factor capable of producing value. We decided that production was the result of the cooperation of at least three main factors—land, labor, and tools. Now as I thought this over last night I was more and more struck by the immense importance of the tools and machinery, their enormous effect on both the quantity and quality of production, and therefore the stupendous importance of improving the quantity and quality of the tools of production themselves.... Let’s take the three main factors that go to determine the volume and value of production. Let’s begin with land. I include in this, of course, natural resources and all other free gifts of nature. It’s obvious that we can’t do anything to increase these. All we can do is to try to make the best use of them. We are strictly limited, also, even concerning what we can do about labor. We can of course increase manpower by increasing the population. But it is doubtful whether that would make us collectively or individually any better off. For if we increased the population we would also increase the number of mouths to be fed, the number of persons to be clothed and housed, and so on; and we would have less natural resources per capita than we had before-”

  “You may be right there, chief. Our statistics don’t show it—they were either suppressed or never collected in the first place—but several of us in the Politburo privately suspect that it has been the series of famines and pestilences since the triumph of Communism that has helped us to solve our problems even as well as we do. The population of Wonworld today is estimated at only about a billion. But just before the final Communist-Capitalist War started, the world’s population was estimated at about two billions. Now every time there is a famine it leaves fewer mouths to feed with the amount of food that remains; it leaves more square feet of floor space per inhabitant, and so on. So our constant famines are, in a way, part of the solution of our difficulties.”

  “It is the continuance of just that kind of horrible ‘solution’ that I am trying to stop,” said Peter. “And that brings me to my hopeful conclusion. True, we can’t do much about land or labor. But it has just struck me that the quantity and quality of the tools and machinery of production are indefinitely expansible and improvable. If that is so, the economic lot of mankind can be constantly bettered without assignable limit.... Such a conclusion opens a new window on the world. It means a new dawn for mankind!”

  “Your conclusion may be very important, chief—but haven’t we already been trying to multiply and improve our tools of production?”

  “In a way, I suppose we have,” conceded Peter. “But our emphasis has been in the wrong place. Under the teachings of Marx, our emphasis has been on labor and labor efficiency. But what we have overlooked is that the right tools and machines can multiply labor’s productivity far more than added hours of daily work or individual industriousness, however desirable these may be.”

  “But how do you suppose that a man with so powerful a mind as Marx would ignore or belittle the tremendous contribution to production of tools and machinery?”

  “I suppose, Adams, it was because in Marx’s day the tools of production were privately owned, that the workers were powerless without these tools and had to come to the owners of them for work, and therefore the owners exploited the workers. Or at least Marx thought they did, and he was so angered by this that he ended by ignoring or denying the tremendous role that the tools of production played in creating goods. He admitted that they were necessary for production—he had to do that to explain why the workers who used the tools were forced to come to the employers who owned them. But he refused to admit that the tools added to production, and that part of the production must be attributed to the tools—instead of the whole of production being attributed to labor alone.”

  “You may have something there, chief. I’m going to study Marx some more....”

  At their next talk Peter was even more enthusiastic.

  “I think I’ve hit upon a brilliant reform, Adams! It hasn’t got much to do with Marx’s theory of production at all, at least not directly. It really grew out of my thinking about your own suggestion of using labor certificates instead of ration tickets. You remember I didn’t think that would work, and I still don’t think it would work. But something occurred to me that would do precisely
the same thing that you had in mind. Why not permit people to exchange their ration tickets with each other?”

  “But that would lead to chaos!”

  “How?”

  “How? Under present conditions, chief, the Central Planning Board decides what each worker, what each consumer, ought to have. It tries to provide him with a well-balanced ration all around: each person gets his daily quota of bread, and his weekly quota of beans and turnips. Everything is based on giving each person his proper number of calories—or at any rate the same number as anybody else. Then each person gets his yearly allotment of clothing, or of such luxuries as cigarettes and beer. Now if we allow people to start exchanging ration tickets, some of them would not get enough to eat, or would get too many luxuries that they didn’t really need—”

  “But no one would have to exchange his ration tickets, Adams. If he found that he got too little to eat he would very soon cease to make exchanges.”

