EcoNomicsMany reader; ste.em tof look 4 0. n SocFialthCredcit as the the Catholic Social Guild, takes a poor view of the contributions of Major Douglas, its prophet. W.WWNWOMMEWNWANYMMAWNI MAJOR Douglas is known to most students of economics as the proponent of the famous A plus B Theorem, by which he sought to prove that there was in the economic system a permanent and inherent deficiency of purchasing power, which necessarily prevented the whole product of industry from being bought by the consumer.
Major Douglas's analysis of the deficiency of purchasing power as necessary and inherent was proved wrong after his theoremhad been submitted to rigorous examination by competent economists, amongst others by Mr. Hugh Gaitskell in a chapter entitled Four Monetary Heretics, which he contributed to What Everyone Wants to Know About Money, an able symposium edited in 1933 by Mr. G. D. H. Cole. In 1935 the late Lord Keynes in his General Theoty of Employntont, Interest and Money. attributed involuntary unemployment to what he called a permanent deficiency of effective demand, that is, to a deficiency of purchasing power. He saw this deficiency, not as something inherent and necessary to the economic system, but as caused by several accidental factors such .as, for example, an inequitable distribution of income or an undue strengthening of the propensity of a people to save.
The remedies for this state of affairs suggested by Lord Keynes and his many disciples would include the direct distribution of purchasing power to consumers at certain times. This remedy is not far removed from that advocated by Weir
Douglas and his followers. The essential difference, then, is one of analysis, which carries with it the further difference that the Douglas remedy is akin to only one of the remedies advocated by the Keynesian school.
This difference of analysis is enormously important for, as far as we can judge, the analysis of Lord Keynes is quite right and that of Major Douglas is quite wrong.
It must always be remembered that the one point of tangency between Keynesians and Douglasites does not support the analysis of the latter as to the possible causes of a deficiency of purchasing power. That analysis fell to the ground with the able disproof of the A plus B Theorem by Mr. Hugh Gaitskell and others a good many years ago. Nevertheless, Major Douglas deserves high praise for his pioneering efforts in this field. He did not hit on the truth, but he and others set going an inquiry which we hope was resolved in the General Theory. In that bodk Lord Keynes rightly pays tribute to the earlier efforts of Major Douglas in this field.
IHAVE just finished reading an
other book by Major Douglas.* At the end of it I could not help feeling that its author would have done well had he stopped writing some time ago or pursued some of the fruitful lines of investigation which Lord Keynes's analysis of unemployment offers to so many. Major Douglas has not done that. Instead, he has been engaged during the war years in writing a series of five books (of which this is the last), which are described on the cover as " contributions to the understanding of ivorld politics." Having got halfway through the 85 pages of The Brief for the Prosecution and still finding myself in a complete daze as to the author's intentions, I turned once more to the cover, where I read, " There is no comparable commentary on the causes of the war Old the ultimate seat of responsibility for the threat to civilisation and even the continuance of human life, which outlasts the coming of ',Peace,' by any writer in any country."
I admit that I am slow, but I do think that any brief for any prosecution should be sufficiently clearly written at least to enable the reader or listener to realise who is being prosecuted and for what purpose. If you read Major Douglas's book to an average English jury of average intelligence. I am willing to bet that they would be no wiser after the reading than they were before.
In his preface, Major Douglas asks. " What is it which is strong enough to plunge the world into a cataclysm of destruction at decreasing intervals. against the common will?'" The answer is a hydra, which seems to be composed of the Lqndon School of Economics. the Fabian Society, P.E.P., the T.U.C., the German General Staff, the Jews, Mr. Montagu Norman, the late Lord Melchett, Mr. Anthony Eden and I.C.I. A formidable combination indeed! For the elaboration of his thesis. Major Douglas relies on assertion and innuendo.'
As an example of the former, let its take the passage in which he sets out to show how American Jewry proceeded to use to its own advantage, and against Great Britain, the control over British policy provided (so he says) by British indebtedness to the United States after the 19141918 war. On page 12, Major Douglas writes, " In any case, the absolute size of the payments was far from being the main issue, which was the control over British policy. This is not in doubt . . . It is certain, moreover, that a direct political control of a coercive character was applied to British legislation. For the purpose of This preliminary survey it is only necessary to mention two instances, one in the realm of major foreign policy, and the second in domestic legislation." He chooses as an instance in the realm of foreign policy. the abrogation of the AngloJapanese Alliance and writes, " The abrogation of it, and the Washington Naval Agreement limiting Jape& to a position of naval inferiority. did two profound injuries to the British Empire. It was an unprovoked and rather ungracious blow to Japanese • face '—the most vulnerable aspect of Asiatic diplomacy. And it demonstrated to the whole of Asia. including India, that the important capital to placate was no longer London, but Washington. Nothing could have made a new war more certain." That is an example of assertion.
As an example of innuendo take the following passage, " The public activities of P.E.P. emerged hi 1933. In 1938, Planning, the publication dealing with such of its activities as it was desired that the public should apprehend. declared, ' Only in war. or under threat of war, will a British Government embark on large-scale planning.' This is a key statement and it requires careful examination." IT is time, surely, that writers desisted from these penny-dreadful theories, which seek to explain all our woes in terms of the machinations of certain men of straw, who exist as a rule only in the minds of those who create them.
At the very least, 'those who put forward these theories should have the charity to prove their case. Very often, so fat as I can see, they have no proof at all. What proof has Major Douglas that any of the groups he mentions (with the exception of the German General Staff) is responsible for the war and for the attempt to crush the British people? The only acceptable proof in this case would be documentary evidence. Where is it? Are these powerful groups going to be so foolish as to leave it lying around, and, if not, assuming they have the power that is attributed to them, who is going to get the documents from them? And until a writer has access to the evidence, what right has he to charge them with machinations of this sort? It seems to me that such a proceeding is quite unjust.
Writers of this school, for example, often assert that the trade depression is caused by the deliberate devilry of powerful groups of unscrupulous rich men, who aim to enrich themselves out of the bankruptcy of others. To prove this you need evidence, documentary evidence. Where is it? This, quite apart from the fact that. though some rich men would gain from such a proceeding, others would lose. Why should those who stand to gain always. defeat those who stand to lose? On the other hand, it is now not too difficult to explain the trade cycle in terms of the Keynesian categories. To do that you do not need documentary evidence of the sort just mentioned because your theory does not rest on the assumption of individual guilt, but on thc probability of human muddle. What you do need is reasonable proof that your facts fit your theory. antelligent observation and adequate use of statistics suffice in this context. Surely the just thing, the reasonable thing is to accept the economic explanation until documentary evidence giving proof of individual moral guilt is produced?
Again, in the case of the relationship between financial power and war, the historical evidence is against those who attribute all power to the financier, for it shows the theory which asserts the domination of political struggle by financial interest to be wrong and its opposite true. Itt support of that statement I would cite Eugene Staley's masterly study, War and the Private Investor. A careful and unbiassed reading of this book should make the firmest supporters of Lenin's analysis of Imperialism and war think twice.
For reasons given above, I think there is little to be gained from reading books of the type under re view in this article. With their strange mixture of assertion and innuendo directed to prove the guilt of men of straw. their authors seem to me to contribute nothing to the understanding of our present discontents.
PAUL CRANE, S.J.
" The Brief for the Prosecution. By C. H. Douglas. (K. R. P. Publications Ltd., Liverpool, 8s. 6d.)