Oswald Mosley - Right or Wrong ?

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Question 32. What is your Monetary policy?

Answer :  The first object of monetary policy is to secure a supply of money adequate to an expanding economy, neither more nor less than is necessary to a system continually increasing production. Extra money which is not matched by extra production means inflation. Less money than is required to match the extra production means deflation. Both are disastrous. The mass production evoked by the new European market will need a continually expanding supply of money to match the greater volume of production. The tendency of this mass production will be to bring prices down by making goods more plentiful, and in the early stages this will be good and necessary. But in the long run we shall need a stable price level to ensure steady progress.

I disagree strongly with the current opinion of the Establishment, that monetary measures alone will be enough to meet all the economic problems of this age. Keynes, in his General Theory and other works, made a great contribution to economic thinking from which we have all learnt much.

But I have always held the view that in normal conditions Keynes would not be enough. Hence my whole thesis of the economic leadership of government through the wage-price mechanism described in previous answers. That economic policy, applied within a viable area, insulated from the world costing system, would permit a far bolder monetary policy than is possible in an island economy dependent on world markets.

Although many interesting new ideas are now available in the monetary sphere, no experiment is possible in the present island economy without risk of exchange disaster. But in an economy so large and viable as that of Europe and its overseas territory, sober and careful experiments could he tried in any of the new directions Without undue risk. Apart. also, from new principles in monetary theory, a banking system operating within European territory, and designed to promote steady industrial expansion could adopt such measures as a differential rate of interest according to some criteria of desirability from the national standpoint. For example, housing should not he charged the same rate of interest as the new dog-racing track, or many less desirable things which are now competing in the money market. We must always remember that it is the high rate of interest which is the main factor in the present high rate of rent. By this means alone the spiv and the speculator would be practically eliminated, although more direct measures would he taken against them if these measures and the general conditions of our stable system did not suffice. None of these developments are possible in an island economy tied to the world costing system. But all things are possible to the giant economy of the new Europe.

Question 33. What will be the position of the investor and the Stock Exchange?

Answer : There will he a much wider choice of investment in the stable but expanding economy of Europe, which will not he subject to the ruinous fluctuations now prevailing. People who invest their money in die constructive industries and services which create national wealth and amenity will reap a greater reward than they do now, because industry will he earning more. There will be larger earnings to distribute between salaries and wages. profits in the shape of dividends for such investors, and capital resources for industrial developments. It is easy to see how this will occur once we have the large and assured European market, for which industry may mass-produce without fear of undercutting or dislocation by the fluctuations of world markets.

To take a simplified illustration: Supposing today an industry after selling its products and paying for overheads and raw materials, is able to divide ten units in the proportion of 6 to wages and salaries, 2 to dividend and 2 to capital resources for the development of industry. Suppose then the industry operates within the new European system and is able to double its production for that assured market it will then have not 10 but 20 units to allocate in the same proportion, which will result in 12 to wages and salaries, 4 to dividend and 4 to capital resources for development. Wages and salaries alone would then be getting more than the total annual sum now divided between wages. salaries dividend and capital resources.

In fact. the advantage will generally be found to be greater because the overhead charges would not increase proportionately, and the same consideration applies to other factors in mass-producing industries. This over-simplified case I have given allows a higher proportion to dividend and capital resources than is usually the case at present, but it illustrates that all parties in industry must gain immensely from more production for a large and assured market. Wages and salaries in such a situation are quite certain to draw a larger sum than the total allocation to wages, dividend and capital development today. The conflict between labour and capital for the division of the present limited reward will be ended, and the investor will benefit by a larger return on money placed in an industrial development which will greatly enrich the community.

The genuine investor has everything to gain from a system in which the spiv and speculator are eliminated, not merely by law but by the end of the fluctuations and shortages through which profits are made at the expense of the community. Investors will be able to buy and sell shares on the Stock Exchange in the far greater range and wider choice of genuine industries and services of an economy which will certainly and steadily expand. The Stock Exchange will not he subject to the daily, nagging intervention of government. hut will he required to follow the rule of honourable, professional conduct which its leading members will find easier to secure when the day of spiv and speculator is ended.

