TIME WILL RUN BACK
A Novel About the Rediscovery of Capitalism by
Henry Hazlitt
ARLINGTON HOUSE-PUBLISHERS
81 CENTRE AVENUE • NEW ROCHELLE, N. Y. 10801
BOOKS BY HENRY HAZLITT:
Thinking As a Science
The Anatomy of Criticism
A New Constitution Now
Economics in One Lesson
Will Dollars Save the World?
The Great Idea
The Free Man’s Library
The Failure of the “New Economics”
The Critics of Keynesian Economics
What You Should Know About Inflation
The Foundations of Morality
All names, characters, and events in this book are fictional, and any resemblance which may seem to exist to real persons is purely coincidental.
Originally published by Appleton-Century-Crofts in 1951 as The Great Idea.
Revised Edition published in 1966 by Arlington House, Inc.
Library of Congress Catalog Card No.: 66-23142
Copyright © 1951, 1966 by Henry Hazlitt
Printed in the United States of America
TO: Ludwig von Mises
For it so falls out,
That what we have we prize not to the worth,
Whiles we enjoy it, but being lack’d and lost,
Why, then we rack the value; then we find
The virtue that possession would not show us,
Whiles it was ours.
—William Shakespeare
CONTENTS
PREFACE
PART ONE: LOST
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
PART TWO: GROPING
Chapter 17
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Chapter 23
Chapter 24
Chapter 25
Chapter 26
Chapter 27
Chapter 28
Chapter 29
Chapter 30
Chapter 31
PART THREE: DISCOVERY
Chapter 32
Chapter 33
Chapter 34
Chapter 35
Chapter 36
Chapter 37
Chapter 38
Chapter 39
Chapter 40
Chapter 41
Chapter 42
Chapter 43
Notes
PREFACE
I
If capitalism did not exist, it would be necessary to invent it—and its discovery would be rightly regarded as one of the great triumphs of the human mind. This is the theme of Time Will Run Back. But as “capitalism” is merely a name for freedom in the economic sphere, the theme of my novel might be stated more broadly: The will to freedom can never be permanently stamped out.
This book was first published in this country in 1951 under the title, The Great Idea. The British publishers, however, were not happy with the title. Of the several alternatives I submitted, they much preferred Time Will Run Back and it was published in England under that title in 1952. I now prefer this myself, not only because of its Miltonic origin, but because by implication it challenges the present smugly fashionable assumption that every change means progress, and that whatever political or economic trend is latest in time must be best.
In addition to changing the title I have changed the ending. The original novel closed ironically; by that ending I meant to emphasize the insecurity of all human progress. But my ending unfortunately gave at least one or two reviewers the quite mistaken impression that I personally favored Wang’s middle-of-the-road notions over Peter Uldanov’s forthright libertarianism. I have changed the fictional ending in the new version to obviate any such impression.
The idea of writing a novel on this theme came to me many years ago. It was touched off, as I recall, by several paragraphs in Ludwig von Mises’ Socialism, which I reviewed for the New York Times (January 9, 1938). But more than a decade passed before I felt sufficient sense of urgency to put the idea into effect.
The form I chose for my work made it difficult to assign credit where credit was due. If it had been written as an economic treatise, it would doubtless have been peppered with footnotes. Not only, however, would footnotes have been out of place in a novel, destroying whatever illusion I might otherwise have succeeded in creating, but by the premise of this particular novel all the economic and political writing of the past, except that of the Marxists, has been completely wiped out. My hero is supposed to perform the truly prodigious feat of recreating out of his own unaided head ideas that it has in fact taken generations of great economists to develop and refine. It would be fatuous to make excessive claims to originality in this field. I should like, therefore, to indicate here some of the principal writers to whom my own thought is indebted.
They include Böhm-Bawerk, John Bates Clark, Frank H. Knight, Ludwig von Mises, Brutzkus, Halm, Pareto, Barone, Jevons, Wicksteed, Carver and Roepke. There are doubtless still further debts that slip my mind at the moment. Most readers will, of course, recognize the metaphor of “the invisible hand” as Adam Smith’s. And some will recall that the aphorism: “Despotism may govern without faith, but liberty cannot,” is de Tocqueville’s. So much for ideological credits. Now as to structural. Many readers will see, in Part One of my book, striking coincidences with George Orwell’s Nineteen Eighty-Four. These are, however, in fact coincidences. Orwell’s book was published in 1949, The Great Idea not until 1951.1 did not read Orwell’s book until after I had finished the first draft of my own. I was at first disturbed by the number of coincidences, but it then occurred to me that at least the broad outlines if not all the details of the imagined future life were the common property of more than one of the recent writers who have tried to imagine that life (Zamiatin in We and Aldous Huxley in Brave New World, for example).
