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.
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