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686 Reconstruction THE NATIONAL SITUATION * Social Objectives and Economic Necessities FROM A CORRESPONDENT IT happens that since 1939 two of the most dramatic changes that have ever occurred in our economic life have taken place together. First, the loss of our foreign assets has precipitated the need for a great alteration in our way of living : we no longer possess the income from foreign assets which for a century has enabled us to enjoy imports greatly in excess of our exports. Secondly, the country has taken a great step forward in its determination to put social welfare above the freedom of the old unrestricted industrial England. Our present malaise is largely due to the combination of these two changes, and our failure to work out their implications. Had the first change occurred by itself, the old correc- tive process of supply and demand would after its own fashion have provided a solution. There would, for example, have been a sharp rise in the prices of many things hitherto imported from abroad, and in due course a reallocation of our internal resources between one occupation and another. This would have been attended by high prices and high wages in some occupations, and by low prices, low wages, and unemployment in others. Though the social consequences would have been most uncomfortable, and the cost in human welfare very heavy, the economic machine would eventually have attained a new equilibrium. Had the second change occurred by itself the picture would again have been different. The determination to put social welfare above industrial laissez-faire means primarily two things : (1) the setting of a brake on the old corrective machinery of supply and demand, and especially on its chief instrument, unemployment ; and (2) redistribution of the national income to ensure a’-fair share of the necessities of life for all before superfluity for the few-a redistribution which has been attained partly by taxation, partly by rationing, and partly by food subsidies. These things-rather than the present drive for nationalisation and a " planned economy "- are the essential features of the drive for social justice on which all parties are at heart agreed. Now had this programme had a fair field in which to operate-i.e., relatively stable economic conditions-a great social advance would almost certainly have been achieved at a moderate cost in economic efficiency. The refusal to use unemployment as a means of transferring labour from one industry to another is unimportant in relatively stable times ; for other methods, such as discouraging entry into a particular industry, are sufficient to bring the desired results. Similarly, given relatively stable conditions, the redistribution of our national income by taxation, rationing, and food subsidies need not have unduly disturbed the economic machine. The tragedy of our present plight is that these two trends are in absolute conflict. We have on the one hand an economic situation which urgently demands a realloca- tion of our resources, and on the other hand a social policy which not only abhors the old corrective mechan- ism but actually obscures the need for any adjustments at all. We cannot go on fumbling like this. If we are to retain the measures we have already taken for social betterment, and to go further on the same path, we must promptly devise some means of distinguishing more clearly between economic necessities and social objectives. * A previous article appeared on March 15. Without this clear-cut distinction, the " planning " which is now our recipe represents no more than a groping towards a solution. Once the economic necessities stand out stark and clear we can consider how far their operation can be controlled in the interests of social welfare. THE FOOD PROBLEM The conflict between these two forces is nowhere more evident than in our handling of agriculture. Until 1939 we pursued a policy of importing food-to such an extent that half our import bill was in respect of food, and only about 40% of our requirements was produced at home. Today the import-export balance has under- gone a radical change, and we cannot find enough foreign currency,to pay for food imports on the old scale. But though we have granted the farmer fixed prices and thereby improved his prospects, we have not yet recog- nised the need to devote to home agriculture a far greater proportion of our resources. The adjustment required can be grasped only if we remember that for over a century agriculture has been steadily drained of man-power, not only in numbers but in quality, since able and ambitious men have been steadily attracted into industry and commerce. In estimating what home agriculture is capable of providing, it is idle to use figures (like those of the white-paper recently published by the Government) which ignore the possibilities of a policy which would put this process into reverse. If we want to get more out of the land; the reward to the producer must be allowed to rise : it is insufficient to offer the farmer merely his cost of produc- tion plus a reasonable profit-there must be real monetary incentive on a grand scale until the needs of the com- munity are met and a new equilibrium is attained. Under the old regime of supply and demand such a change would have occurred ; and from the economic angle the necessity for it can be decisively demonstrated. As things stand today the nutritional and social policies of the Government keep the price of food to the consumer under rigid control ; and, despite the subsidies, the reward to the farmer is fixed by reference to cost of production. By obscuring the possibilities of a rapid rise in production of food, this policy has played into the hands of the export industries, to which we are told to look for the 300-400 million needed to balance our import-export account. These industries have been given priorities ; the home market is subjected to rigid controls ; and we have almost unwittingly embarked upon an attempt to draw a still greater proportion of our man-power into industry, with all the doubtful conse- quences that such a policy must entail if it succeeds. The Government have thus been led into all sorts of difficul- ties ; they have on their hands a shortage of man-power for the basic and export industries, and no real means of correcting it ; and a huge bill for stabilisation of the cost of living which reflects their attempt to continue to import food on the old scale and yet maintain prices to the consumer at a low level. Standing in too close a proximity to the industrial and commercial life of the nation, the Government and their advisers assume-that salvation is only to be found by a search for pre-war standards of living along the road that leads to enhanced industrialisation. If only our planners could be induced to step back a few paces and see the goal in perspective ! INCENTIVES If we take things in the proper order; we must surely recognise the need for a steep rise in the incentives to the producer of home-grown food-a rise sufficient to draw into the field a larger proportion of our man-power and other resources. This applies not only to the farmer
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Page 1: THE NATIONAL SITUATION