These writers had not been plagiarizing from each other; but all of them had, so to speak, been plagiarizing from the actual nightmare created by Lenin, Hitler and Stalin (and now prolonged by Communist regimes wherever they get into power). All that the writer had done was to add a few logical extensions not yet generally foreseen.
While Orwell, moreover, portrayed with unsurpassable power the intellectual paralysis and spiritual depravity that a totalitarian regime imposed, he left the determining economic aspect virtually blank (except for the dreadful end-results for consumers). And his book closed on a note of utter despair. Time Will Run Back, with its promise of material progress and spiritual rebirth, is in a sense an answer to the black pessimism of Nineteen Eighty-Four. Though my book begins at practically the same point as Orwell’s, it ends at a diametrically opposite one. My book is also, in a sense, an answer to Bellamy’s Looking Backward of 1888, because it turns the Bellamy situation upside down. But Time Will Run Back was not conceived as an answer either to Bellamy or to Orwell. It was written to state a positive theme of its own. Its fate must rest on the success with which it states that theme.
II
The question may arise in some readers’ minds whether as a result of the passage of ti
me in the fifteen years since my mock-novel was originally published, parts of it may not have become out of date. But to ask this is to misconceive the nature and purpose of the book. It is true that the people in my story are forced to rely on radio and the airplane, and do not have television and intercontinental thermonuclear missiles. But a central theme of my book is that under complete world totalitarianism (in which there was no free area left from which the totalitarian area could appropriate the fruits of previous or current discovery and invention, or in which its own plans could no longer be parasitic on knowledge of prices and costs as determined by capitalistic free markets) the world would in the long run not only stop progressing but actually go backward technically as well as economically and morally—as the world went backward and remained backward for centuries after the collapse of Roman civilization.
If my book seems out of date in a few other respects it is, ironically, precisely because of the fulfillment of some of its predictions or apparent predictions. Thus the dictator in my story is named Stalenin (an obvious combination of Stalin and Lenin). He is incapacitated by a stroke, and later he is shot. By coincidence it happened that a bare two years after my book appeared Stalin was reported to have had a stroke. And it is still an unanswered question today, because of the mystery and delays surrounding the announcements of his illness and death, and the subsequent puzzling zigzags and reversals in attitudes towards him on the part of Khrushchev and his successors, whether or not he was actually assassinated.
But other events since the original appearance of The Great Idea were not coincidences. Thus my book points out that a centrally directed economy cannot solve the problem of economic calculation, and that without private property, free markets, and freedom of consumer choice, no organizational solution of this problem is possible. If all economic life is directed from a single center, solution of the problem of the exact amounts that should be produced of thousands of different commodities, and of the exact amount of capital goods, raw materials, transport, etc. needed to produce the optimum volume of goods in the proper proportion, and the solution of the problem of the coordination and synchronization of all this diverse production, becomes impossible. No single person or board can possibly know what is going on everywhere at the same time. It cannot know what real costs are. It has no way of measuring the extent of waste. It has no real way of knowing how inefficient any particular plant is, or how inefficient the whole system is. It has no way of knowing just what goods consumers would want if they were produced and made available at their real costs.
So the system leads to wastes, stoppages, and breakdowns at innumerable points. And some of these become obvious even to the most casual observer. In the summer of 1961, for example, a party of American newspapermen made an 8,000-mile conducted tour of the Soviet Union. They told of visiting collective farms where seventeen men did the work of two; of seeing scores of buildings unfinished “for want of the proverbial nail”; of traveling in a land virtually without roads.
In the same year even Premier Khrushchev complained that as of January 1 there were many millions of square feet of completed factory space that could not be used because the machinery required for them just wasn’t available, while at the same time in other parts of the country there were the equivalent of hundreds of millions of dollars worth of machinery of various kinds standing idle because the factories and mines for which this machine was designed were not yet ready.
