Year XXVI, 1984, Number 2 - Page 152
LIONEL ROBBINS
On the occasion of the death of Lionel Robbins (on May 15th, 1984; Robbins was born in 1898) The Federalist wishes to recall the significance of his work as an economist and as a federalist. In both respects, his work has been singularly underestimated by the academic world and indeed by the world of culture in general.
Although he was fifteen years his younger, Robbins’ career was interwoven with Keynes’. During the years of the Great Depression it was inevitable that the divergent points of view of two great economists would clash. Current opinion on this divergence over doctrine and politics is summary and incorrect. Nobody questions the fact that Keynes’ opinions proved adequate to the situation. The consequence of this is that Robbins came to be considered a great interpreter and continuer of classical liberal tradition but not a theoretical innovator.
This is not how matters stand in actual fact. Robbins’ and Keynes’ differences concern two main questions: (a) public policies needed to cope with the economic crisis and reduce unemployment,· (b) the nature of the international system capable of guaranteeing the world economy a high and balanced development. Now, while as regards the first question Robbins recognized very honestly on a number of occasions that he had been wrong in opposing Keynes’ measures, he did not change his opinion as regards the second.1 Yet it is precisely his reflections on the international economic order which are systematically ignored by almost all academic economists who are prisoners, as was Keynes, of the myth that an international economic order, and consequently growth and welfare, is possible in a world of sovereign states.
Keynes’ intellectual evolution is highly significant in this respect. In 1919 he very courageously resigned his position as the British Government’s representative at the Paris Peace Conference to show his complete disagreement with the insipid position taken by the Great Powers whose victory was used to humiliate Germany with incredible claims for «reparations». Thus, a post-war European system grew up, which, from the outset, was infected by the ‘germs’ of revenge, as Keynes correctly pointed out in The Economic Consequences of the Peace. But Keynes’ proposed remedies were the typical ineffective remedies of liberal internationalism, namely an appeal to democratic governments’ good will, in particular the United States’, and never questioned a reconstruction of Europe based on the principle of absolute sovereignty of national states. The very most Keynes proposed – and even then only for reasons of economic expediency – was the creation of a Free Trade Union among European countries, that he hoped the United Kingdom would join. The facts disproved this excessively simplistic vision of international policy and in the thirties, faced with the growing threat of Fascism and Nazism, Keynes abandoned his faith in international liberalism and even went so far as to embrace the doctrine of protectionism and autarky. «The age of economic internationalism» he wrote in 1933, «was not particularly successful in avoiding war; and if its friends retort that the imperfection of its success never gave it a fair chance, it is reasonable to point out that a greater success is scarcely probable in the coming years». Therefore, Keynes declared: «I sympathise with those who would minimise, rather than with those who would maximise, economic entanglement between nations ».2
These political leanings are important if we are to properly understand the economic policy proposals that Keynes was developing in those years and which are the backbone of the General Theory. Keynes’ unemployment policies were designed for a closed political system within national boundaries and a world with little, indeed very little, trading between nations. This is certainly an anti-historic vision of the evolution of international relationships but it faithfully reproduces the United Kingdom’s position in those years, namely a colonial power in decline, no longer able to carry out an active role in world politics. From this limited perspective in fact, Keynes was able to free himself only partly, when under United States’ pressure, he became concerned with the post-war re-organization of the international economy.
Robbins’ reply to the crisis in the European and World political order was very different. The Great Depression, Robbins believed, was not caused by the mistakes of this or that government, but by the inability of each of them to keep control of a state of affairs which really called for a supranational body empowered to organize the market on a world scale. These reflections led Rob-bins to re-examine the very bases of international economic theory, and to rediscover the forgotten truths that inspired the authors of the first federal constitution in history. His contribution, as he wrote with a touch of pride in his Autobiography, consisted in extending the principles of the Federalist from the specific American case to the «international anarchy of the twentieth century»3
This updating made a considerable yet almost completely overlooked contribution to economic theory itself. During the thirties a great debate grew up around the meaning f a planned economy and its relationships with the market. The general tendency was (and still is) to contrast plan and market. But in Economic Planning and International Order (1937), Robbins introduced a completely new, yet decisive consideration as regards the understanding of international problems. «The issue, Robbins claimed, is not between a plan and no plan, but between different kinds of plans». More correctly toe need to speak of the existence of a liberal plan, as we speak of a socialist or a national plan. «‘Planning’, in the modern jargon, involves governmental control of production in some form or other. It was the aim of the liberal plan to create a framework within which private plans might be harmonised. It is the aim of modern ‘planning’ to supersede private plans by public – or at any rate to relegate them to a very subordinate position ».4
Robbins was thus able to speak out against this weakness in the liberal (and socialist) position at an international level. Classical economists had supported the need to introduce a series of institutions, such as money, currency and property controls and so on, in order to allow the market to work: the invisible hand is in truth, wrote Robbins, the legislator’s hand. But while classical economists believed that these government measures were necessary within the state, they ingenuously believed – in a situation characterized by political anarchy – that a well-ordered and properly-functioning international market might be created spontaneously. It follows that at the international level, where there is no government, liberalism (like socialism) has never existed.