686

Reconstruction

THE NATIONAL SITUATION *

Social Objectives and Economic NecessitiesFROM A CORRESPONDENT

IT happens that since 1939 two of the most dramaticchanges that have ever occurred in our economic lifehave taken place together.

First, the loss of our foreign assets has precipitatedthe need for a great alteration in our way of living :we no longer possess the income from foreign assetswhich for a century has enabled us to enjoy importsgreatly in excess of our exports. Secondly, the countryhas taken a great step forward in its determination toput social welfare above the freedom of the oldunrestricted industrial England.

Our present malaise is largely due to the combinationof these two changes, and our failure to work out theirimplications.Had the first change occurred by itself, the old correc-

tive process of supply and demand would after its ownfashion have provided a solution. There would, for

example, have been a sharp rise in the prices of manythings hitherto imported from abroad, and in due coursea reallocation of our internal resources between one

occupation and another. This would have been attended

by high prices and high wages in some occupations,and by low prices, low wages, and unemployment inothers. Though the social consequences would have beenmost uncomfortable, and the cost in human welfare veryheavy, the economic machine would eventually haveattained a new equilibrium.Had the second change occurred by itself the picture

would again have been different. The determination to

put social welfare above industrial laissez-faire means

primarily two things : (1) the setting of a brake on theold corrective machinery of supply and demand, andespecially on its chief instrument, unemployment ; and

(2) redistribution of the national income to ensure a’-fairshare of the necessities of life for all before superfluityfor the few-a redistribution which has been attainedpartly by taxation, partly by rationing, and partly byfood subsidies. These things-rather than the presentdrive for nationalisation and a " planned economy "-are the essential features of the drive for social justiceon which all parties are at heart agreed.Now had this programme had a fair field in which to

operate-i.e., relatively stable economic conditions-agreat social advance would almost certainly have beenachieved at a moderate cost in economic efficiency. Therefusal to use unemployment as a means of transferringlabour from one industry to another is unimportant inrelatively stable times ; for other methods, such as

discouraging entry into a particular industry, are

sufficient to bring the desired results. Similarly, givenrelatively stable conditions, the redistribution of our

national income by taxation, rationing, and food

subsidies need not have unduly disturbed the economicmachine.The tragedy of our present plight is that these two

trends are in absolute conflict. We have on the one handan economic situation which urgently demands a realloca-tion of our resources, and on the other hand a social

policy which not only abhors the old corrective mechan-ism but actually obscures the need for any adjustmentsat all. We cannot go on fumbling like this. If we are toretain the measures we have already taken for socialbetterment, and to go further on the same path, we mustpromptly devise some means of distinguishing moreclearly between economic necessities and social objectives.

* A previous article appeared on March 15.

Without this clear-cut distinction, the " planning "which is now our recipe represents no more than agroping towards a solution. Once the economic necessitiesstand out stark and clear we can consider how far their

operation can be controlled in the interests of socialwelfare.

