This is a short section from my new book, Transcending the Economy. The idea is that if markets are so good, why do governments abandon them in terms of crisis. War and the Reorganization of Society Indeed, during times of war, when the threat to social survival becomes extreme, countries abruptly abandon the rhetoric of individualism. Instead, we find a thorogoing emphasis on efficiency, except for the question of the inefficiency of the war itself. In the words of Ralph Hawtrey, a British Treasury official who was also a very influential economist: The War suddenly showed up all our economic standards from a new angle. In the belligerent countries people became aware of the paramount claims of the State. They were called upon to give up former pursuits in favour of a single transcendent purpose. The economic problem presented itself in an unequivocal form; human nature had to be worked upon and induced to do what the State required to do. Every combination of payment, persuasion and pressure was resorted to, not only to make people serve in the forces and work at the manufacture of munitions, but to regulate every part of their lives. Controls and rationing were gradually extended in all directions. Markets ceased to function. Prices lost their ordinary significance. Demand usually meant either the demand of the State or a consumers' demand limited by rationing. Cost meant a total of wages and prices determined by authority and cut off from any semblance of free competition. Wealth no had any useful meaning. [Hawtrey 1925, p. 384] For example, in the United States, a push toward standardization was an important part of the war effort during the First World War. In forcing business to reduce the variation in styles and sizes, the government was "giving production problems precedence over sales problems" (Knoedler 1997, p. 1015; citing Haber 1964, p. 120). The results of the standardization drive were impressive. The National Industrial Conference Board calculated that the War Industries Board push toward standardization saved about 15 percent of total costs for the relevant industries (Knoedler 1997, p. 1015; citing National Industrial Conference Board 1929, p. 9; see also Knoedler and Mayhew 1994). The standardization drive was part of a larger process. During the Second World War, John Maurice Clark observed that in peacetime society acts as if consumption were the objective; in war, leaders concern themselves with "the necessities of health, efficiency, and 'morale'." In peacetime, we are limited by the capacity to consume; in war, by the capacity to produce (Clark 1942, p. 3). Earlier, during the First World War, Clark gave a slightly different interpretation of the changes that occur during war: "The need of a more coherent social organization is probably not less great in times of nominal peace, merely less obvious and less immediate" (Clark 1917, p. 772). In other words, facing a serious threat of a military disaster, the typical individualistic motivations cease to occupy society. During such times, just as in the sensory deprivation chamber, we suddenly become aware of the need to eliminate wasted effort. Political leaders quickly realize that productive capacity depends upon both the capacity and the morale of the people. For example, during the First World War, the British Report of the Ministry of National Service told the country that only one man in three of nearly two?and?a?half million examined was completely fit for military service (Titmuss 1958, p. 81). Still later, during the Second World War, professor Cyril Falls said that, in military terms, the war could not be won unless millions of ordinary people, in Britain and overseas, were convinced that Britain had something better to offer than had her enemies did ?? not only during but after the war (Falls 1941, p. 13; cited in Titmuss 1958, p. 82). Richard Titmuss, a British professor of social administration, noted that Family Allowances, the Beveridge Report, National Insurance (income security) and the Education Act of 1944 were all spawned during this time (Titmuss 1958, p. 84). He concluded: The social measures that were developed during the war centred round the primary needs of the whole population irrespective of class, creed or military category. The distinction of privileges, accorded to those in uniform in previous wars, were greatly diminished. [Titmuss 1958, p. 82] In effect then, the pressing demands of a wartime emergency tend to encourage a nation to rationalize capital, labor, and society as a whole. In terms of rationalizing capital, the government takes measures to coordinate different industries and to see that firms use their plant and equipment as efficiently as possible. In terms of rationalizing labor, the government tries to make sure that the workers and soldiers are stronger and healthier. The rationalization of society is the most subtle of the three rationalizations. Toward this end, the government tries to minimize the dissipation of effort wasted in conflict between various groups of people. For example, the government will act to minimize the disparities in the privileges that different classes enjoy. Immediately after wars, before the memory of the threat has fully dissipated, political leaders still take an interest in policies that facilitate the creation of social solidarity and make the working class healthier. In this regard, Richard Titmuss noted: It was the South African War, not one of the notable wars in human history, to change the affairs of man, that touched off the personal health movement which led eventually to the National Health Service in 1948. [Titmuss 1958, p. 80] In the United States, the School Lunch Program, established in 1946, was another classic case. Much of the initial support for the program was due to the persuasive testimony of Major General Lewis Hershey, Director of the Selective Service Commission. The general told congressional committees that, during the Second World War, poor nutrition accounted for many of the rejections of young men by local draft boards (U.S. House of Representatives 1989, p. 53). Hawtrey noted that many hoped that the changes in society would go farther: [culminating in] changes in human nature, which will bring new motives to bear. Mr. [Richard] Tawney looks forward to an extension through all occupations of the honorable zeal which we count on finding in the professions. This is itself a separate solution of the economic problem, a solution based like that of primitive society, upon a sense of obligation in the individual, but differing from the primitive solution in that the sense of obligation would be rational. It would take the form of a desire to render a service to society; it would not be bound up with a caste?imposed obligation to render a service of a narrowly traditional kind, but would be free to adapt itself to the changing needs of society. [Hawtrey 1925, p. 385] Of course, those in power naturally did whatever they could to forestall such changes. In fact, even in the press of military emergencies, even when leaders recognize the importance of encouraging social solidarity, the powers that be still have limits to how far they are willing to go in the direction of equality. Titmuss mentioned a particularly revealing example. In May 1855 in the midst of the Crimean War, when Florence Nightingale opened a reading room for injured soldiers in Scutari, the War Office responded that soldiers "would get above themselves" if, instead of drinking, they read books and papers, and that army discipline would thereby be endangered (Titmuss 1958, p. 85; citing Woodham?Smith 1950, p. 239 although this page reference seems to be wrong). -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
