We Impose Collectivism

January 3, 1949

The White Paper on the British Government’s four-year recovery program is significant not only for what it tells about that government’s policies but for what it tells about our own. The Marshall Plan was put forward as a plan to combat Communism by helping the world to return to free enterprise. By almost imperceptible stages this objective has been reversed. We now insist that no country can get financial aid from us unless it rejects free enterprise in favor of government planning and collectivist controls.

This startling transformation has come about not by anybody’s conscious plot. It has come about because the basic assumptions of those in charge of the EGA are unconsciously collectivist.

The British White Paper makes this clear. The “general framework” of its four-year plan, it points out, “was one prescribed by OEEC [Organization for European Economic Cooperation] for all its members.” Last August “each member country was invited [by the OEEC] to prepare a statement showing how it proposed to reach the objective” of restoring “a satisfactory level of economic activity.” In asking for this the OEEC was in effect asking for a government plan. In asking for a government plan it was in effect asking for the suppression of free markets and free enterprise.

For government planning means central control. Where you have central control you cannot at the same time have private or individual control. One excludes the other. If the government is going to say exactly how much steel, coal, oil, electricity, chemicals, and textiles are going to be produced in the next four years, then individual firms cannot make their own decisions on how much they are going to produce of these things. If the government is going to plan just how great imports and exports and the trade deficit are going to be four years from now (a palpable absurdity anyway), then these things are not going to be left to the play of market forces.

Suppose, in reply to our demand for its “program” for economic recovery in the next four years, one European government had had the courage and intelligence to reply simply: “Our program is to restore a free economy,” period. In all likelihood the EGA would have told that country that this was no program at all—that it was (in the fashionable patter of the moment) merely a proposal “to sit idly by and do nothing.”

Yet what is America’s four-year production plan? Unless something is just about to he sprung on us. “America.” unlike “England” and “France,” has no plan at all. True, General Motors, United States Steel, the firms making television sets, the wheat grower in Kansas, the drugstore owner on Main Street have their own individual plan. So do most consumers—the family planning to build a home, to buy a car or a washing machine. But an overall government plan displaces such individual plans. In Britain the industrialists are told who is going to be allowed how much to expand what. The consumers are told how much of what they will be allowed to buy. The workers are told where and at what they can work. These four-year plans are obviously inspired by Russia’s five-year plans, paying Communism the sincerest flattery of imitation. And they are now being imposed by us on the Marshall-Plan nations under the pretense that we are not “interfering” in their economies at all. But when our officials are asked to insist on the conditions that would really bring recovery, such as the restoration of free exchanges and free markets, they reply that this would constitute “interference.” They dare not recommend a free economy for Europe, but they insist on continued collectivist planning.

As a result, the official summary of the British White Paper contains not a single word about the real cause of the British and the general European trade deficit. That cause is exchange control. Europe will continue to be “short” of dollars just as long as Europeans are not permitted to pay the real market price for dollars.