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is a long-run solution but it marks a permanent departure from a system of private capitalism and can be easily attacked in a country with a capitalistic ideology and a private banking system. Spending on armaments and national defence is the last method of fighting depression and is the one most readily and most widely adopted in the twentieth century. A program of public expenditure on armaments is a method for filling the deflationary gap and overcoming depression because it adds purchasing power to the market without drawing it out again later (since the armaments, once produced, are not put up for sale). From an economic point of view, this method of combating depression is not much different from the method listed earlier under destruction of goods, for, in this case also, economic resources are diverted from constructive activities or idleness to production for destruction. The appeal of this method for coping with the problem of depression does not rest on economic grounds at all, for, on such grounds, there is no justification. It's appeal is rather to be found on other, especially political, grounds. Page 550 The adoption of rearmament as a method of combating depression does not have to be conscious. The country which adopts it may honestly feel that it is adopting the policy for good reasons, that it is threatened by aggression, and that a program of re-armament is necessary for political protection. It is very rare for a country consciously to adopt a program of aggression, for, in most wars, both sides are convinced that their actions are defensive. It is almost equally rare for a country to adopt a policy of re-armament as a solution for depression. If a country adopts re-armament because of fear of another's arms and these last are the result of efforts to fill a deflationary gap, it can also be said that the re-armament of the former has a basic economic cause. In the 20th century, the vested interests usually sought to prevent the reform of the economic system (a reform whose need was made evident by the long-drawn-out depression) by adopting an economic program whose chief element was the effort to fill the deflationary gap by re-armament. THE PLURALIST ECONOMY AND WORLD BLOCS The economic disasters of two wars, a world depression, and the post-war fluctuations showed clearly by 1960 that a new economic organization of society was both needed and available. The laissezfaire competitive system had destroyed itself and almost destroyed civilization as well by its inability to distribute the goods it could produce. The system of monopoly capitalism had helped in this disaster. Page 551 The almost simultaneous failure of laissez-faire, Fascism, and of Communism to satisfy the growing popular demand both for rising standards of living and for spiritual liberty had forced the mid-20th century to seek some new economic organization. Underdeveloped peoples have been struck by the conflicting claims of the two great super-Powers.. The former offered the goods the new peoples wanted (rising standards of living and freedom) while the latter seemed to offer methods of getting these goods (by state accumulation of capital, government direction of resources) which might tend to smother these goals. The net result has been a convergence toward a common, if remote, system of the future whose ultimate nature is not yet clear but which we might call the "pluralist economy." CHAPTER XII: THE POLICY OF APPEASEMENT 1931-1936 file:///C|/Documents%20and%20Settings/me/Desk...ley,%20Carroll%20-%20Tragedy%20and%20Hope.txt (54 of 129) [14/06/2005 11:42:39]