Question 34. But should investment be allowed at all - would not social justice be better served by public ownership?

Answer : Let us face frankly and fearlessly the issue raised by this question. Either we have complete public ownership, or some system of private investment. Complete public ownership means that everyone is a servant of the state. It means government by universal bureaucracy. In short, it means communism.

Any system of freedom must allow people to save and to invest. If they save and invest in other industries than those in which they are employed, they are liable to he denounced as absentee shareholders, etc.

The present system can lead to such abuses. In theory at any rate, the fate of great industries and the lives of their employees can he at the mercy of absentee shareholders who know nothing about them and are concerned only with profits. But at this point our policy of the wage-price mechanism would again operate, not only to make competition fair and to equate production and consumption, hut also to prevent abuse and injustice. The economic leadership of government through this method can obtain a fair and proper balance between wages, re-investment and dividend. And remember that the life of the government depends on the vote of the mass of the people. and on its ability to persuade them that it is acting fairly. 

Remember, too, that our industries in the new system will not be subject to world competition. and that similar wages will be paid in similar industries throughout the home market of Europe.

An industrialist may he put out of business by a more efficient rival, but not by a competitor who pays lower wages. It is these conditions which make possible the raising of wages to the point where consumption balances production without destroying the competitive power of industry. Present capitalism can never sufficiently raise wages without being costed out of world markets, or even being defeated by internal competition. Nor would socialist industries be in any better position if they operated within the international system, as the Labour Party proposes.  

It is the viable area of the European system, insulated from world markets and world costing, which enables our method of the wage-price mechanism both to raise wages in order to provide a market for production. and to retain the incentive of profit which creates new enterprises. That is why we can give both workers and investors a fair deal, and, in so doing, can create a new economic system which will alike be free from the slumps and unemployment of capitalism and from the bureaucratic tyranny of communism.  

Question 35. Will not the Wage-Price Mechanism require as much bureaucracy as socialism or even communism?

Answer : Obviously not, because government operating the wage-price mechanism will intervene only at the two key points of wages and prices. Socialism or communism means the complete control by the state or its institutions of every process of production, distribution and exchange. To intervene at two points of these immense processes clearly does not require the bureaucracy which the complete management of them all must involve. That is a proposition so evident as to be self-explanatory. 

In fact, the “bureaucracy” required by the wage-price mechanism would be little more than the economic general staff with which government should long ago have been armed. The detailed organisation could he devolved to joint organisations of employers and trade unions. They could carry out the general instructions of government that similar wages should be paid and similar conditions maintained in comparable industries throughout Europe. A related organisation could also implement the price control policy in monopoly conditions. When it was necessary to hold a balance between interests, a government representative could be supplied to take the necessary decisions. Plenty of effective precedents for such administrative mechanism already exist in Europe.

The function of government’s economic leadership would be rather to settle the general trend of industry, and for this purpose the power to determine wages in the various complexes of industry would be a most effective instrument to which industry would he very sensitive. It is quite unnecessary to conduct or control everything: this concept is the deep error of socialism or the communism with which it becomes identical in the final phase. Give government the power to regulate the wage relation between the various complexes of industry, the reward relation between wage and profit. and the relation of both to reserve and future development; you will then find that the people’s government has quite enough power to lead the economic system in the best interest of the nation whose voters supply the mandate.

Because the method is leadership. not bureaucracy, the number of officials required will be relatively small. The contrast between the new thinking and the old socialist conception is another example of the simplification which comes as thought progresses and mind develops. Remember men thought of the complicated "penny-farthing” bicycle with two wheels of different size long he fore they thought of the ultimate simplicity of two similar wheels, and the modern jet airplane appears in basic principle to be a great simplification in comparison with the engines which first lifted men into the sky. In short, the complications, obfuscations and pedantries of the old Marxian thinking are as out of date as the universal bumbledom of socialist controls which end in communist tyranny.

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