THE FOOD PROBLEM

The conflict between these two forces is nowhere moreevident than in our handling of agriculture. Until 1939we pursued a policy of importing food-to such anextent that half our import bill was in respect of food,and only about 40% of our requirements was producedat home. Today the import-export balance has under-gone a radical change, and we cannot find enough foreigncurrency,to pay for food imports on the old scale. But

though we have granted the farmer fixed prices andthereby improved his prospects, we have not yet recog-nised the need to devote to home agriculture a far greaterproportion of our resources.The adjustment required can be grasped only if we

remember that for over a century agriculture has beensteadily drained of man-power, not only in numbersbut in quality, since able and ambitious men have beensteadily attracted into industry and commerce. Inestimating what home agriculture is capable of providing,it is idle to use figures (like those of the white-paperrecently published by the Government) which ignorethe possibilities of a policy which would put this processinto reverse. If we want to get more out of the land; thereward to the producer must be allowed to rise : it isinsufficient to offer the farmer merely his cost of produc-tion plus a reasonable profit-there must be real monetaryincentive on a grand scale until the needs of the com-munity are met and a new equilibrium is attained.Under the old regime of supply and demand sucha change would have occurred ; and from theeconomic angle the necessity for it can be decisivelydemonstrated.As things stand today the nutritional and social

policies of the Government keep the price of food to theconsumer under rigid control ; and, despite the subsidies,the reward to the farmer is fixed by reference to costof production. By obscuring the possibilities of a rapidrise in production of food, this policy has played into thehands of the export industries, to which we are told tolook for the 300-400 million needed to balance our

import-export account. These industries have been

given priorities ; the home market is subjected to rigidcontrols ; and we have almost unwittingly embarkedupon an attempt to draw a still greater proportion of ourman-power into industry, with all the doubtful conse-

quences that such a policy must entail if it succeeds. TheGovernment have thus been led into all sorts of difficul-ties ; they have on their hands a shortage of man-powerfor the basic and export industries, and no real means ofcorrecting it ; and a huge bill for stabilisation of thecost of living which reflects their attempt to continueto import food on the old scale and yet maintain prices tothe consumer at a low level.

Standing in too close a proximity to the industrialand commercial life of the nation, the Government andtheir advisers assume-that salvation is only to be foundby a search for pre-war standards of living along the roadthat leads to enhanced industrialisation. If only ourplanners could be induced to step back a few pacesand see the goal in perspective !

INCENTIVES

If we take things in the proper order; we must surelyrecognise the need for a steep rise in the incentives tothe producer of home-grown food-a rise sufficient todraw into the field a larger proportion of our man-powerand other resources. This applies not only to the farmer

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687

and horticulturist, but to the many millions of individualswho can make their own substantial contribution to the

food-supply if they are given good reason to do so.

In producing many important items of food-potatoes,vegetables and fruit of many kinds, and poultry-theordinary Englishman (especially when he has a five-dayworking week) is ready enough to play his part. But ifhe is to do so he must have the necessary incentive ;we must put an end to the artificially low prices nowprevailing for these things. If he can buy potatoes andeggs in the shops at the present subsidised price, theincentive to produce them for himself and for his neigh-bours rests wholly on his own actual shortage of them.Once increase the price of these things to a level corre-sponding to our need, and production everywhere willtake a sharp upward turn. Our present policy dis-

courages all effort except by the subsidised large-scaleproducer. Here is one way of reducing our imported-foodbill to which we are turning a blind eye.

It does not follow, however, that subsidies could bedispensed with. For if the -prices paid to producersare allowed to find a natural level it will be necessaryto use Government money to reduce the burden onconsumers where it is worst borne.

PLANNING

The case here made for incentives first, and redistri-bution of the national income second, should not beconfused with the cry for laissez-faire so often heardfrom some sections of the business community. It isnot, indeed, a case for absolute priority for incentivesover redistribution, but rather for logical sequence andorderly thinking. It is quite possible to arrange incentivesaright, and at the same time to proceed with redistributionin the interests of social justice. What is dangerous, andwhat is at present hampering us, is failure to recognisethe need for economic adjustments on a sufficientlydrastic scale, and having done so to plan the redistributionin the light of these requirements. What the Governmentare trying to do is to settle the programme of redistribu-tion on the basis of the old economy, the old scale ofimports, and the old allocation of man-power andresources as between different occupations ; and thento force the economy of the country into line. If the new

Planning Chief is not given a real opportunity to assessthe relative merits of the alternative methods wherebyan underlying balance may be attained, he will provebut another cog in the machinery.Measured in terms of man-power, only about I/1sth

of our resources is devoted to agriculture, and on theface of it the radical change in our import-export situationdictates a drastic revision of this ratio. If this 1/18thwere doubled or trebled, our livelihood would cease todepend on the success of the drive to double our exports-a success which under present conditions is at best

problematical. Admittedly the difficulties standing inthe way of so big a reallocation of labour are formidable.In particular, if we think that a big rise in agriculturalprices and wages is the only means of drawingman-power back to the land, we must discover howit can be applied without causing a fresh all-roundincrease in the cost of living and an inflationary wagemovement. These difficulties, however, are not in-surmountable, and it is high time they were given’inoreserious attention in official circles than they seem tohave had so far.

