Time Will Run Back

by Henry Hazlitt

  Adams telephoned the Central Planning Board. He learned that all the ash trays came from a single factory, and that fewer of them were turned out each year than chairs.

  “So you see?” said Peter. “Yes, chief, but these things take very little labor to produce—”

  “So we are back to our problem,” said Peter. “But we get at least to this conclusion. Things are not valued merely in relation to their scarcity. They are valued in relation to how much they are wanted in relation to their scarcity.”

  Adams held his head in mock despair of taking in an idea so complex.

  “So this leads us closer to the heart of the problem, Adams. And the problem is this: Are we making things in such relation to the wants of the people as to satisfy those wants to the maximum extent possible with the land, labor and machinery at our disposal? In other words, are we creating the maximum value in relation to our existing means of production?”

  Adams stared at the ceiling. He seemed to be trying to take in the problem.

  “Let me put it this way,” continued Peter, trying to help not only Adams but himself. “Are we wasting, are we misapplying, are we misdirecting, labor, land or machinery in making some things or in making certain quantities of those things, when we might be using the labor, land and machinery better in making other things, or greater quantities of other things, that would meet more wants?”

  “I’m just beginning to see the problem,” confessed Adams. “But I would have to see the problem itself in a much sharper focus before I would have any notion of the answer.”

  “Well, let’s see whether we can’t get it into a sharper focus,” said Peter. “Marx assumed that the only thing required to produce commodities was labor-time—or at least that everything required to produce commodities could be resolved into simplelabor-time or stated in terms of simple-labor-time-—”

  “And we have decided that that was a gross oversimplification,” said Adams.

  “Precisely,” agreed Peter. “But we also decided that the comparative labor-time involved in producing different commodities had at least something to do with their relative scarcity and hence with their relative value. We decided that labortime was at least one of the factors that determined this relative scarcity. Now precisely because Marx’s answer was a gross oversimplification, it may help us with our present problem: we often have to simplify problems even to find out what they are. All right, then. Let’s assume for the sake of simplification that Marx was right in contending that all the sacrifices made in producing goods could be reduced to ‘simple average labor time.’ Very well. We find out that, in a free exchange market, people value a chair at four times as much as a shirt. Now if it took just four times as many labor-hours to produce a chair as a shirt, then we would be making equal sacrifices to produce equal satisfactions, equal values, and we would not be misdirecting or wasting labor. But if, on the contrary, it should turn out that it took the same number of labor-hours to produce a shirt that it did to produce a chair, then we would be obviously wasting hours of labor-time in producing shirts, for those labor hours would be producing far more value—in fact, four times as much value—if they were used in producing chairs instead.”

  “But we have to have shirts,” protested Adams.

  “So we do,” agreed Peter; “but the real question is, how many shirts is it economical to produce compared with how many chairs? For if it took the same number of labor hours to produce a shirt as a chair, then we ought to continue to take labor away from making shirts and put it into making chairs, until chairs become relatively so plentiful, and shirts relatively so scarce, that they exchange in the market at exactly the same price—that is, at a ratio of 1:1.”

  “But suppose it actually does take four times as many labor-hours, chief, to produce a chair as a shirt?”

  “Then labor is not being wasted,” agreed Peter. “But if it took only four times as many labor-hours to produce a chair as a shirt, and 6 shirts instead of 4 should begin to exchange in the market for a chair, it would mean that we were then wasting labor in producing shirts instead of chairs.”

  “I see the problem more clearly,” said Adams; “but I am troubled by something. We had already agreed that Marx was grossly oversimplifying when he contended that ‘simple average labor time’ is the only thing that produces commodities or values.”

  “Right,” agreed Peter. “And therefore our answer must be modified. But suppose we take ‘simple average labor time’ symbolically, to stand for all the costs and sacrifices that have gone into production, then it will help to give us the ans—”

  He paused, struck by a new approach. “I think we are now in a position to state the problem clearly, Adams. Let me try. On the market we find hundreds of different kinds of consumption goods exchanging at various ratios with each other. At any given moment the ratio of exchange between one kind of goods and another is the same for everybody in the same market. If that market ratio changes, it changes for everybody. These ratios therefore measure the relative values that the consumers, considered collectively, put on these goods.”

  “And these ‘collective’ valuations, chief, are, so to speak, the net resultant of individual valuations?”

  “Right. Perhaps, also, the collective valuations in turn influence the individual valuations, so that there is a sort of reciprocal determination.... But we don’t need to go into all these complications now. The point is, that if we are not to waste or misdirect labor, land and machinery, we must fulfill several requirements. In the first place, taking any one commodity in isolation, the sacrifices we put into producing it must at least be more than offset by the satisfactions it yields—otherwise at least a part of those sacrifices have been unnecessary; they have been wasted.”

  “In other words,” said Adams, “the value of every commodity we make should be greater than the cost of producing it?”

