Preface

IT IS CURIOUS that so important a subject as unemployment should have brought forth no treatise devoted to theoretical analysis of the condition. There have been many books purporting to deal with unemployment of labor, but these have either been descriptive works, like Sir William Beveridge’s famous Unemployment, a Problem of Industry, or theoretical studies of demand, like Professor Pigou’s Theory of Unemployment, or Mr. J.M. Keynes’s General Theory of Employment, Interest and Money. This essay tries to fill the gap. The necessity became clear to me in the course of an attempt to envisage the institutions required for an equalitarian or competitive society. Having found no satisfactory analysis of conceptions which it seemed essential to employ, I was forced to provide my own textbook treatment.

My reason for using the term “idleness” instead of “unemployment” is that the latter term has, by tradition, become associated with the idleness of labor, and any satisfactory study must obviously be concerned with “idleness” in all resources. And having made “idleness” my topic, I have adhered strictly to it, and do not claim to have made any direct contribution to monetary or trade-cycle theory. I was at first tempted to venture into this province, but after many wanderings I could not feel satisfied that I had found my bearings with sufficient accuracy to try to guide others. Nevertheless, I have indicated a region which ought to be explored with the instruments that I have provided. My several critical references to the work of Mr. J.M. Keynes are due to the fact that his General Theory happens to be in the thoughts of all economists today. I have been wisely advised not to touch on any of the major controversies which his contribution has aroused. Certainly I have not avoided controversial topics. But it is my hope that all sides in the current debate on the monetary causes of idleness will find my analysis realistic and useful, and that it will be of some help to them in searching for the origin of their differences.

Although I am offering a “theoretical” contribution, a mere contribution to conceptual clarity, my inspiration has throughout been the closest interest in practical affairs. The objective problem of inventing institutions which could foster security and equality has been the motive which has guided my study at each stage. I earnestly believe that policy-makers could find enlightenment in it. But I am sufficient of a realist to know that the chances of its exercising any influence on policy are small. The politicians in unemployment-cursed countries are too concerned with their immediate popularity to give much consideration to a dispassionate analysis such as I have attempted. For if they do glance at its pages they will soon see that its implications cannot be easily reconciled with ideologies to which they feel they must of necessity pander.

However, to encourage the policy-makers, I have endeavored to treat the subject, as far as possible, in a non-technical way. Any patient and intelligent layman should be able to understand my argument. I have reduced the current jargon and conventional technical conceptions to a minimum, and where I have employed them, their meaning should be sufficiently evident to the careful reader. In this way, my treatment differs from all the recent theoretical studies of demand which intend to deal with the causes of idleness. My suggestions need not be taken on authority. The reader who is unacquainted with the economic textbooks may follow my reasoning from point to point and himself decide on its validity. I welcome the layman not, as Keynes does in his General Theory, as an “eavesdropper,” but as one who can and should consider my thesis. I do not claim, however, to have produced a “popular” work. Where I have thought it helpful, I have not shrunk from exploiting the most abstract conceptions. And I have incidentally introduced a new jargon of my own. Hence, the reader who is inexpert in economics must persevere and have constant recourse to the summaries which may guide him through a labyrinth of notions.

It has not been my task in this essay to recommend specific reforms. Certainly I have hinted at desirable changes, but my aim here has been to determine causes. If would-be reformers feel bewildered by the practical difficulties which my analysis of causes discloses, they may be helped by my own attempt to face the basic obstacles in my Economists and the Public, chapter XXI, entitled “Vested Interests and the Distributive scheme. “The clue to the understanding of the chief economic and sociological problems of today can be found, in my opinion, in a recognition of the struggle which is in progress against the disrupting equalitarian effects of competitive capitalism. Competition and capitalism are hated today because of their tendency to destroy poverty and privilege more rapidly than custom and the expectations established by protections can allow. We accordingly find private interests combining to curb this process and calling upon the State to step in to do the same; and unless the resistance is expressed through monetary policy, the curbing takes the form of restrictions on production. Hence there arises a clash between what I have called the “productive scheme” and the “distributive scheme”; and wasteful idleness, both in labor and in physical things, appears to be due to the consequent restraint of productive power—a restraint imposed immediately in defense of private interests, but ultimately appearing to be reasonable and just because it defends an existing and customary distribution.

The original typescript of this book was completed more than two years before the present version was sent to the publishers. Several copies were put into circulation and I received advice and encouragement from so many friends that it is impossible to make adequate acknowledgments. But I have a special debt of gratitude to the following who at different times read the whole of the typescript as it then stood and whose comments led to substantial changes of terminology, exposition or content: Professor Lionel Robbins, Mr. Frank Paish, Professor Arnold Plant, Professor F. A. Hayek and Mr. H. A. Shannon.

W.H.Hutt

University of Cape Town

1939