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The Socialization of Risks

Published online by Cambridge University Press:  05 August 2009

Fritz Karl Mann
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Extract

Transition to a war economy is, in its very essence, a shift of economic responsibilities from business to government. This shift covers almost all activities: initiative, planning, execution, coordination. Still the change in our capitalistic structure brought about by governmental leadership and numerous diversified controls should not be overstated. The new frontiers drawn between the private and the public sector do not alter the dualistic character of our economy. It is not “the opposite of free enterprise” since successful entrepreneurs are still allowed to reap the profit of their venture, restricted only by taxation and by some of its efficient supplements, particularly renegotiation of contracts and war bond drives. War profits, moreover, have been so substantial in almost all social groups that the stream of private capital-formation flows broader and deeper than it did in peace time, broader and deeper at any rate than in the public sector where the government has been burdened with an unprecedented federal debt. Broadly speaking, our economy is a hybrid with a collectivistic head and an individualistic heart.

Type
Research Article
Information
The Review of Politics , Volume 7 , Issue 1 , January 1945 , pp. 43 - 57
Copyright
Copyright © University of Notre Dame 1945

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References

1 Levenstein, Aaron, “The Biggest Lie of the War.” Common Sense, 10 1944. p. 337Google Scholar.

2 “Structural Changes in the American Economy,” The Review of Politics. 04 1942, pp. 144–154Google Scholar.

3 See, for instance, the stimulating paper of ProfessorMachlup, Fritz, “The Division of Labor between Government and Private Enterprise,” on the 55th annual meeting of the American Economic Association, Washington, D. C., 01 1943 (American Economic Review Vol. XXXIII., No. 1, Part 2, Supplement, March; 1943. pp. 94 ff.)Google Scholar

4 Kaplan, A. D. H., Liquidation of War Production, (New York and London, 1944), p. 14Google Scholar.

5 Kaplan, A. D. H., op. cit., p. 14Google Scholar.

6 Compare Kimmel, Lewis H., Postwar Tax Policy and Business Expansion, (Washington, D. C., 1943), p. 20Google Scholar.

7 Bowles, Chester in Frederick, J. George, The New Deal: A People's Capitalism, (New York, 1944), p. 143Google Scholar.

8 Frank Knight, Risk, Uncertainly and Profit, (Reprint, London, 1933), p. 20.

9 Knight, Frank, op. cit., pp. 231–232Google Scholar.

10 Steiner, W. H. and Shapiro, E., Money and Banking Revised, (New York, 1941), p. 167Google Scholar.

11 76th Cong. 3rd sess. Senate Document No. 172, Part I, Financial Statements of Certain Covernment Agencies, p. 103.

12 Sec. 302 (h) Agricultural Adjustment Act of 1938, as amended.

13 Jarvis, George Y., “Holding Surplus Farm Products with Government Credit,” in Agricultural Finance Review, Vol. 3, No. 2 (11. 1940), p. 49Google Scholar.

14 Although a legal method of enforcing does not seem to exist.

15 Clendenin, J. C., Federal Crop Insurance in Operation, Wheat Studies of the Food Research Institute, Stanford University, (Cal., 03. 1942), p. 231Google Scholar.

16 See Annual Report of the Export-Import Bank of Washington, 1936 and if.

17 Annual Report for 1936, p. 4; Financial Statements, Part I, p. 70.

18 Compare Schram, Emil, The Reconstruction Finance Corporation and the Business Lending Program, broadcast over a nation-wide network of the National Broadcasting Company, 11. 20, 1939Google Scholar.

19 Report of the Reconstruction Finance Corporation, Second Quarter, 1941, p. 9. See also p. 77, footnotes, 8–10.

20 Financial Statements, part I, pp. 125 and 131.

21 Ibid., Part II. p. 308.

22 National Housing Act (Public Law. No. 479, 73 Cong. 2 Sess. Ch. 847. June 27. 1934) sec. 204-a. See also amendment (Public Law, No. 559, 77 Cong. 2 Sess. Ch. 319, approved May 26, 1942) sec. 608 (c).

23 This trend has bern recntly confirmed by the proposal of Mr. Maury Maverick, chai-man of the Smaller War Plants Ccporation. to support the little business man by another system of risk socialization. If the risk of loans to the small fellow would be assumed by the Smaller War Plants Corporation. he anticipates the bankers becoming as “bold as they were in pioneer days” (Maverick, Maury. “Small Business Must Get the Breaks,” The Saturday Evening Posl, 09 16, 1944, p. 44)Google Scholar.