Ordeal by Planning

June 28, 1948

It is fortunate that the publishers have so promptly made available an American edition of the most forthright and powerful attack on government economic planning that has appeared in England since the publication of F. A. Hayek’s The Road to Serfdom. The new book is called Ordeal by Planning.

Its author is John Jewkes, professor of economics in the University of Manchester and a wartime member of the British bureaucracy. Ordeal by Planning should appeal to an even wider audience than The Road to Serfdom. While it lacks some of the philosophic penetration and depth of the Hayek book, it is much more explicit and concrete. Its style is lively, sparkling, and witty. It hits hard. It is difficult to see how any but the most fanatic government planners can fail to be shaken by it.

Mr. Jewkes assails central economic planning in all its aspects. He exposes the economic fallacies behind it; he ridicules its scientific pretensions; he points to its international, political, and moral dangers. He beautifully dissects planners as a species.

As one specific case, he cites the British coal and power crisis of February 1947—“the classic example of a planning crisis.” In the preceding October the Minister of Fuel and Power himself had said with an irony that backfired: “Everybody knows that there is going to be a serious crisis in the coal industry—except the Minister of Fuel and Power.” When the crisis arrived, “a government pledged to planning and economic stability was compelled to order, at a moment’s notice, the closing down of about two-thirds of British industry.”

“No country,” Mr. Jewkes points out, “has ever suffered from a more sudden or catastrophic economic seizure. . . . The price system brings about gradual and continuous readjustment in a changing economic world; the central planning technique means that, from time to time, the economic system must be kicked downstairs.”

“I believe,” he continues, “that the recent melancholy decline of Great Britain is largely of our own making. . . . At the root of our troubles lies the fallacy that the best way of ordering economic affairs is to place the responsibility for all crucial decisions in the hands of the state.” He lists the fateful errors made in foreign economic policy, the mistake of exchange control, the false alibis, the effort to put the blame on America. “Export planning,” he concludes, “reduces exports.”

But though he shows again and again how planning leads toward national impoverishment, his most powerful indictment of it rests on its destruction of freedom: “When Sir Stafford Cripps declared in the House of Commons on Feb. 28, 1946, that no country in the world has yet succeeded in carrying through a planned economy without compulsion of labor, he might, with equal truth, have gone much further and admitted that no planned economy has yet operated without suppressing free speech, destroying representative government, robbing the consumer of free choice, and virtually abolishing private property. This is no accident.... It is due to the logical incompatibility of a planned economy and freedom for the individual.”

This book has so many merits and presents its case with such cumulative force that I regret to have to mention one serious flaw. Mr. Jewkes surprisingly accepts the Keynesian theory that “mass unemployment is due to a deficiency of demand for goods and services,” and that when it threatens, the state must intervene “either to spend more money itself or to put its citizens in the way of spending more.”

This superficial doctrine is merely one of the countless disguises of the immemorial gospel of inflation. It is government planning in the field of money and credit: and its application in practice must inevitably involve the same sort of slapdash economic guesswork and shabby political abuse that Mr. Jewkes so brilliantly exposes in government planning in other fields. Rejection of the Keynesian fallacies is essential to the preservation of free enterprise.