The crisis has also been attributed to other causes which we will now consider.
(1) Over-production. We have to distinguish between two things here—real over-production and apparent over-production. By real overproduction I mean a production so great that it exceeds the demand. This may perhaps apply to motor-cars and wheat in the United States at the present moment, although even that is doubtful. By “over-production” people usually mean a condition of things in which more of one particular article is produced than can, in existing circumstances, be sold, in spite of a shortage of consumption-goods among consumers. This condition of things I call apparent over-production. In this case it is not the demand that is lacking but the consumers’ purchasing-power. Such apparent over-production is only another word for a crisis, and therefore cannot serve as an explanation of the latter; hence people who try to make over-production responsible for the crisis are merely juggling with words.
(2) Reparations. The obligation to pay reparations lies heavy on the debtor nations and their industries, compels them to go in for dumping, and so harms the creditor nations too This is beyond dispute. But the appearance of the crisis in the United States, in spite of the high tariff-wall protecting them, proves that this cannot be the principal cause of the world crisis. The shortage of gold in the debtor countries due to reparations can at most serve as an argument for putting an end to these payments; it cannot be dragged in as an explanation of the world crisis.
(3) Erection of new tariff-walls. Increase in the unproductive burden of armaments. Political insecurity owing to latent danger of war. All these things add considerably to the troubles of Europe, but do not materially affect America. The appearance of the crisis in America shows that they cannot be its principal causes.
(4) The dropping-out of the two Powers, China and Russia. This blow to world trade also does not touch America very nearly, and therefore cannot be a principal cause of the crisis.
(5) The economic rise of the lower classes since the War. This, supposing it to be a reality, could only produce a scarcity of goods, not an excessive supply.
I will not weary the reader by enumerating further contentions which do not seem to me to get to the heart of the matter. Of one thing I feel certain: this same technical progress which, in itself, might relieve mankind of a great part of the labour necessary to its subsistence, is the main cause of our present troubles. Hence there are those who would in all seriousness forbid the introduction of technical improvements. This is obviously absurd. But how can we find a more rational way out of our dilemma?
If we could somehow manage to prevent the purchasing-power of the masses, measured in terms of goods, from sinking below a certain minimum, stoppages in the industrial cycle such as we are experiencing to-day would be rendered impossible.
The logically simplest but also most daring method of achieving this is a completely planned economy, in which consumption-goods are produced and distributed by the community. That, in essentials, is what is being attempted in Russia to-day. Much will depend on what results this mighty experiment produces. To hazard a prophecy here would be presumption. Can goods be produced as economically under such a system as under one which leaves more freedom to individual enterprise? Can this system maintain itself at all without the terror that has so far accompanied it, which none of us “westerners” would care to let himself in for? Does not such a rigid, centralized system tend towards protection and hostility to advantageous innovations? We must take care, however, not to allow these suspicions to become prejudices which prevent us from forming an objective judgment.
My personal opinion is that those methods are preferable which respect existing traditions and habits so far as that is in any way compatible with the end in view. Nor do I believe that a sudden transference of the control of industry to the hands of the public would be beneficial from the point of view of production; private enterprise should be left its sphere of activity, in so far as it has not already been eliminated by industry itself in the form of cartelization.
There are, however, two respects in which this economic freedom ought to be limited. In each branch of industry the number of working hours per week ought so to be reduced by law that unemployment is systematically abolished. At the same time minimum wages must be fixed in such a way that the purchasing power of the workers keeps pace with production.
Further, in those industries which have become monopolistic in character through organization on the part of the producers, prices must be controlled by the State in order to keep the creation of new capital within reasonable bounds and prevent the artificial strangling of production and consumption.
In this way it might perhaps be possible to establish a proper balance between production and consumption without too great a limitation of free enterprise, and at the same time to stop the intolerable tyranny of the owners of the means of production (land, machinery) over the wage-earners, in the widest sense of the term.
Culture and Prosperity
IF ONE WOULD ESTIMATE the damage done by the great political catastrophe to the development of human civilization, one must remember that culture in its higher forms is a delicate plant which depends on a complicated set of conditions and is wont to flourish only in a few places at any given time. For it to blossom there is needed, first of all, a certain degree of prosperity, which enables a fraction of the population to work at things not directly necessary to the maintenance of life; secondly, a moral tradition of respect for cultural values and achievements, in virtue of which this class is provided with the means of living by the other classes, those who provide the immediate necessities of life.
