International Statism Rampant

April 2, 1951

On March 19 the delegates of France, Western Germany, Italy, Belgium, the Netherlands, and Luxembourg initialed at Paris a draft treaty running for 50 years to give legal effect to the Schuman plan. It was another major step in the onward march of international bureaucratism, international controlism, and international statism.

The Schuman plan does have two merits. It represents a political rapprochement between France and Germany. And it recognizes, at least in the sphere of coal and steel, the evils of economic nationalism and fragmentation. But it resorts to a dangerously false method of meeting the problem. When we consider what it will mean from the standpoint of peace, freedom, and real internationalism in the long run, it is a grave step backward.

The truly liberal way for the six governments concerned to solve their coal and steel problem would be simply to lower or remove the legal barriers to international trade that they themselves have erected. This would mean the removal of tariffs, quotas, import and export prohibitions, license systems, and exchange controls.

Instead, the Schuman plan imposes new controls for old ones. It frowns, it is true, on private bigness, integration, or cartelization. But it will sanction and enforce all these things under intergovernmental direction. Under the plan the supranational control authority will have power to fix maximum, minimum, and “just” prices for coal and steel; to fix wages, production quotas, and consumption priorities; to subsidize submarginal companies; to guarantee private loans and to direct investment, financing expansion here and prohibiting it there. And to do all this the plan sets up elaborate bureaucratic machinery with consultative committees, and its own Assembly, Council, and Court of Justice.

In brief, in the name of freedom of competition the plan will prevent the very adjustments that it has been the immemorial function of competition to bring about—to allow and encourage the free expansion of efficient producers, to weed out the inefficient, to economize resources, lower prices, and promote maximum output.

Hardly was the ink dry on signatures to the Schuman plan than the French Government announced new plans to set up new supranational agencies with power to fix prices and allocate markets for Europe’s wheat, sugar, dairy products, wine, and whatnot. And the U.N. Economic and Social Council, meeting in Chile, voted 13 to 0 that governments of the world combine “to regulate at equitable levels and relationships the prices of essential goods moving in international trade, including capital goods, essential consumer goods and raw materials”—in other words, to fix prices on practically everything.

All this is to be piled on top of what is already the greatest aggregation of overlapping intergovernmental agencies and collectivist controls that the world has ever known—from the International Fund to the European Payments Union, and from exchange controls to the wheat pact.

The fact that existing agencies and controls are either breaking down or promoting further economic chaos, instead of leading to any demand for their abolition, leads merely to demands for still more agencies, still more bureaucrats, still more controls. It is never the controls that are blamed for the resulting chaos, but the few remaining elements of freedom.

When the brief attempt to make pounds convertible into dollars broke down in 1947, the British Government blamed free convertibility, and not its absurd officially pegged price of $4.03 for the pound. When Erhard finds it almost impossible in Germany today to maintain a few tiny islands of economic freedom in a sea of controls, it is the partial freedom, not the control, that is ridiculed.

The situation would not be quite so ironic if the bureaucrats of the world were frankly repudiating a free market economy. But world economic freedom is being strangled to the accompaniment of suave assurances that it is in the clutches of its friends.