  “Exactly,” said Peter; “provided we agree on just what we mean by ‘cost.’ At bottom, costs are subjective. Costs are equal to the value we attach to the satisfactions we have to forego in order to attain the satisfactions we are creating. The cost of production of commodity X, for example, is equal to the value of the product or products that we can’t produce because the labor, time, land, raw materials and so on necessary for their production are used up in producing X.”

  Adams seemed to need time to take this in.

  Peter continued: “Or we could put the matter in still another way: For every product the value of the output should be greater than the value of the input—otherwise we are wasting resources.”

  He lit a cigarette, to give himself time to collect his thoughts.

  “The next requirement we must fulfill, Adams, is a little harder to state. The respective costs of production of the hundreds of different commodities should bear exactly the same relationship to each other as the respective prices of these commodities bear to each other in the market. Wherever there is a discrepancy of any kind in these relationships it is a sign that productive resources have been wasted, that some factors of production have been misdirected.”

  “In other words, chief, such a discrepancy means that less labor, land, machinery and raw materials should have been devoted to producing, say, commodity A and more to producing commodity B?”

  “Exactly,” said Peter. “And now, I think, we are really closing in on the problem. Not only must the total value of our output exceed the total value of our input, but the value of the output of each product must exceed the value of the resources devoted to producing it. And the solution would not be perfect unless for each product the value of the output exceeded the value of the input by the same percentage as for every other product—otherwise we would know that we were producing too much of products A, B, and C and too little of D, E, and F, etc., and that we were wasting productive resources.

  “And therefore the problem we face, Adams, may be stated this way. The ideal productive system would be one that produced the maximum overall satisfacti
ons with the minimum overall sacrifices or cost. The hundreds of different consumption goods must be produced in the relative proportions and by the methods that secure this result. Otherwise we are wasting our sacrifices and our resources or failing to obtain the maximum welfare from them.”

  Adams thoughtfully stroked his nose. “And we didn’t even see this problem, chief, we didn’t even know it existed, we certainly didn’t know how to formulate it, until we had developed a market in consumption goods.... The problem seemed simple enough when you and I, as the economic dictators, decided what kinds and ratios of goods and services people ought to have. But the minute we gave them the opportunity to put their own relative valuations on these goods, the result began to open our eyes.”

  “And now,” resumed Peter, “we can see still another problem that would never have occurred to us before we permitted freedom of exchange. The problem is not merely how to decide what things to produce, and in what proportions to produce them, but how to decide what is the most economical method of producing each of them. In what proportion, for example, ought we to use labor and machinery for producing shirts? Which would be more economical—hand sewing or machine sewing?”

  “Obviously machine sewing, chief, is more efficient.”

  “It isn’t really more efficient, Adams, unless it is also more economical. And when we start to figure on that, we have to figure first on the cost and time required to make the machines to do the sewing. And if we have to make the machines before we can start the sewing, then the process of production is obviously more round-about than if we start sewing by hand right away.”

  Adams held his head again with his hands. “I don’t find it easy to deal with these abstractions, chief. My brain is beginning to sag. Do you mind if we put off the solution of this problem for another day?”

  “Not at all,” said Peter. “We have at least got to the statement of the problem, and as we started out by saying, that is probably half die battle.”

  Adams left.

  Peter’s brain, too, was tired. He buried his face in his hands. Whenever he found himself alone like this, with no problem of his office absorbing his attention, his thoughts returned to Edith. Where could she be? Was she even still alive? What had he left undone to find her? ...

  He heard the timid knock of the waitress on the door.

  “Come in!”

  He sat up.

  She entered with the supper tray, spread the napkin on his desk, set the tray softly on it, and went out again with noiseless steps. He hadn’t much appetite, but slowly and dutifully ate what was put before him.

  Shortly after he was finished, she knocked and came in again.

  “I’ve brought your dessert separately tonight, Your Highness. It’s ice cream. I didn’t want it to melt before you got it, so I had it kept in the refrig—”

  “Ordinarily it would look very tempting, comrade. But I just can’t eat anything more tonight.”

  “It seems a shame to waste it, Your Highness.”

  “No. Maybe somebody else will like it.”

  She put the dish of ice cream on the tray, took the tray out and silently closed the door behind her.

  A few minutes later he heard a scream.

  He flung open the door. It led into a corridor which in turn opened on the kitchen from which his meals were served. Toward the rear of the corridor was a small serving table against the wall. His tray was on this. On the floor by the table the waitress was writhing in agony.

  “The ice cream,” she groaned. “It was poisoned. Oh, a doctor... please...”

  When the doctor arrived the woman was dead.

  Peter noticed again her thin hands and pinched face.

  Chapter 27

  HE learned that the waitress and the cook had been taking turns in supplementing their meager rations by eating the leftovers from his meals. That night had been the cook’s turn, but the waitress had been tempted by hunger and the untouched ice cream.

  When Peter reported the incident the following morning, Adams seemed cold-blooded.