This is a crucial observation for the understanding of contemporary problems and the difficulties encountered by traditional political thinking when trying to face up to them. For this reason, it is worth quoting in full a comment that Mario Albertini made regarding Robbins’ contribution. «In the discussion on the crisis in ideologies (now hitting Marxism also) a very pertinent observation made by Lionel Robbins – says Albertini – has never been taken into proper consideration. As regards liberalism, he states that “international liberalism is not a plan which has been tried and failed. It is a plan which has never been carried through – a revolution crushed by reaction ere it had time to be fully tested”: and he extends (virtually) this observation to socialism. The adjustment thereby made to the framework of discussion is obvious. If this is the case, the worst evils in our century in international, national and social policy must obviously be ascribed to what is not yet liberal and/or socialist, and not to liberalism and socialism as such, which, because they are not fully developed, have not had a chance to prove their full validity (they should appropriately be re-assessed only if it were possible to show that their complete development is impossible).
«Robbins’s reasoning is unassailable. In a nutshell and put in another form, it can be expressed as follows. He notices that with the current international system, based on the absolute and exclusive sovereignty of national states, any economic plan (in the sense that he ascribes to the term i.e. including a liberal plan) can only be national; and then he shows easily how these plans cannot fail to contain very strong elements of protectionism and corporativism because national governments (i.e. the centres of decision that formulate such plans and handle them) are supported by a balance of power that includes all protectionist and corporativist interests and excludes an increasing portion of the liberal and socialist ones (those which have their seat in the framework of the nation but which can be enforced only internationally because their scale of realization is international). The ultimate reason for this lies in the fact that, while the lot of the protectionist and corporativist interests depends exclusively on the respective national governments, that of the liberal and socialist interests in question depends on the contrary on the behaviour of many governments (at the limit, of all of them) and not only on that of one’s own, i.e. on a power situation escaping electoral control of the citizens. This is why a national vote is effective in the former case, ineffective in the latter. In fact only in the former case do favourable or unfavourable governmental decisions appear altogether as gains and losses of votes and support for the party (or parties) in power. It follows that liberalism and socialism can only develop fully with an international (world) plan, and that an international plan can be implemented only by a world government.»5
If these observations are correct, the contemporary world cannot renew itself or resolve its dramatic problems without adding Robbins’ essential contribution to Keynes’ thinking. It is certainly no mere chance that the current economic debate takes note, on the one hand, of the crisis in Keynesian policies, which, on a national scale, can no longer stand up to the waves of inflation and depression coming from every corner of the globe, and, on the other hand, the urgent need for a new international order based on justice, peace and equality among all peoples. The old world based on closed national states is on its death bed and a new world cannot be created on the basis of a thinking which ignores the vital need for international economic development. The lack of awareness of Robbins’ contribution causes our inability to plan the indispensable reforms needed for a rational government of the world economy: the alternative to economic disorder and depression is a world development plan.
After having spoken of Robbins’ greatness, it is not, however, possible to overlook his limits as regards his commitment to federalism. His admirable intellectual coherence was not matched by an equal commitment to pursuing the political project for a European Federation, as the first step to overcoming international anarchy. He conceived of the federal solution to international problems as a technical expedient to make liberalism achievable and he never ceased to be a liberal above all else. Thus, when Hitler’s threat dissipated and Western Europe began its reconstruction, with the help of the USA, he felt the commitment to the construction of a European Federation as a less urgent priority. Only later did he return to his old pre-war theses.6 Nevertheless, his contribution to the history of federalism must be considered of fundamental importance, as the authors7 of the Manifesto di Ventotene explicitly recognise and as is also apparent from subsequent outcomes in federalist thinking which do not tire of recalling Robbins’ decisive teachings on the meaning and limits of liberal and socialist internationalism.
* * *
I. International liberalism *
[ ... ] As consumer the citizen buys in the cheapest market. As producer he sells in the dearest. In this way the maximum division of labour which is compatible with given tastes and given technique is continuously enforced. In this way the inhabitants of the most diverse parts, as producers. whatever the width of the jurisdiction of the government under which they happen to reside, co-operate in an organization which is tending continually to make their range of effective choice, as consumers, as wide as is compatible with an absence of arbitrary curtailment in their favour of the range of choice of their fellows.
But is this not the very negation of planning – a «planless economy», an «individualistic chaos»?
This view is widely prevalent nowadays. And, of course, if the term planning is by definition to be restricted to the operations of a centralized control, then the institutions of international liberalism are indeed excluded. The principle of international liberalism is decentralization and control by the market. If we say that the term plan must not be applied to an organization in which free initiative is guided to the service of free choice by an impersonal mechanism, then we have settled a point of terminology. But we have not judged the significance of the organization.
But the terminology is surely unfortunate. The essence of a plan is that it is an attempt to shape means to ends. In a world of change the essence of a successful plan of productive organization is that it should bring about continual adaptation to changing technical conditions and changing demands of consumers. Now the various plans which we have examined hitherto do not do this. They involve a paralysis of the mechanism of adaptation: they tend to make the plan the end and the frustration of the consumers the means. They involve a tendency to a curtailment of productivity in a world which is certainly not overburdened with plenty. Surely it is wise to attempt to avoid this kind of plan, to attempt to erect a world order which is capable of adaptation and which provides incentives to adaptation. It is this which is the object of international liberalism. It is an institutional pattern especially designed to meet the difficulties of economic organization on an international scale. If planning is an attempt to create institutions conducive to the satisfaction of the citizens, then international liberalism is a plan.
It is a plan, too, in the sense that it is to be the creation of government.
It is often held that liberalism denies all functions to government. The naive belief that unguided self-interest is necessarily conducive to public benefit is thought to be the foundation of the liberal social philosophy: and a system which is held to rest upon such a superstition is, not unnaturally, condemned without examination.
