As a member of Roosevelt’s “Brain Trust”, Rexford Tugwell was in no doubt quite supportive of a controlled economy. He believed, understandably, that the purchasing power of consumers must be at least capable of consuming the amount of goods produced by suppliers. He felt that there needed to be a renovation on the industrial side of things to make such purchasing power possible. To do so, he suggested that unnecessary motions of workers be removed and that costs of production be reduced. Basically, he suggested technological innovation. This is curious, though, because his beliefs simultaneously contrasted this notion.
Entrepreneurship exists in the forms of imitation, arbitrage, and innovation, with innovation being the key form for reference. In a planned economy, that last form of entrepreneurship is removed. Individuals no longer have that incentive to discover their comparative advantage, or lack thereof, in a field. Near the end of this chapter, it was noted that a planned economy would “abolish what [Tugwell] regarded as wasteful and dangerous […] speculative profit-seekers like Henry Ford.” But these dangerous profit-seekers are the people that bring us innovation. There are few motivators as prominent as monetary gain, and a rather large dollop of innovative techniques have been the spawn of such prospects. Hence, a command economy, or at least Tugwell’s planned economy, is self-destructive because while it hinders the process instigating innovative measures, it seeks out those same innovative measures to solve its problems. In a nutshell, planned economies just need to make up their minds or recognize that they are creating the problems that they are trying to solve.