  “We simply can’t depend on the people, chief, to exercise their own discretion regarding what is good for them.”

  “You mean that we commissars will have to make that decision for them?”

  “That’s what a commissar is for.”

  “Well, Adams, I don’t agree. On the contrary, each person knows his own needs best. At least he knows his own desires best. And if one man wants fewer beans and more cigarettes, while another wants fewer cigarettes and more beans, that is the business of each of them. They should be free to seek each other out and make the exchange.... Moreover, we will satisfy far more needs that way than we do now. It ought to be the very purpose of an economic system to satisfy as many needs and wants as possible. Under a system of free exchange of ration tickets, each person will be freer to take goods in whatever relative proportions he wants them—and not merely in the proportions that someone else, like you or me, thinks is good for him. This freedom of exchange will mean that more wants will be satisfied than now. And ultimately we have no other way of measuring ‘production’ than by its capacity to satisfy wants.”

  “What ratios of exchange are you going to establish, chief?”

  “What do you mean?”

  “Well, how many bread coupons, for example, would you specify as the legal exchange ratio for how many cigarette coupons?”

  “I wouldn’t specify any. Coupons can exchange in any ratio that suits both parties to the transaction.”

  “This brings us right back to the chaos I was talking about,” Adams said. “If no legal exchange rates are set, some people will start to take advantage of others.”

  “How?”

  “It is bound to happen. If Peter gains by the exchange, for example, Paul must necessarily lose by it. In fact, Paul must necessarily lose exactly as much as Peter gains.”

  “Not at all, Adams. You are missing the whole point. There is no inherent exchange ratio between bread coupons and cigarette coupons, or between bread and cigarettes. The relative value of a loaf of bread and a package of cigarettes will be different in each person’s mind, depending upon his own relative desires and wishes. No exchange can or will take place unless each party to the exchange feels that he gains by it.”

  “But won’t one of them necessarily be deceiving himself?”

  “Not at all. The gain from the exchange occurs in each case not because of some inherent difference in the relative objective value of the goods themselves, but because each party to the exchange more fully meets his own desires by making it. Both parties to the exchange gain, because both are better satisfied—otherwise the exchange would not have been made.”

  “But Marx’s labor theory of value—”

  “Marx’s labor theory of value was wrong, Adams, among other reasons, because it rested on the assumption that values were measured by some objective unit, whereas values are only measured subjectively. The value of a commodity doesn’t reside in the commodity; it resides in a relationship between somebody’s needs or desires and the capacity of that commodity to satisfy those needs or desires.... Marx looked for some objective standard of value because he assumed that two commodities that exchanged for each other must do so because of some ‘equality’ between them. But if two commodities were exactly equal, in the opinion of two persons, each of whom held one of them, there would be no reason for any exchange to take place at all. It is only because Peter, who holds potatoes, thinks that a certain amount of prunes, held by Paul, would be more valuable to him, that Peter would want to make an exchange. And only if Paul placed the opposite relative value on a given amount of potatoes and prunes would he agree to make the exchange.”

  “I still contend,” insisted Adams, “that your system would lead to chaos. For example, we issue cigarette coupons to every adult. But we find that only two-thirds of these coupons are ever turned in for cigarettes, because some people just don’t care to smoke. Under your proposed system, the people who don’t present their cigarette coupons under our present system would exchange them for bean coupons, say, offered by people who wanted more cigarettes. And then all the bean coupons and all the cigarette coupons would be presented—and there simply wouldn’t be enough cigarettes in which to redeem them.”

  “It would be our business, then,” said Peter, “either to increase the production of cigarettes or to reduce the number of cigarette ration coupons to bring about an equality.”