For this belief the liberals of the past are not altogether blameless. It is, of course, a grotesque libel to suggest that men such as Hume, Adam Smith or Bentham regarded government as superfluous.8 To attribute to the great utilitarian philosophers the jejune presuppositions of an anarchistic philosophy of society can only be regarded as propagandist rhetoric. But it may be true that, in their preoccupation with the discovery of the laws of the market, they were apt sometimes to take the market itself for granted. It may be true too that, in their zeal to expose the results of interference with the disposal of property, they may have laid insufficient emphasis upon the framework of law and order which made the institution of property possible. In this way they, and still more the politicians who simplified their analysis for popular consumption, laid themselves open to misunderstanding and misrepresentation.
But, notwithstanding all that has been said to the contrary, it is a gross misconception to suppose that government and governmental bodies do not play a most important and indispensable role in the liberal plan of co-operation. To emphasize this is not to claim any additional virtue for the plan. In spite of certain contemporary habits of speech, there is no intrinsic virtue either in government or the absence of government: the utilitarian calculus weighs governmental and nongovernmental actions indifferently. It is only to draw attention to an aspect of the failure to understand which may lead to total misconception of the whole system. The characteristic institutions of a liberal society are inconceivable without government.
It should be obvious that they are inconceivable without security. If there is no authority armed with coercive power, the plans of the different citizens must be to some extent self-frustrating. They must provide for an apparatus of defence. This is necessarily wasteful; and it is often itself provocative. They must be short-run plans: it is not worth while planning for a long run of great uncertainty. Even so they are liable to continual disturbance. There can be no world-wide division of labour, no extensive accumulation, no elaborate organization of production if arbitrary force is not restrained by force which is stronger but which is not arbitrary.
But this is not enough. The mere absence of violence is not a sufficient condition for the efficient working of free enterprise. For co-operation to be effective it must be restrained within suitable limits by a framework of institutions. Neither property nor contract are in any sense natural. They are essentially the creation of law; and they are not simple creations. For purposes of exposition, we may sometimes speak as if property rights and the system of contract were homogeneous and simple. But if we allow ourselves to be led into supposing that this is anything but the crudest of simplifications we fall into gross error. The system of legal rights in any existing society is a matter of the utmost complexity, the actual result of centuries of legislation and judicial decision. To determine wherein these rights are to consist if they are to be conducive to the satisfaction of the public choice, to delimit their scope and their content, is a task of the utmost difficulty. In what objects are property rights to be recognized? Are they to cover ideas and inventions? Or are they to be limited to scarce material resources and their utilization? If so, what type of utilization? May a man use his property in ways which mean damage to others? If not, how is damage to be defined? Are contracts to restrict trade permissible? If so, in what circumstances? If not, what is the definition of restriction? It is in the solution of questions of this sort that the task of legal planning consists. It is in the reference of particular cases to such a system of norms that the plans thus made are continually translated into practice. The system of rights and duties of the ideal liberal society may be thought to be a·good plan or it may be thought to be a bad plan. But to describe it as no plan is not to understand it at all. The idea of a co-ordination of human activities by means of a system of impersonal rules, within which what spontaneous relations arise are conducive to mutual benefit, is a conception, at least as subtle, at least as ambitious, as the conception of prescribing positively each action or each type of action by a central planning authority: and it is perhaps not less in harmony with the requirements of a spiritually sound society. We may blame the enthusiasts who, in their interest in what happens in the market, have paid too little attention to its necessary framework. But what shall we say of those who argue perpetually as if this framework did not exist?
But this is not all. The provision of security and a suitable legal system is a function more important and more complex than is often suspected. But it does not exhaust the province of government. The market apparatus has its limits: and outside these limits arise certain generally acknowledged wants which, if they are not satisfied by governmental action, will either not be satisfied at all or, at best, will be satisfied very inadequately.
It is not possible or desirable exhaustively to enumerate such cases. But is not difficult to describe their general nature. On the one hand, there exist wants which must be satisfied collectively or not satisfied at all. Of this class provision against infectious diseases is a conspicuous instance. It is comparatively useless for the individual to make private provision here. He may be willing to pay all that is technically necessary. But unless all others are doing likewise his expenditure may be ineffective. On the other hand, there arise wants which can be formulated individually, but for whose supply spontaneous contracts between private property owners is not effective. Of this class the demand for certain means of communication is typical. It is possible for individuals to offer money for means of access to different places. But, in many cases, in the absence of government action in some shape or form the supply will not be forthcoming. It is not inconceivable that an extensive road system should be satisfactorily created by private enterprise. But it is not probable: and, if it is not, then there may be need for another kind of plan.
This necessity has long been recognized. Adam Smith made in the third of his list of duties of the sovereign «to erect and maintain certain public works and certain public institutions which it can never be to the interest of any individual or small group of individuals to maintain». But in recent years it has become more important. The development of technique has brought it about that many services of obvious utility are best rendered by methods which involve the use of a network of long strips of land difficult to establish save by compulsory acquisition – rail transport and canals, drainage, water supply, electricity, telegraphic and telephonic communication, and so on. It is not certain that the supply of these services is best organized on the basis of governmental or quasi-governmental monopoly. Current discussion of the matter is usually interested or superficial: the task of independent scrutiny of the most suitable institutions here has scarcely yet begun. But it is certain that, in some form or other, governmental action is necessary. It is certain, too, that the field of such necessary action is extensive.