Planning, it has been well said, is not a matter of

superimposing some new authority : " it is much morea question of providing existing authorities with informa-tion sufficient to enable them to coordinate their workeffectively and accurately." In the national sphere todayit is up to the economists to provide the data needed todisplay the choices before us.

Special Articles

SHORTAGE OF NURSES

Hospital Doctors’ Review

THE fevers group of the Society of Medical Officersof Health and the London and Home Counties branchof the Medical Superintendents’ Society met in Londonon March 14, to discuss the nursing shortage. The fol-lowing memorandum * embodies the meeting’s discussionand conclusions.

CHARACTER AND INCIDENCE OF THE NURSING SHORTAGE

It has been stated that there are more nurses in thecountry today than ever before. This may be so, fornurses are now employed much more than formerlyin attractive jobs outside hospitals-e.g., in public-health and school services, day nurseries, and factories.Furthermore, the shorter hours now worked in manyhospitals necessitate an increase of some 10-12 % in thenumber of nurses.

It is pre-eminently in the local-authority hospitals,the special hospitals, and the smaller voluntary hospitalsthat the acute shortage of nursing staff exists. Mostof these have been compelled to close a considerableproportion of their beds because of it. London isparticularly hard-hit ; most of the local-authoritygeneral hospitals in London have had to close downabout half their beds and the fever hospitals even more.This means daily refusal of admission to thousands ofcases recommended to hospital. It also threatens, as

far as the fever hospitals are concerned, the training ofmedical students and graduates. -

It is said, on the other hand, that the great Londonvoluntary hospitals with medical schools’have no short-age of nurses, and have, indeed, waiting-lists. This isdoubtless due partly to the inherent attractiveness ofthese hospitals. These discrepancies in staffing as

between different kinds of hospitals have been greatlyincreased since the Rushcliffe scales of salary were

introduced in 1943. The Rushcliffe policy of uniformityof salary-scales for all hospitals, regardless of theirvarying appeal to prospective nurses, is undoubtedly amajor factor in the shortage which now threatens theexistence of many local-authority and other hospitals.

FEMALE POPULATION CONCERNED

The Registrar-General has kindly supplied the followingestimate for England and Wales of females aged 17 inthe 25 years from 1922 to 1946 (figures givenin thousands) : 358, 356, 360, 367, 364, 357, 350, 346,353, 354, 345, 314, 296, 263, 262, 399, 374, 357, 334,324, 315, 309, 300, 291, and 291. Thus, the main averagefemale population from which nursing recruits may bedrawn dropped from 361,000 in the quinquennium1922-26 to 301,200 in the quinquennium 1942-46-adecrease of 16 % in 20 years. If we compare the earlierquinquennium with the 2-year period 1945-46, however,the drop is nearly 19 %. Owing to the continued lowbirth-rate during the years 1930-45, the availablepopulation is unlikely to increase and is more likelv todecrease during the next 15 years. We have, therefore,good reason to reckon that for the next few years thefemale population available as potential nursing recruitswill be- some 20 % less than that available a quarterof a century ago.

ALTERNATIVE EMPLOYMENT

From this diminished female population, the propor-tion attracted to industry, to the Services, and to clericaland administrative work has increased as comparedwith that entering hospital nursing. The reasons usuallyadvanced for this shift include the higher wages, shorterhours, advantages of home life or unrestricted privatelife, and -the generally easier time enjoyed in thosealternative occupations. On the other hand, the nurse’s

*Dr. WILLIAM GUNN, president of the fevers group, presided overthe meeting, at whose request the memorandum has beenwritten by the principal speakers. These speakers wereDr. H. STANLEY BANKS (president, London and Home Countiesbranch, Medical Superintendents’ Society) ; Dr. E. B. BROOKE(Surrey) ; Dr. 0. W. S. FITZGERALD (Herts) ; and Dr. W. F. T.MCMATH (Willesden).


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