Daily RC Article 222

The Illusion of Solved Production: A Critical Examination

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One of the most fateful errors of our age is the belief that ‘the problem of production’ has been solved. Not only is the belief firmly held by people remote from production and therefore professionally unacquainted with the facts, it is held by virtually all the experts, the captains of industry, the economic managers in the governments of the world, the academic and not-so academic economists, not to mention the economic journalists. They may disagree on many things but they all agree that the problem of production has been solved; that mankind has at last come of age.

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That things are not going as well as they ought to be going must be due to human wickedness. We must therefore construct a political system so perfect that human wickedness disappears and everybody behaves well. In fact, it is widely held that everybody is born good; if one turns into a criminal or an exploiter, this is the fault of ‘the system’. No doubt ‘the system’ is in many ways bad and must be changed. One of the main reasons why it is bad and why it can still survive in spite of its badness, is this erroneous view that the ‘problem of production’ has been solved. As this error pervades all present-day systems, there is at present not much to choose between them.

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The arising of this error is closely connected with the philosophical and religious changes during the last four centuries in man’s attitude to nature. Modern man does not experience himself as a part of nature but as an outside force destined to dominate and conquer it. He even talks of a battle with nature, forgetting that, if he won the battle, he would find himself on the losing side. Until recently, the battle seemed to go well enough to give him the illusion of unlimited powers, but not so well as to bring the possibility of total victory into view. This has now come into view, and many people are beginning to realize what this means for the continued existence of humanity.

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The illusion of unlimited powers, nourished by astonishing scientific and technological achievements, has produced the concurrent illusion of having solved the problem of production. The latter illusion is based on the failure to distinguish between income and capital where this distinction matters most. Every economist and businessman is familiar with the distinction, and applies it conscientiously to all economic affairs – except where it really matters: namely, the irreplaceable capital which man has not made, but simply found, and without which he can do nothing.

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One reason for overlooking this vital fact is that we are estranged from reality and are inclined to treat as valueless everything that we have not made ourselves. Now, we have indeed laboured to make some of the capital which today helps us to produce – a large fund of scientific, technological, and other knowledge; an elaborate physical infrastructure; innumerable types of sophisticated capital equipment, etc – but all this is a smaller part of the total capital we are using. Far larger is the capital provided by nature. This larger part is now being used up at an alarming rate, and that it why it is an absurd and suicidal error to believe, and act on the belief that the problem of production has been solved.