If this reasoning is correct, it is therefore wrong to regard the proposals of international liberalism as involving no plan. On the contrary, they constitute the one plan we have so far examined which does not at once display conspicuous internal weakness when conceived on a world scale.
It would be equally wrong to regard them as a plan which has ever yet been realized. Much of the order which exists even at the present owes its origin to private enterprise and the market. If there were no markets and no private enterprise our position would be even worse than it is. It is indeed one of the strongest recommendations of liberal institutions that their vitality as organizing influences is displayed even on the smallest scale and in the most adverse circumstances. But, as our earlier investigations have shown, the world today is not predominantly liberal. It is nationalist and interventionist; and the continual succession of political and economic catastrophes which this involves gives what market mechanism exists a task which no mechanism can perform. It is not liberal institutions but the absence of such institutions which is responsible for the chaos of today.
Indeed, if we preserve a sense of perspective, the conspicuous fact that emerges from any historical survey is radically different from what the reactionaries – both fascist and communist – endeavour to make us believe. International liberalism is not a plan that has been tried and failed. It is a plan that has never yet had a full chance.
[ ... ] International liberalism is not a plan which has been tried and failed. It is a plan which has never been carried through – a revolution crushed by reaction ere it had time to be fully tested.
We can see this all the more vividly if we try to sketch out for ourselves some of the changes which are necessary to make international liberalism a reality. To imagine that, in the present state of opinion, these changes will come about may be as absurd as to imagine the establishment of an Oceana or a Utopia. But it is always useful to know the significance of different directions of movement. And if we have found that other plans lead to institutions which seem to be ultimately unworkable, it is, at least, interesting to know whether this plan would be doomed to frustration for similar reasons.
We do not have to look far before coming to the main requirement. According to the outline of the functions of government which we have already made, the first essential is security. There cannot be an orderly international division of labour, there cannot exist the complicated network of financial and economic relations essential to the proper development of the earth’s resources, if the citizens are continually in danger of violence. In the present state of technique as regards communications and production, this is more important than it ever has been. Without order, no economy: without peace, no welfare.
But it is in just this most elementary requirement of a comprehensive international plan that our present organization is most conspicuously lacking. There is world economy. But there is no world polity. The different national states each arm against the other. Between their members there is not the ordered freedom of the liberal state but the brutish anarchy of the state of nature. The opportunities of division of labour make us members one of another. But for lack of proper governmental machinery we make war or prepare for war continually. We should regard it as absurd if the inhabitants of the county of London maintained armed forces for defence against the inhabitants of the surrounding counties and the inhabitants of surrounding counties maintained armed forces against them. We should regard it as childish, atavistic, wasteful, if not actually productive of chaos. Yet, because of the division of the world into national units, similar arrangements between areas, equally interdependent and equally indistinguishable by any criteria other than the arbitrary heritage of past governmental arrangements, are not merely taken for granted as inevitable but even regarded as contributing to the general good. These are no doubt matters of ultimate valuation. Whether it is a good thing or a bad thing to kill without judicial process is a question which, even at the present day, is often decided differently according to the nationality of the victims. But this thing is certain. The nationalistic anarchy is wasteful. Whatever value we may put on the military virtues as such, there can be no doubt that, at the present time, the existence of this apparatus for eliciting such virtues is more costly, in terms of the other things we have to sacrifice, than any other luxury the human race affords. How much misery might have been avoided, how much poverty prevented, had the accident of history not divided the seat of sovereignty.
It is just here that we can perceive one of the main deficiencies of nineteenth-century liberalism. It was the great achievement of the men of those days to have realized the harmony of interest of the inhabitants of different national areas. But they did not sufficiently realize that the achievement of this harmony was only possible within a framework of international security. They thought that if they demonstrated the wastefulness and futility of economic and political warfare it was enough. If each national state were limited to the performance of the functions proper to a liberal government there would be no occasion for international conflict. There would be no need for a super-national authority.
But this was a grave error. The harmony of interests which they perceived to be established by the institutions of property and the market necessitated, as they had demonstrated, an apparatus for maintaining law and order. But whereas within national areas such an apparatus, however imperfect, existed, between national areas there was no apparatus at all. Within the national areas they relied upon the coercive power of the state to provide the restraints which harmonized the interests of the different individuals. Between the areas they relied only upon demonstration of common interest and the futility of violence: their outlook here, that is to say, was implicitly not liberal but anarchist. But the anarchist position is untenable. It is true that, for the citizen who does not love war as such, abstention from violence is an obvious matter of self-interest. It is true that, in the long run, aggression seldom pays the aggressor, and that even victory is associated with impoverishment. But if we are not content to rely on such arguments for the preservation of order within the nation, we have no reason to believe that such reliance would be effective in preserving international order.
Es kann der Beste nicht in Frieden leben
Wenn es dem bösen Nachbar nicht gefällt 9
The existence of one state whose leaders have evil intentions can frustrate the co-operation of a world of peaceful peoples. It is not by the demonstration that burglary and gangsterdom do not pay that we restrain the activities of burglars and gangsters: it is by the maintenance of a mechanism of restraint. And it will not be without a mechanism of restraint that international burglary and gangsterdom are banished from the face of the earth.10
«A man must be far gone in Utopian speculations who can seriously doubt that if ... states ... be wholly disunited or only united in partial confederacies, the subdivisions into which they might be thrown would have frequent and violent contests with each other. To presume a want of motive for such contests as an argument against their existence would be to forget that men are ambitious, vindictive and rapacious. To look for a continuation of harmony between a number of independent, unconnected sovereignties in the same neighbourhood would be to disregard the uniform course of human events, and to set at defiance the accumulated experience of ages.»11
But how is the apparatus of restraint to be provided?
