Free Trade or Coercion?

July 3, 1950

Rather than reiterate my own reasons for questioning whether the Schuman coal and steel pool proposal is a real step toward free trade and economic integration (Newsweek, June 5), I quote from the excellent summing up of George Winder in The London City Press of June 9:

“What Mr. Schuman proposes is a substitute for free trade—an effort to obtain its advantages without conceding the freedom which is its essential condition. Free trade brings about the integration of trade by giving the individual freedom to buy and sell as he likes. Mr. Schuman is attempting to give us the advantages of free trade by denying freedom. He intends to impose integration by setting up an international body with power to dictate to national producers. . . .

“However disinterested are the aims of those who desire to bring about this unification, we can be sure that, if it is attained, it will be run for the benefit of iron, steel, and coal producers and their employees, and not for the benefit of the peoples of Europe as a whole. . . .

“The integration of the iron, steel, and coal industries would require that the less efficient units should close down, and the more efficient would expand their production.... Any politician, however, who imagines that the British iron and steel worker, and the British coal miner, or their French and German counterparts, would allow units of the industry which provides their livelihood to be closed down by the fiat of an international body, has lost all sense of reality. . . .

“But the economic unity of Europe, by means of free trade, is within the bounds of attainment....”

The British Labour Party pamphlet rejects the Schuman plan, not because it would involve coercion, but because it would not involve enough. “Any industries concerned in European planning,” it insists, “should be subject to government direction in their own country.” Government “must be able to decide the investment policies of the basic industries. . . . Nothing less than public ownership can ensure this fully.... If there is any threat of a recession in world trade, it is then vital to maintain and perhaps increase investment in these industries. But this is just the time when private capitalists, fearing for their profits, restrict production.”

In other words, it is precisely when events have proved that steel is already being produced in excess of demand that socialism would increase steel capacity—not because anybody wants to buy more steel, but to maintain “full employment and stability”!

The National Executive Committee of the British Labour Party, which composed this pamphlet, does not know that it is precisely relative prices, profits, and losses that in a free-market economy decide the balance of production among thousands of different commodities. If this free-market yardstick is thrown away, nothing remains but naked government coercion. It is then the politicians and bureaucrats who decide arbitrarily how much of each thing is to be produced.

But at least the socialist authors of this pamphlet have a candor missing in our crypto-socialists at home. They do not pretend to be for socialism and the free market at the same time. “Our population,” they write, “would not tolerate the flagrant injustices of a free-market economy in which workers live in squalor yet see the shops bulging with goods beyond their reach.” No doubt the free-market squalor they have in mind is in the United States, where average factory wages are still only $57 a week, as compared with the magnificent average of $20 a week in Socialist Britain. I wish the authors had explained in more detail, however, how industry keeps going here and in other squalid free-market economies by turning out goods that nobody can buy.

Just why our own government thinks it must continue to force American taxpayers to underwrite all these economic errors, and support and subsidize these anti-recovery policies, is a question, as I have learned by sad experience, that it is futile to raise.