Again, Chase

"What is an economic system for?" This question, says Stuart Chase in A New Deal, published last fortnight by Macmillan, was never put by the economic sages of the last century. A very literate economist himself, Mr. Chase answers the question simply and proposes changes which he believes will make the system function as it should. Whether the system is capitalism or socialism, he cares little. "The crux of the matter is, who receives the factory income? As the case now stands, it is a six-cornered fight between the landlord ... the bondholder . . . the stockholder ... the worker ... the management . . . and the state. If the worker or the state wins out, it is socialism; if landlord, bondholder and stockholder . . . it is capitalism; if the management wins out it is, so far, unnamed."

Unlike many economists who are inclined to cheer for the worker and the state, Mr. Chase has no particular objection to the rich, but he says: "What no system can bear indefinitely is the continual rowelling of its vitals by those who are trying to get rich. It makes little difference whether they succeed or fail; the operation is disastrous in either case." For the benefit of young men on the make, he lists 16 ways of getting rich. Some of them:

"The tying up of a patent or a secret process and charging all that the traffic will bear. The United Shoe Machinery Co. has no reason to complain in this department."

"The ingenious overcoming of the interest rate in selling credit to the wayfaring man. . . . The mechanic or clerk ... to . . . buy a car, or bury his grandmother, must pay anywhere from 10 to 100% per annum for the privilege."

"Speculating in securities. . . . After speculation in real estate, this is the great American business enterprise."

"Graft in politics. The bulk of this traffic is small change, worth no ambitious man's time."

"Racketeering."

"Rushing blindly in to compete when excess capacity already threatens the industry. This is ... quantitatively the worst item on our schedule. . . . Money is indeed made, but, in a closed market, an equal amount is lost, while the economic structure reels dizzily with repeated blows in a vital part."

The fact that the U. S. population curve is tending to level off (approaching a peak about 1960) Economist Chase thinks will force a thoroughgoing revamping of the old system. "For the first time in our national history since the opening of the West," he says, "we have to deal with a roughly static rather than an expanding structure. There is no prairie, no mountain, no forest to which we can escape; there are no elastic real estate values to muffle the impact of our industrial blunders. Our luck has run out; we have at last to face real things in a real world."

Facing this world, the U. S. must invest less & less in producers' goods, must spend more & more on consumers' goods, says Economist Chase. ". . . It seems a pity that the wayfaring man, having built this magnificent plant . . . should not have a chance to secure some good from it." Vast expansion of manufacturing equipment, he believes, has been confounded with progress. "We have the plant but we cannot make adequate use of it. Jam yesterday, jam tomorrow, but never jam today. Men want jobs; people want shoes." What the U. S. can save by eliminating its 16 ways of making money, plus a considerable part of what it now saves for investment, Economist Chase would have spent on everyday living.

The application of new inventions must be regulated, thinks Economist Chase. "The going system is concerned with building, improving, scrapping, redesigning, high financing--anything to secure profitable investment ... at the cost of the wayfaring man. . . . There are a dozen inventions now wavering on the edge of practical engineering which will dynamite as many industries. . . . This is the progress of the Sabine army: one step forward, two steps backward, March!"

A frank admirer of Soviet Russia, Economist Chase believes, along with many another contemporary economist, that laissez-faire is dead. Even in the U. S. collective efforts have superseded the rough & tumble of cut-throat competition. He favors government operation of huge semi-public corporations, not only utilities and railroads but also in such basic industries as oil and steel. Scouting the idea that public operation is inefficient, he points with pride to the German rail roads, American Telephone & Telegraph Co., the Port of New York Authority (TIME, Aug. 29). Lesser industries should be forced by a public body to hold production in line with consumption. Flotation of stocks & bonds shall be carefully supervised to avoid creating excess capacity, useless industries. Foreign investments Economist Chase would ban.

But the key to his new system is managed currency and credit. Inflation and deflation will be minimized by a controlled dollar. Though the U. S. would have to take its chance in foreign trade, the value of the dollar would be changed by a body similar to the Federal Reserve Board. Economist Chase thinks that the importance of exports will tend to dwindle, that the U. S. will be forced back upon itself as a self-contained unit, selling only to buy the few raw materials (tin, rubber, manganese, coffee, silk) it lacks. Managed currency and credit (not a price-fixing scheme) would serve merely to flatten the major swings in commodity prices.

Economist Chase learned the ins & outs of business as an accountant in the employ of the Federal Trade Commission. Now 44, he writes busily for private profit, lives in a remodeled barn in Redding, Conn. He was a founder of Consumers' Research, an organization which tests and analyzes consumer products for 40,000 subscribers. What he terms "consumer literacy" (knowing intrinsic values apart from advertising blasts), Economist Chase thinks will eventually have a cleansing effect on the present system. When plain people as well as economists recognize that the system's function is "to provide food, shelter, clothing and comforts in as dependable and adequate quantities as ... resources . . . and technical arts permit" for every U. S. man, woman & child, then his system, says Economist Chase, will more than double the standard of living which existed, before the Depression.

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