It is becoming very obvious that mere associations of sovereign states are ineffective. The confederation – the Staatenbund – has never been very successful: and in our own day its weaknesses are only too painfully evident. So long as the different states retain their sovereignty, so long can decrees against them be enforced ultimately only by armed alliances of other states. Every word that was written by the founders of the American constitution against the confederal form of government has been vindicated again in our own time by the history of the League of Nations. «Government», wrote Hamilton, «implies the power of making laws. It is essential to the idea of law that it be attended with a sanction.... If there be no penalty attached to disobedience, the resolutions or commands which pretend to be laws will, in fact, amount to nothing more than advice or recommendation. This penalty, whatever it may be, can only be inflicted in two ways: by the agency of the courts and ministers of justice, or by military force: by the coercion of the magistracy, or by the coercion of arms. The first kind can evidently apply only to men: the last kind must of necessity be employed against bodies politic or communities or states. It is evident that there is no process of a court by which the observance of the laws can in the last resort be enforced. Sentences may be denounced against them for violations of their duty: but these sentences can only be carried into execution by the sword. ... In every political association which is formed upon the principle of uniting in a common interest a number of lesser sovereignties, there will be found a kind of eccentric tendency in the subordinate or inferior ones by the operation of which there will be a perpetual effort in each to fly off from the common centre. ...»12
Only the surrender of sovereignty, of the right to make war, by the national governments can remove the danger.
But a completely unitary world state is neither workable nor desirable. Its unworkability depends essentially upon the extent of the area and the complexity of the language conditions over which it would have jurisdiction. We have seen this difficulty in surveying the possibilities of international communism. It would arise even in a completely liberal system. For a central authority to be responsible for roads and public health both in Austria and Australia would be absurd. Nor could we be sure that such a body would be an efficient safeguard of liberty. Caligula once wished that the whole Roman people could be united in one head so that at a single blow he might have the supreme ecstasy of decapitating it. That great Leviathan, the unitary world state, might present similar temptations to our modern sadists. If independent sovereignty is chaos, the unrestricted unitary state might be death.
There is only one solution to this stupendous problem. The first need of the world is not economic but political revolution. It is not necessary that a world state should have powers unrestricted by constitution. But it is necessary that the national states should surrender certain rights to an international authority. The right of making war and the power to do so must be given up. But they need not give up all their rights of independent government; and the rights of the international authority must also be limited. There must be neither alliance nor complete unification, but Federation; neither Staatenbund, nor Einheitsstaat, but Bundesstaat.
Here we once more see the far-reaching wisdom of the founders of the American constitution. They did not produce a perfect constitution. Perfection of political arrangements is not to be hoped for, is indeed not even conceivable. It is obvious that both in the American Federation which exists and in any world or smaller federation which might be modelled on it there remain great problems of providing for proper adaptation of the division of federal and state powers and adjusting the areas of regional administration. No sane person will pretend that the American constitution today provides an instrument which is at all perfectly adapted to the necessities of government under present technical conditions. But when all these obvious deficiencies are taken into account, the fact remains that they did construct an instrument which has reconciled the interests of a multitude of people over vast stretches of the earth’s surface and has created an area of peace and internal freedom for economic co-operation which is without precedent in history. They did establish a principle which offers the one hope of escape from the fear of destruction which today overshadows humanity. And when we contrast the peace and the riches of that great Union with the chaos and anarchy of the unhappy nations of Europe we know that this was something worth doing, worth preserving, worth fighting to preserve. We can read Abraham Lincoln’s noble dedication of the deeds at Gettysburg and know that his claims were just.
II. International socialism **
[ ... ] Let us suppose that the planning authorities have a completely free hand to do what they like with the national resources. Even so, the assumption that they would dispose of these resources in such a way as to promote what, from the international point of view, would be the optimal forms of international co-operation, rests upon very weak foundations.
For the fact is that if production is controlled by extensive quasi-monopolistic units of this kind, the disposition of resources which seems most conducive to the advantage of the members of these units is not necessarily a distribution of resources which is in any sense optimal from the point of view of society as a whole. If a small state sets up trading monopolies in a world of otherwise competitive markets, it is improbable that its operations will very greatly affect the course of the markets in which it deals. If it follows the movements of the markets, it will be conforming to the requirements of the international optimum. The policy which maximizes its takings will contribute also to the maximization of world production, measured in price terms. But if it forms a large element in any of these markets, then contradictions arise. The interests of the group may be opposed to the interests of the rest of the world. The group may gain by restriction, the rest only by plenty. And if this method of organization becomes general, then further disharmonies are probable. The world market is frozen into a series of geographical monopolies: and its nature is completely transformed. There is no longer any reason to believe in the emergence of internationally harmonious arrangements. There is no price which is determinate apart from considerations of strategy. The result of the process of exchange is determined by a sort of political negotiation. There is no presumption at all that it conduces to anything which, from the international point of view, can be called a rational utilisation of resources. For the presumption that regulation of production according to the dictates of the market will be conducive to general harmony, is justified only when the units which deal are relatively small. There is no presumption whatever that the different national states form units which satisfy this criterion.