During the past century Germany has been one of the countries in which both conditions were fulfilled. The prosperity was, taken as a whole, modest but sufficient; the tradition of respect for culture vigorous. On this basis the German nation has brought forth fruits of culture which form an integral part of the development of the modern world. The tradition, in the main, still stands; the prosperity is gone. The industries of the country have been cut off almost completely from the sources of raw materials on which the existence of the industrial part of the population was based. The surplus necessary to support the intellectual worker has suddenly ceased to exist. With it the tradition which depends on it will inevitably collapse also, and a fruitful nursery of culture turn to wilderness.
The human race, in so far as it sets a value on culture, has an interest in preventing such impoverishment. It will give what help it can in the immediate crisis and reawaken that higher community of feeling, now thrust into the background by national egotism, for which human values have a validity independent of politics and frontiers. It will then procure for every nation conditions of work under which it can exist and under which it can bring forth fruits of culture.
Production and Purchasing Power
I DO NOT BELIEVE that the remedy for our present difficulties lies in a knowledge of productive capacity and consumption, because this knowledge is likely, in the main, to come too late. Moreover the trouble in Germany seems to me to be not hypertrophy of the machinery of production but deficient purchasing power in a large section of the population, which has been cast out of the productive process through rationalization.
The gold standard has, in my opinion, the serious disadvantage that a shortage in the supply of gold automatically leads to a contraction of credit and also of the amount of currency in circulation, to which contraction prices and wages cannot adjust themselves sufficiently quickly. The natural remedies for our troubles are, in my opinion, as follows:—
(I) A statutory reduction of working hours, graduated for each department of industry, in order to get rid of unemployment, combined with the fixing of minimum wages for the purpose of adjusting the purchasing-power of the masses to the amount of goods available.
(2) Control of the amount of money in circulation and of the volume of credit in such a way as to keep the price-level steady, all special protection being abolis
hed.
(3) Statutory limitation of prices for such articles as have been practically withdrawn from free competition by monopolies or the formation of cartels.
Production and Work
An Answer to Cederström
DEAR HERR CEDERSTRÖM,
Thank you for sending me your proposals, which interest me very much. Having myself given so much thought to this subject I feel that it is right that I should give you my perfectly frank opinion on them.
The fundamental trouble seems to me to be the almost unlimited freedom of the labour market combined with extraordinary progress in the methods of production. To satisfy the needs of the world to-day nothing like all the available labour is wanted. The result is unemployment and excessive competition among the workers, both of which reduce purchasing power and put the whole economic system intolerably out of gear.
I know Liberal economists maintain that every economy in labour is counterbalanced by an increase in demand. But, to begin with, I don’t believe it, and even if it were true, the above-mentioned factors would always operate to force the standard of living of a large portion of the human race down to an unnaturally low level.
I also share your conviction that steps absolutely must be taken to make it possible and necessary for the younger people to take part in the productive process. Further, that the older people ought to be excluded from certain sorts of work (which I call “unqualified” work), receiving instead a certain income, as having by that time done enough work of a kind accepted by society as productive.
I too am in favour of abolishing large cities, but not of settling people of a particular type—e.g., old people—in particular towns. Frankly, the idea strikes me as horrible. I am also of opinion that fluctuations in the value of money must be avoided, by substituting for the gold standard a standard based on certain classes of goods selected according to the conditions of consumption—as Keynes, if I am not mistaken, long ago proposed. With the introduction of this system one might consent to a certain amount of “inflation,” as compared with the present monetary situation, if one could believe that the State would really make a rational use of the windfall thus accruing to it.
The weaknesses of your plan lie, so it seems to me, in the sphere of psychology, or rather, in your neglect of it. It is no accident that capitalism has brought with it progress not merely in production but also in knowledge. Egoism and competition are, alas, stronger forces than public spirit and sense of duty. In Russia, they say, it is impossible to get a decent piece of bread. … Perhaps I am over-pessimistic concerning State and other forms of communal enterprise, but I expect little good from them. Bureaucracy is the death of all sound work. I have seen and experienced too many dreadful warnings, even in comparatively model Switzerland.
I am inclined to the view that the State can only be of real use to industry as a limiting and regulative force. It must see to it that competition among the workers is kept within healthy limits, that all children are given a chance to develop soundly, and that wages are high enough for the goods produced to be consumed. But it can exert a decisive influence through its regulative function if—and there again you are right—its measures are framed in an objective spirit by independent experts.
I would like to write to you at greater length, but cannot find the time.
