Review of

Basic Principles of Economics
by Harry Gunnison Brown

Michael J. Bernstein

[Reprinted from Land and Freedom, March-April 1942]


A recognition of the complexity of modern economic life is essential for its understanding, and hence for its improvement. Sadly enough, most social reformers attempt to compensate for their lack of this indispensable knowledge by an excess of zeal in agitating for the acceptance of their own particular reform. Single taxers often commit the same error as collectivists in believing that their proposals would alone be sufficient to bring about the millenium and that immediately upon their adoption, the world's ills would, as if by magic, utterly vanish.

Professor Brown is guilty of no such facile optimism. A professional economist, skilled in the analytical techniques of his craft, he is fully cognizant of the innumerable factors upon which the efficient working of our economic system depends. He is aware that our central problem has been (until the Nazis plunged the world into war) the trade cycle with all its shattering consequences of bankruptcy, unemployment and disequilibrium. He knows that cyclic phenomena are directly related to the functioning of the monetary system with its huge, and more significant, superstructure of bank credit. Committed to the goal of a stable price-level as a method for controlling depressions, he seems unaware, however, of the devastating criticism of price-level stabilization made by Ropke, Robbins, von Hayek and others.

Professor Brown's chapters dealing with utility, cost, value and distribution are excellent and clearly presented. His acceptance and discussion of "opportunity costs" (that is to say, the theory of "displaced alternatives") in his analysis of value, leaves no doubt in the reader's mind that this explanation alone really explains and that all other analyses of value are erroneous. One could wish for a fuller refutation of the fallacies of collectivism, a refutation which Professor Brown's presentation of value theory makes inevitable, and for some discussion of the work of Ludwig von Mises in this field. However, a careful study of "Basic Principles of Economics" and a thorough understanding of it are an assurance against a too-ready acceptance of any and all economic panaceas.

Professor Brown is a devoted advocate of the capitalistic system or, as he calls it, the "price-system." This does not imply that he is a blind or bigoted defender of the status quo. His chief concern is to remove the monopolistic elements which help to sabotage the healthy and efficient workings of an economy based on the, private ownership of capital, the free wage-contract, and free consumer-choice. He recognizes that a free market has existed in the United States and other democratic countries, despite the many imperfections due to widespread monopolistic institutions and practices. He is a strong proponent of increased land-value taxation because he realizes its acceptance flows inevitably from a belief in a free-market system based on private enterprise. But he realizes equally that other reforms are necessary, and his support of a free-market does not involve him in that hatred of state and government peculiar to Manchester anarchism and so prevalent among many professed followers of Henry George. Professor Brown is quite prepared to accept other forms of taxation in times of national emergency and even advocates a program of public works to help combat depression. Government control, when such control is for the purpose of curbing monopoly or maintaining competition, has his entire approval. It would indeed be well if similar sanity and catholicity were prevalent among the more ardent advocates of particular proposals for economic and social reform.

Curiously enough, Professor Brown is a materialistic determinist in his social and political thinking, despite his opposition to Marxist proposals. According to him, the ills of the world today are almost entirely due to the failure of its economic Systems to provide sufficient material satisfactions to a sufficiently large portion of their populations. That such views are inconsistent with the liberalism that he so ably defends in the economic sphere, is not apparent to Professor Brown. And this leads him through queer contradictions to even stranger, because anti-liberal, conjectures and conclusions. Having conceded that we possess a free if imperfect market he proceeds to talk as if the defense of our system against the attacks of groups committed to the destruction of any market economy is of minor importance. Apparently unaware that political democracy is essential to a system of free enterprise, he is inclined to treat democracy with contemptuous tolerance, accepting it as merely a lesser evil. A few quotations from the book's conclusion which embodies several magazine articles written previous to our entry into the war, clearly illustrate this destructionist, because perfectionist, attitude to social and political reality:

"As it is, would the workers of England, Scotland and Wales necessarily be so much worse off, economically, under .German or Italian or Russian domination as the conservative defenders of the prevailing parasitism would have them believe?" (p. 501.)

"Sometimes, indeed, the military defeat of a nation, the majority of whose people are exploited by a privileged few, if the defeat does not bring serious subjection to alien exploiters, may help to relieve the common folk of the defeated nation from their economic subservience. For such defeat may destroy the prestige of the ruling caste, diminish the respect or the fear in which it is held, and make possible a disruption of relationships that had come to see eternal." (p. 506.)

Professor Brown has fallen into the serious error of identifying the material with the economic and of failing to grasp the wider significance of the latter concept, which includes the former as on one of its elements. Economic choices are not confined to food shelter and clothing. They include customs, habits, forms of government, beliefs, political rights and religious convictions. A concern for these is not mere sentimentality, as Professor Brown seen to hold, but as concrete a necessity as bread or shoes. And that is why, as Henry George himself believed, resistance to extern aggression is always justified, even on the part of a most corrupt community, whose accepted mores are threatened.

In this epoch of specialization, mastery of one field is no guaranty of accuracy in some other. Professor Brown has written an excellent economics text-book; it would have been better had he refrained from taking advantage of his unquestionable authority in his own specialty to lend weight to opinions and conclusions in a sphere where they should receive no greater consideration than that of any other layman.