But, it may be asked, would not the organization of the different national areas on socialistic lines be merely a prelude to their amalgamation into a system of world socialism? Is not this perhaps another of those disagreeable transitions through which it is necessary to pass before reaching more satisfactory arrangements? It is this hope which inspires many socialists who urge local nationalization while still rendering lip-service to the international ideal.
It is not our intention at this stage to investigate the problem whether socialism on completely international lines would be a satisfactory solution of the problem of rational international planning. That will come up for extensive discussion later on. But it is certainly germane to our present enquiry to observe that the organization of the world on national socialist lines is not necessarily a step in that direction. Indeed, it is almost certain to make the achievement of international socialism much more difficult than ever before.
For international socialism, whatever else it is, is essentially a state of affairs in which the resources of the different parts of the world are the property of the world as a whole. It is clearly incompatible with this that the resources in the different national areas should be owned by the national states. But, once the instruments of production have been nationalized, the obstacles to their internationalization are likely to be most formidable. For the value of the instruments of production in the different national areas varies greatly; and the real income per head, calculated on the assumption of collective ownership of these resources, varies greatly also. Some areas, such as Great Britain and the United States, are relatively rich. Others, such as Italy and Japan, are relatively poor. Let us suppose that complete socialization takes place within such areas and that the average incomes thus calculated become actual. Is there any reason to suppose that the citizens of the wealthier areas will be prepared to share the sources of their incomes with the citizens of the poorer? It is surely most improbable. It is difficult enough to get the inhabitants of local government areas where the value of rateable property is high to merge their rights of taxation with those of the inhabitants of areas where the value of rate-able property is low. When it is a matter of pooling the total resources of different national units, the obstacles are likely to be so great as to be totally insurmountable – at any rate by peaceful methods. From the international point of view, national socialism involves the creation of forms of inequality which are likely to be more permanent and more productive of extensive friction than anything which arises in a regime of free enterprise and diffused ownership. There is no vested interest more intractable than the vested interests of national groups.
It is surprising that this has not been more widely recognized. For it has long been generally acknowledged that collective ownership of the instruments of production used in particular industries by the people who happen to work in these industries, is incompatible with the existence of a socialist order of society and is likely to impair its achieven1ent. The incompatibility of socialism and industrial syndicalism is an ancient platitude.13 But collective ownership of the instruments of production used in particular areas by the people who happen to live in those areas is on a precisely similar footing. «The mines for the miners» and «Papua for the Papuans» are analytically similar slogans. Industrial syndicalism and national socialism are highly symmetrical concepts. They are each incompatible with the realization of the international socialist ideal.
III. The United States of Europe ***
If this is so, then the remedy is plain. Independent sovereignty must be limited. As citizens of the various national states, we may hope to diminish the danger of conflict by opposing policies which tend to evoke it. But this is not enough. The apparatus of modern war is so formidable, the cost of its maintenance so onerous, the dangers of actual conflict are so great, that we cannot afford to rely on spontaneous goodwill as our only safeguard against catastrophe. There must be an international framework of law and order, supported by solid sanctions which prevent the emergence of those policies which are eventually responsible for conflict. We do not need a unitary world state; such an organization would be neither practicable nor desirable. But we do need a federal organization; not a mere confederation of sovereign states as was the League of Nations but a genuine federation which takes over from the states of which it is composed, those powers which engender conflict. The founders of the League of Nations were right in that they recognized the need of a supernational authority; their error was that they did not go far enough. They did not realize that the effective functioning of a supernational authority is incompatible with independent national sovereignty. But to-day we know this. The history of the League of Nations is one long demonstration of the truth of the proposition long ago set forth by Hamilton and Madison, that there is no safety in confederations. We know to-day that unless we destroy the sovereign state, the sovereign state will destroy us.14
Now, of course, it is quite Utopian to hope for the formation in our time of a federation of world dimensions. There is not sufficient feeling of a common citizenship. There is as yet no sufficiently generalized culture. In present conditions, even the electoral problems of such a body would present insurmountable difficulties. The formation of a world system, the political consummation of the unity of the human race, may well be regarded as the divine event towards which all that is good in the heritage of the diverse civilizations of the world, invites us to strive. But, whatever we may hope for in the distant future of the planet, it must be clear that, at the present stage of human development, any attempt at so comprehensive an organization would be necessarily doomed to disaster.
But it is not Utopian to hope for the construction of more limited federations – for the merging of independent sovereignties in areas where there exists the consciousness of a common civilization and a need for greater unity. In particular it is not Utopian to hope for the formation of a structure of this kind in that part of the world now most menaced by the contradictions of its present political organization – among the warring sovereignties of Europe.15 So far is it from being Utopian that, for those with eyes to see, it is the most urgent practical necessity of the age.
