Nemesis of Economic Nationalism

Century of Endeavour

The Nemesis of Economic Nationalism

(c) Roy Johnston 1999

The book, published by PS King & Son, London, 1934, is based on a series of lectures, of which the first was given in Trinity College in March 1933 and then repeated as a Barrington Lecture in several provincial centres. The following three were given in Dublin in December 1933 under the auspices of the Rathmines School of Commerce, which is part of the Dublin municipal technical educational system. The final one was delivered to a conference of the co-operative movement.

The first lecture was printed in 1933 as a pamphlet by the Talbot Press. JJ seems to have used this subsequently in support of the promotion of the book and its basic ideas. A copy has turned up which had in it a letter from JJ to Mortished (presumably the leading Labour movement activist), referring to contacts with Tom Johnson, and seeking comparative data for other European countries such as Roumania where subsistence farming had been encouraged by the break-up of ranches.

The 1936 edition of his elder brother James' book Hindu Domination in India carries an advertisement by PS King the publisher for JJ's book. In this there is a quote from the Economist review: "Mr Johnston is to be congratulated on the production of what can truly be described as a pamphlet worthy of Swift, although it is disguised in the form of lectures by a university teacher of economics."

The book was reviewed in the Irish News on 2/07/34 (a provocative book... economic vivisection... a useful and sincere contribution to the discussion of a very knotty problem... refreshing to find a trained economist with such a human outlook..), in the Times Literary Supplement on 30/08/34 (..bitterness... against Great Britain and Mr JH Thomas... naturally biased... distinctly interesting) and in the Manchester Guardian on 22/08/34 (...he essays, with a refreshing liveliness, to teach Mr De Valera his business..). The Guardian review was headed 'Economic Irony'. The Irish News urged the Fianna Fail government to take to heart the 'Lessons from Theory and Experience' chapter.

He had used the 1933 pamphlet to try to get a US publisher, with the aid of Leroy Hodges, of the Virginia State Chamber of Commerce, who could have been a contact from the Albert Kahn Fellowship epoch. Hodges gave him a contact, Rutger B Jewett, in Appleton and Co, New York, a specialist publisher, but was not optimistic, given the amount of stuff being published on aspects of the Depression.

There is also an appreciative letter from RF Dill, who had been the Headmaster of Dungannon Royal School in JJ's time, in his retirement in Hereford '..even a fool in economic argument can fairly grasp it..'.

1: The Nemesis of Economic Nationalism

(I give primarily JJ's sub-heads; I give also some abstracts where he makes arguments of particular contemporary political relevance. Ed RJ)

Relative importance of world economy to different nations..
The case of the USA shows that a nation may be nearly self-contained and yet collapse due to interdependence with the world economy...
'..In particular the USA even before the Wall Street collapse failed to sustain the purchasing power of her agricultural population..'.
Agricultural producers for subsistence and for exchange react differently to falling prices...
'..The peasant farmer's...reaction to falling prices is to buy less manufactured goods ... raw materials .. he will till more for subsistence..'.
The feasibility of economic nationalism depends on other nations not practicing it at the same time...
Economic nationalism and monetary internationalism...
'..A tariff war is an effort to separate (as for Siamese twins sharing a common circulation of the blood of commerce) two economically interdependent nations..'.
The correct reaction to the depressing effect of other nations' tariffs is a monetary one...
'...The way to expand consumption is to promote the production of capital goods. The workers engaged on the Shannon Scheme were consuming food and clothing that were available there and then, and producing something that would not add its quota to the volume of consumers goods for some years...'.
The State must now do deliberately what the gold standard formerly did automatically...
"There are important departments of economic activity which by common consent have been abandoned to public or non-profit-making enterprise...(namely) educational services, transport facilities, the housing of the working classes, forestry and the Shannon Scheme (ie electricity generation)..."
Creditor nations have it in their power to promote the production of capital goods...
States should sometimes go to war with other things than foreign enemies...
'...providing homes for living heroes instead of coffins for dead ones..'.
The bankruptcy of the world is more moral than economic.
'..The nation which first turns the other cheek to the economic blows of its neighbours, and adopts ...a national economic policy whose chief recommendation is, not that it injures other nations, but that it benefits then as well as herself, will begin a new world era..'.

2: Right and Wrong Methods of promoting National Economic Self-sufficiency.

He does not give sub-heads in this chapter. He begins with a critical comparison of Russia(1), Britain and the USA as regards policies of self-sufficiency. He then goes on to urge the transformation of Irish external assets (which then were considerable, as indeed they still are) into a massive infrastructural development programme, importing the necessary capital goods and putting the people to work on public works projects. The concept is basically analogous to that adopted by Roosevelt, and shows the influence of his contact with Keynes, and indeed his reading of Berkeley, whom he is by then beginning to identify as the Adam Smith of what we would now call 'development economics'.

3: Lessons from Theory and Experience

In this chapter he reverts to the practice of sub-heads, which I therefore give, in lieu of abstracting; this I will do later.

Correct relations of the economist and the politician...
The economic value of our 'economic war'...
Evidence that Great Britain too is the victim of economic warfare..
Folly of economic war from Great Britain's point of view...
The exact nature of the wound inflicted on us by the British taxes...
The British taxes as part of a programme for developing a closer balance between British agriculture and British industry...
Evidence that agricultural production is diminishing in the Irish Free State.
Competition for export markets...
Tariff policy and the solvency of foreign debtors...
Our bounty on the export of cattle favours the export of raw material and destroys the market for home-grown cereals...
Even economic nationalists do not dispute that universal free trade would produce the maximum of wealth for all....
Importance of maintaining the exchange economy and resisting the relapse to subsistence agriculture...
"..As an 'uneconomic' holder of 20 acres of County Meath land, I have lately altered my economy so as to produce a subsistence of potatoes and milk for about 20 inhabitants of the local village...paying no toll to transport or middleman agencies.....The new 30-acre farmers, whom it is proposed to plant on divided ranches, will, if they are wise in their own interests, practice a subsistence economy, and make little use of money, transport or shops. If they fail to produce a surplus for our townsfolk, will the latter take a leaf out of Lenin's book?..."
Is it consistent to promote at one and the same time an industrial revival and a reversion to subsistence agriculture?

In this final section he has the following in italics: "The main problem of the Irish economy now is, not the creation of new industries, but the expansion of the home market for the products of our agriculture and of existing industries."

4: The importance of economy in the distribution of goods

In this final section JJ develops a critique of the retail trade and makes the case for the development of a consumers co-operative movement. This represents a sort of afterthought, distilled from his earlier work with the Rockefeller Foundation in the 1920s, which was reported in his 1927 'Distributive Waste' paper to the Statistical and Social Inquiry Society.

Notes and References

1. JJ was aware of the contemporary disastrous attempt in the USSR to collectivise agriculture in top-down bureaucratic mode, and was appropriately critical. He would however not have been aware of the way the Comintern at the time was attempting to spread the narrow and simplistic 'dictatorship of the proletariat' policy to Ireland, in the context of the contribution of the Irish Communist Party to the 1934 Republican Congress: see Emmet O'Connor's paper delivered at the 2007 Desmond Greaves Summer School, which gives some interesting background to the situation in which Fianna Fail was emerging as the leading political movement.

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