Minorities
IT SEEMS TO BE a universal fact that minorities—especially when the individuals composing them are distinguished by physical peculiarities—are treated by the majorities among whom they live as an inferior order of beings. The tragedy of such a fate lies not merely in the unfair treatment to which these minorities are automatically subjected in social and economic matters, but also in the fact that under the suggestive influence of the majority most of the victims themselves succumb to the same prejudice and regard their brethren as inferior beings. This second and greater part of the evil can be overcome by closer combination and by deliberate education of the minority, whose spiritual liberation can thus be accomplished.
The efforts of the American negroes in this direction are deserving of all commendation and assistance.
Observations on the Present Situation in Europe
THE DISTINGUISHING FEATURE of the present political situation of the world, and in particular of Europe, seems to me to be this, that political-development has failed, both materially and intellectually, to keep pace with economic necessity, which has changed its character in a comparatively short time. The interests of each country must be subordinated to the interests of the wider community. The struggle for this new orientation of political thought and feeling is a severe one, because it has the tradition of centuries against it. But the survival of Europe depends on its successful issue. It is my firm conviction that once the psychological impediments are overcome the solution of the real problems will not be such a terribly difficult matter. In order to create the right atmosphere, the most essential thing is personal co-operation between men of like mind. May our united efforts succeed in building a bridge of mutual trust between the nations!
The Heirs of the Ages
PREVIOUS GENERATIONS WERE ABLE to look upon intellectual and cultural progress as simply the inherited fruits of their forebears’ labours, which made life easier and more beautiful for them. But the calamities of our times show us that this was a fatal illusion.
We see now that the greatest efforts are needed if this legacy of humanity’s is to prove a blessing and not a curse. For whereas formerly it was enough for a man to have freed himself to some extent from personal egotism to make him a valuable member of society, to-day he must also be required to overcome national and class egotism. Only if he reaches those heights can he contribute towards improving the lot of humanity,
As regards this most important need of the age the inhabitants of a small State are better placed than those of a great Power, since the latter are exposed, both in politics and economics, to the temptation to gain their ends by brute force. The agreement between Holland and Belgium, which is the only bright spot in European affairs during the last few years, encourages one to hope that the small nations will play a leading part in the attempt to liberate the world from the degrading yoke of militarism through the renunciation of the individual country’s unlimited right of self-determination.
III
Germany 1933
Manifesto
AS LONG AS I have any choice, I will only stay in a country where political liberty, toleration, and equality of all citizens before the law are the rule. Political liberty implies liberty to express one’s political views orally and in writing, toleration, respect for any and every individual opinion.
These conditions do not obtain in Germany at the present time. Those who have done most for the cause of international understanding, among them some of the leading artists, are being persecuted there.
Any social organism can become psychically distempered just as any individual can, especially in times of difficulty. Nations usually survive these distempers. I hope that healthy conditions will soon supervene in Germany, and that in future her great men like Kant and Goethe will not merely be commemorated from time to time, but that the principles which they inculcated will also prevail in public life and in the general consciousness.
March, 1933.
Correspondence with the Prussian Academy of Sciences
The following correspondence is here published for the first time in its authentic and complete
form. The version published in German newspapers was for the most part incorrect, important
sentences being omitted.
The Academy’s Declaration of April 1, 1933, Against Einstein
THE PRUSSIAN ACADEMY of Sciences heard with indignation from the newspapers of Albert Einstein’s participation in atrocity-mongering in France and America. It immediately demanded an explanation. In the meantime Einstein has announced his withdrawal from the Academy, giving as his reason that he cannot continue to serve the Prussian State under its pre
sent Government. Being a Swiss citizen, he also, it seems, intends to resign the Prussian nationality which he acquired in 1913 simply by becoming a full member of the Academy.
The Prussian Academy of Sciences is particularly distressed by Einstein’s activities as an agitator in foreign countries, as it and its members have always felt themselves bound by the closest ties to the Prussian State and, while abstaining strictly from all political partisanship, have always stressed and remained faithful to the national idea. It has, therefore, no reason to regret Einstein’s withdrawal.
Prof. Dr. Ernst Heymann,
Perpetual Secretary
Le Coq, near Ostende, April 5, 1933
To the Prussian Academy of Sciences,
I have received information from a thoroughly reliable source that the Academy of Sciences has spoken in an official statement of “Einstein’s participation in atrocity-mongering in America and France.”
I hereby declare that I have never taken any part in atrocity-mongering, and I must add that I have seen nothing of any such mongering anywhere. In general people have contented themselves with reproducing and commenting on the official statements and orders of responsible members of the German Government, together with the programme for the annihilation of the German Jews by economic methods.
The World As I See It Page 8