For it is surely plain that the present political organization of Europe has completely outlived its usefulness and is now nothing but a menace to the very existence of the civilization it has helped to bring forth. When the sovereign states of modern Europe emerged from the feudalism of the middle ages, their functions were liberalizing and creative. They eliminated the mass of local restrictions which were strangling economic development. They pacified the warring barons and princes and established uniformity of law over areas given over to particularism. But, at the present time, it is not their unifying, but their separatist tendencies which have become dominant. They restrict the activities of an economic life which, in its spontaneous development, spreads far beyond their borders. They are uneconomic units for the administration of what positive functions they discharge; and the burden of maintaining the apparatus of defence which is necessary to secure their independence, threatens more and more to absorb all the energies of their inhabitants. The existence of restrictions to trade and movement between the different states of Europe to-day is as absurd as the existence of similar restrictions between different provinces at earlier periods. To an intelligent outsider unacquainted with the background of our history, the maintenance of vast armies by the states of Europe for defence against each other must be hardly less ridiculous than would be the maintenance of armies for the separate defence of the towns or departments within these states. The system has reached breaking point; and, with the development of modern military techniques, it has no longer survival value. As gunpowder rendered obsolete the feudal system, so the aeroplane renders obsolete the system of the independent sovereignties of Europe. A more comprehensive type of organization is inevitable. Will it come by mutual agreement or by caesarian conquest? That is the unsolved question. For either there must be empire or federation; on a long view, there is no alternative.
But to create such a federation will not be easy. We have a common culture. But we have no common language. We have a common history. But it is riven by fratricidal quarrels. No one who has realized the nature of the interests involved in the perpetuation of the present powers of the independent sovereign states can be blind to the strength of the opposition to any attempt to eliminate our disunity. The federation of the thirteen secession states of the new world was almost wrecked by local particularism, even though they were united by a common tongue, common habits and the memory of recent action against a common enemy. How much harder must it be for the warring states of Europe, with none of these aids to establish a basis of unity. It will not be easy to make the new Europe.
Nevertheless, of all the tasks which present themselves to our generation, it is that which is most worth while attempting. The age in which we live is an age in which men have worshipped many idols and followed many false visions. It has seen nationalism run mad and collectivism turn oppressor. The ideals of the romantic rebellion have proved dead sea fruit in our hands. But the great ideals of liberty, justice and mutual tolerance and the heritage of art and learning which is their spiritual outcome, have not been found wanting. The more they have become endangered, the more important we have discovered them to be. But it is just these things which are in peril from the disunity of Europe. The political structure amid which they have developed has developed stresses and strains which threaten to overwhelm them; if they are to be preserved, a constructive effort is necessary. Not merely because war is terrible, not merely because it impoverishes, but because it threatens all that is most valuable in the cultural heritage of Europe, we must devise institutions which banish it from our midst. It is because the civilization of Socrates and Spinoza, of Shakespeare and Beethoven, of Michelangelo and Rembrandt, of Newton and Pascal, is at stake that we must build a new Europe.
And now that the war has come and our hopes of peaceful developments lie shattered, this necessity is all the greater if the end is not to be chaos. We are fighting Germans. If European civilizations is not to perish, we must destroy the tyranny which rules over them. No one with any sense of history and art will deny the existence of a real German problem in Europe – the incapacity for self-government, the tendency to brutality and sadism, the fascination with the death motive, the moral clumsiness, the deep sense of spiritual insecurity, which again and again, since the rise of Prussia, have been a menace to the peace and liberties of Europe. But for all that, Germans are Europeans. They are part of our civilization; and Europe can never be completely healthy till Germany is healthy too. Somehow or other we must create a framework in which the German Geist can give its best, not its worst, to Europe. A draconian peace will do nothing. The Nazis must be extirpated; but we have neither the strength nor the will to keep Germans in subjection for ever. What more appropriate outcome of our present agonies, therefore, what more fitting consecration of the blood which is being shed, than a peace in which this great people, purged of its devils, shall be coerced into free and equal citizenship of the United States of Europe?
(Prefaced and edited by Guido Montani)
NOTES
1 On these matters see L. Robbins in his Autobiography of an Economist, Macmillan, London, 1971. Richard F. Kahn (in The Making of Keynes’ General Theory, Cambridge University Press, Cambridge, 1984, p. 184) recalls that in a speech to the House of Lords on July 28th 1966, Robbins stated: «In the inter-war period when mass unemployment actually prevailed, I was on the wrong side: I opposed measures of reflation which I now think might have eased the situation».
2 J.M. Keynes, National Self-Sufficiency, in The New Statesman and Nation, July 8th and 15th 1933. Now in The Collected Writing of J.M. Keynes, vol. XXI, Activities 1931-1939, Macmillan, 1982, pp. 236-7.
3 L. Robbins, Autobiography of an Economist, cit., p. 160.
4 L. Robbins, Economic Planning and International Order, Macmillan, London, 1937, pp. 6-7.
5 M. Albertini, «War Culture and Peace Culture» in The Federalist, Year XXVI, no. 1, July 1984, pp. 26-27.
6 In a preface, written in 1968, to a reprint of The Economic Causes of War (1939), Robbins himself declared his attitude vis-à-vis the question of European unification. «The essay here reproduced –says Robbins – ends with a section written in the first weeks of war, pleading passionately for the creation of a United States of Europe within which German creativeness and energy might serve the common weal rather than periodically disrupting it. It also contains a foot note referring to plans for a wider Atlantic Union put forward by Mr. Clarence Streit and others, in which I express cordial appreciation of the idea but considerable scepticism concerning its practicability. At that time, I did not conceive the possibility of an isolationist United States allowing itself once more to be involved in the internecine quarrels of Europe.
A great deal has happened since then. Japanese and Nazi aggression destroyed isolationism during the war, and since then, fortunately for the rest of us, the hostility of the Soviet Union and later of China – whether based on fear or on expansionist ambition we need not enquire – has prevented any serious recrudescence thereof. With its massive armaments and its incomparable economic power, the United States is today the active leader and defender of the civilisation of the West.