  “Remember the day Bolshekov’s men tried to machinegun me? I told you your turn would come next. Well, it came. We have both had miraculous escapes. It would be too much for either of us to expect to repeat the miracle.”

  “What can we do about it?”

  “The first thing you must do, chief, is to change the cook and everyone who had access or could have had access to the kitchen. Everybody should be thoroughly screened by Stalenin’s guard. You have been amazingly careless. Stalenin used to have a special food taster at his desk.”

  “Yes; he still has him at his bedside for meals.”

  “I keep a dog,” Adams continued, “that nobody but myself is allowed to feed. He gets a little taste of everything before I try it.”

  “How long have you been doing that?” “As far back as I can remember. Practically every member of the Politburo has to take similar precautions. I’ll send a dog over to you, if you want. It’s better to have an ugly one, so you don’t get too fond of him.” So this, thought Peter, is the life that everyone else in Won-world envies.

  “Of course, the only real remedy, as I advised you long ago, chief, was to throw Bolshekov out; but he has since made his position so solid with the army that you couldn’t remove him now without unleashing a civil war.... A war which, I think frankly, you and I would lose.”

  “Then what can I do now?”

  “Your only choice is to do to him what he has been trying to do to you. You had better beat him to it!” “Have him assassinated?” Adams nodded. Peter shook his head. “I’ve told you time and time again,

  Adams, that I just can’t resort to such methods. I don’t believe in them. Means determine ends. We are trying to make a better society. A society founded on violence, bloodshed, trickery and murder would be certain to be loathsome. It would not be worth creating. It would not be worth living in.”

  “Well, if you don’t follow my advice, chief, you won’t be living long in this society, I assure you.”

  Peter was beginning to find the subject too uncomfortable.

  “Let’s go back to where we left off yesterday, Adams.” There was just a touch of command in his tone. “How are we going to solve the problem of economic calculation? How are we going to determine just what commodities to produce, just how much to produce of each of the hundreds of different commodities, and just what means and methods of production are in each case the most economical?”

  Adams looked at Peter incredulously, then seemed resignedly to decide to go along with him.

  “Isn’t there any way of solving the problem directly, chief? Just by deciding, for example, what things are probably most needed, and how many men, how many machines of different kinds ought to be used in producing each of them—just as we have been doing?”

  “We have already decided, Adams, that we are working completely in the dark. You simply can’t add things that are unlike each other. Or subtract, or multiply, or divide them, or even, in any meaningful quantitative way, compare them. You can’t add pigs to pears, or subtract houses from horses, or multiply tractors by toothbrushes.”

  “I’ll try again, chief. How about comparing things in relation to the average labor-time necessary to make each of them?”

  “We’ve already been over all that ground, too,” said Peter. “We found that the labor-time of an expert or a genius is incomparably more important than that of a bungler. We found that all sorts of other things besides labor go into producing goods—such as raw materials, machinery and land. And we found, finally, that unless we have some common unit—and that common unit is not labor-time!—we can’t measure the relative amounts of raw materials, machinery and land that go into producing different commodities.”

  “Then why not just find out by trial and error, chief, whether or not we’re making the right things in the right proportions and by the most economical methods? Trial and error! That’s the human method of learning. That’s the method of
science.”

  “‘Trial and error’ doesn’t mean anything, Adams, unless you have some definite way of recognizing and measuring the extent of the error. Otherwise you don’t know what to correct for in your next trial. If I’m shooting at a target, and my shot falls approximately a foot below the bull’s eye, I try to raise my next shot by a foot; if my shots are going too far to the left, I aim more to the right. If a chef broils a steak and finds it overdone, he leaves the next steak over the fire a shorter time. And so on. But what standard have you got for error in the problem we are trying to solve? How do you now that the production of some particular item is costing more than it is worth? How do you know whether or not you are adopting the most economical method of making that item or any other item?”

  Adams was silent for a while. He thoughtfully took a few pinches of snuff. Peter resorted to a cigarette, and blew the smoke toward the ceiling.

  “I have it! Adams, I have it!” he said suddenly. “I don’t know why we didn’t think of it before. You’re right. Trial and error! We can use the method of trial and error—and combine it with a price system!”

  “Now that sounds interesting, chief. Just how would you do that?”

  “Well, let’s think it out. We allowed people first to exchange their ration coupons and then to exchange their consumption goods. And as a result a market was established. Certain exchange ratios, certain relative market values, established themselves. And now we know, for example, that people considered collectively value a chair by four times as much as a shirt, and so on. So we now know how much consumption goods are worth. But we still don’t know how much it costs us to make them. But suppose we knew how much production goods were worth? Suppose we knew the exchange value, the maret value, of each piece of land, of each tool or machine, of each hour of every man’s labor-time? Then we would be able to calculate costs! Then we would be able to know, for each particular commodity, whether or not the value of the finished product exceeded the value of the costs that went into it—whether or not the value of a given output exceeded the value of a given input.”