  Adams shrugged his shoulders in despair. “We’re simply going to have to produce more goods which we don’t really need to produce. I hope you’re at least not going to permit people to exchange the actual commodities themselves with each other! That would make the chaos greater still. The government would have no way of tracing who was consuming what. That’s precisely why we have always forbidden people to exchange goods with each other. Some people would have unbalanced diets; others would drink too much Marxi-Cola—”

  “All right; for the present we’ll simply permit the exchange of ration coupons, and see how that works.”

  Adams sighed. “Try it if you like, chief. Maybe it will work. But I must tell you in all candor that if I were running affairs I wouldn’t fool around with all these economic theories until I had taken care of more immediately important things first!”

  “What do you mean?”

  “Well, take this parade that Bolshekov has called for tomorrow afternoon—”

  “Parade? Bolshekov?”

  “Great Marx, chief! Hadn’t you even heard about it? He announced it on the radio this morning.”

  Peter was dazed.

  Adams stared at him incredulously. “I thought it was bad enough, chief, when Bolshekov announced the parade in his own name, announced that he had called it and that he would review it, and never even mentioned you or even Stalenin! But I assumed that at least he had had your consent, and that you had encouraged him to do it. This move is pretty ominous!”

  “I’ll soon stop this,” said Peter. He flicked the intercom and asked Sergei to get Bolshekov on the wire.

  “What is the meaning of this parade, No. 2?” demanded Peter.

  “It means that I have ordered a parade, Uldanov, and that I am reviewing the armed forces.” His tone was one of quiet contempt.

  “Well, Bolshekov, I am ordering you, in the name of Stalenin, to call off the parade.”

  “I am giving orders, not taking them, Uldanov. Do you want to call off the parade? Try it. See what happens!”

  Peter hung up. He turned to Adams.

  “I heard him,” said Adams.

  “You were right,” Peter said. “I’ve been a fool. I should never have appointed Bolshekov head of the Army and Navy. I should have had him liq—Well, I should have done something else than I did. He wouldn’t be challenging me the way he is unless he were sure that he and not I had the loyalty of the army.”

  “The army knows Bolshekov; it doesn’t know you, chief. And Bolshekov has been building up his own personal machine ever since Stalenin began to lose his grip. It’s too late to try to remove him by a simple order....
I’m afraid, chief, that you and I are now the ones in grave danger not merely of losing our jobs, but our lives.”

  Peter got up and walked around the room.

  “Why have you been sticking along with me, Adams?”

  “I thought I’d already made that clear, chief. I didn’t have much choice. Not being Russian, I haven’t the ghost of a chance of becoming Dictator myself. I knew that if Bolshekov came to power his first act would be my liquidation. What did I have to lose by lining up with his only possible alternative?”

  “Were those your only reasons?”

  Adams paused. “I happen to like you,” he said at length, and as if reluctantly. “Your sincerity... your disinterestedness... your innocent and naïve idealism....”

  “You say that almost as if you were ashamed of it.”

  “These are not the things that a good Bolshevist ought to like,” said Adams. “He ought to be strong; he ought to be hard; he ought to be cruel; he ought to be devious.... I have been all these things, or I would never have got to be No. 3. Maybe I got to be so cynical that I finally became cynical about cynicism itself.”

  “I want you to know, Adams, that I trust you completely. And I want you to know also that I’m not licked yet. I’ve been a fool, yes; but there’s still time to act. Thanks to your advice, I think I still have the loyalty of the Air Force. We must and will continue to consolidate that. And now that I’ve had my ears pinned back, I’m humbled, and I’m asking you for more of your practical advice....”

  Chapter 25

  AN hour before Bolshekov’s parade was due to start, Peter, acting on Adams’ advice, went on the radio on a worldwide hookup. The loud speakers were turned on full blast in every street. Peter declared on the radio that he had instructed Bolshekov to order and review this parade (this was Adams’ fabrication) in order to signalize and mark the day on which he, Peter Uldanov, acting in the name of Stalenin, was announcing one of the greatest economic reforms put into effect in the history of Wonworld.