Such gigantic changes of circumstance could not but affect the perspective of thought regarding the possibilities of the future. In the years immediately following the end of the war, despairing of the stability and political reliability of some of the states of Western Europe and revolted by the anti-Americanism current among influential continental politicians and thinkers whose very existence had been saved by American intervention, I abandoned my earlier position and argued against British entry into a purely European Union, setting my hopes on a larger structure developing gradually from the North Atlantic Alliance. In this I now think I was wrong, not in my conviction of the fundamental necessity of preserving the link with the United States and Canada, but in my failure to realise the potentialities both of the creation, in these circumstances, of a United Western Europe and of the part which could be played in it by Great Britain. I underestimated the inability of those responsible for British policy to see where their true interest lay – in a vigorous development of something like Atlantic Union – and I failed to foresee the colossal folly of the Suez episode which deprived us of our standing as a first-class power with freedom to take influential initiatives. At the present time, therefore, I once more support an approach to the more limited union with Western Europe. So I am back in a frame of mind in which the peroration of this essay is not something which I wish to repudiate».
7 Spinelli in his memories (A. Spinelli, Comne ho tentato di diventare saggio. Io, Ulisse, Il Mulino, Bologna, 1984, pp. 307-8) writes: «Requested by Rossi, who as Professor of economics was authorized to write to him, Einaudi sent him two or three books on English federalist literature which had flourished towards the end of the thirties as a result of Lord Lothian’s influence. Apart from Lionel Robbins’ book The Economic Causes of War, which I subsequently translated and which was published by Einaudi, I cannot recall the titles or authors of others. But their analysis of the political and economic perversion that nationalism leads to, and their reasoned presentation of the federal alternative have remained to this day impressed on my memory as a revelation.
Since I was trying to obtain clarity and precision in thinking, my attention was not drawn by the foggy and contorted ideological federalism of· a Proudhon or a Mazzini, but by the clean, precise thinking of these English federalists, in whose writings I found a fairly good method for analysing the chaotic state of affairs into which Europe was plunging and for drawing up alternatives».
* Excerpted from Economic Planning and International Order, cit., Ch. IX, pp. 223-233 and pp. 238-246.
8 Mr. Keynes’ celebrated pamphlet The End of Laissez-Faire has been regarded, both by its author and by the general public, as a great advance on the classical economists: indeed a final (or ought we to say penultimate?) emancipation from the tyranny of their ideas. The full extent of our debt to Mr. Keynes is perhaps best to be estimated by a textual comparison of his own description of the agenda of the state and that of Adam Smith which was the basis of the classical outlook.
Let us put enlightenment first. «The most important agenda of the State relate not to those activities which private individuals are already fulfilling, but to those functions which fall outside the sphere of the individual, to those decisions which are made by no one if the state does not make them. The important thing for government to do is not to do things which individuals are doing already, and to do them a little better or a little worse: but to do those things which at present are not done at all» (Keynes, The End of Laissez-Faire, pp. 46-47).
And now for the classical night. «The sovereign has ... thirdly, the duty of erecting and maintaining certain public works and certain public institutions which it never can be for the interest of any individual or small group of individuals, to erect and maintain: because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society» (Adam Smith, The Wealth of Nations (Cannan’s Edition), vol. ii, pp. 184-185).
From what a quagmire have we been delivered.
9 Even the best man cannot live in peace when the wicked neighbour does not agree.
10 This is a subject Cannan made his own long before it was a matter of popular discussion. See especially his valedictory address to the London School of Economics, «Adam Smith as an Economist»: An Economist’s Protest, p. 417 seq. Also a lecture on «International Anarchy from the Economic Point of View», reprinted in the same place, p. 65 seq.
11 Hamilton, The Federalist (Everyman Edition), p. 20.
12 Op. cit., pp. 71-72.
** Excerpted from Economic Planning and International Order, cit., Ch. III, pp. 63-67.
13 Witness the celebrated Fabian gibe, «The sewers for the sewage men? ».
*** Excerpted from The Economic Causes of War, Jonathan Cape, London, 1939, pp. 104-109.
14 For a fuller elaboration of these arguments see my Economic Planning and International Order, chaps. ix, x and xi. The general argument of Mr. Clarence Streit’s Union Now should also be consulted.
15 Perhaps a word is necessary here concerning the relation of the suggestion here put forward and that put forward by Mr. C. K. Streit. Mr. Streit’s scheme, it will be remembered, is for a union of the Atlantic democracies including the United States and the British Empire. I have no objection to this. If Mr. Streit could induce his fellow-countrymen to come forward with the proposal, I should be delighted to see our government accept it; the larger the federation, the smaller the area of future wars. But I think it very unlikely that this will happen. It does not seem probable that, in our generation at least, the citizens of the United States will feel that compelling urge to union with other peoples which would alone make it possible. On the other hand, the disunity of Europe is so great and the evils likely to result from its persistence are so frightful, that is seems possible that, out of the extremity of our danger, a movement for unity might arise. After all there is a common European consciousness; and it is surely in the logic of history that sooner or later this should be enshrined in common political institutions. I see no insurmountable difficulty in the relation of the British Dominions to a federal Europe. Either they could enter the federation as full members; or they could retain via the British Crown the same loose relation as exists at present. I see much greater difficulty in the inclusion of Russia. For Russia is not European in spirit; and totalitarian dictatorship is incompatible with the federation of free peoples.