At about the same time G. I. Voronov, a Communist party Presidium member, said: “Who does not know that the national economy suffers great difficulties with the supply of metals, that the supply of pipes is inadequate, that insufficient supplies of new machinery and mineral fertilizers for the countryside are produced, that hundreds of thousands of motor vehicles stand idle without tires, and that the production of paper lags?”1
In 1964 Izvestia itself was complaining that the small town of Lide, close to the Polish border, had first been inundated with boots, and then with caramels—both products of state factories. Complaints by local shopkeepers that they were unable to sell all these goods were brushed aside on the ground that the factories’ production schedules had to be kept.
Such examples could be cited endlessly, year by year, down to the month that I write this. They are all the result of centralized planning.
The most tragic results have been in agriculture. The outstanding example is the famine of 1921-22 when, directly as a result of collectivization, controls, and the ruthless requisitioning of grain and cattle, millions of peasants and city inhabitants died of disease and starvation. Revolts forced Lenin to adopt the “New Economic Policy”. But once more in 1928 more “planning” and enforced collections of all the peasants’ “surpluses” led to the famine of 1932-33, when more millions died from hunger and related diseases. These conditions, in varying degree, come down to the present moment. In 1963 Russia again suffered a disastrous crop failure. And in 1965, this agrarian nation, one of whose chief economic problems in Tzarist days was how to dispose of its grain surplus, was once more forced to buy millions of tons of grains from the Western capitalist world.
The industrial disorganization has been less spectacular, or better concealed—at least if we pass over that in the initial phase between 1918 and 1921. But in spite of extravagant claims of unparalleled “economic growth,” Russia’s problems of industrial production have been chronic. Since factory output goals are either laid down in weight or quota by the planners, a knitwear plant recently ordered to produce 80,000 caps and sweaters produced only caps, because they were smaller and cheaper to make. A factory commanded to make lampshades made them all orange, because sticking to one color was quicker and less trouble. Because of the use of tonnage norms, machine builders used eight-inch plates when four-inch plates would easily have done the job. In a chandelier factory, in which the workers were paid bonuses based on the tonnage of chandeliers produced, the chandeliers grew heavier and heavier until they started pulling ceilings down.
The system is marked by conflicting orders and mountains of paperwork. In 1964 a Supreme Soviet Deputy cited the example of the Izhora factory, which received no fewer than 70 different official instructions from nine state committees, four economic councils and two state planning committees—all of them authorized to issue production orders to that plant. The plans for the Novo-Lipetsk steel mill took up 91 volumes comprising 70,000 pages, specifying precisely the location of each nail, lamp and washstand.
Yet in 1964, in Russia’s largest republic alone, deliveries of 257 factories had to be suspended because their goods were not bought. As a result of the consumer’s stiffening standards and an increased inclination to complain, $3 billion worth of unsellable junk accumulated in Soviet inventories.2
Such conditions have led to desperate remedial measures. In the last couple of years, not only from Russia but from the Communist satellite countries, we get reports of massive decentralization programs, of flirtations with market mechanisms, or more flexible pricing based on “actual costs of production” or even on “supply and demand”. Most startling, we hear that “profits” is no longer a dirty word. The eminent Russian economist Liberman has even argued that profit be made the foremost economic test. “The higher the profits,” he has said, “the greater the incentive” to quality and efficiency. And equally if not more miraculous, the Marxian idea that interest represents mere exploitation is being quietly set aside, and in an effort to produce and consume in accordance with real costs, interest (usually at some conventional rate like 5 per cent) is being charged not only on the use of government money by shops and factories, but against the construction costs of plants.
III
On the surface all this looks indeed revolutionary (or “counterrevolutionary”); and naturally I am tempted to hope that the Communist world is on the verge of imitating the optimistic prediction of my novel and rediscovering and adopting a complete capitalism. But several weighty considerations should warn us against setting
our hopes too high, at least for the immediate future.
First, there is the historical record. This is not the first time that the Russian Communists have veered toward capitalism. In 1921, when mass starvation threatened Russia and revolt broke out, Lenin was forced to retreat into his “New Economic Policy”, or NEP, which allowed the peasants to sell their surplus in the open market, made other concessions to private enterprise, and brought a general reversion to an economy based on money and partly on exchange. The NEP was actually far more “capitalistic”, for the most part, than recent reforms. It lasted till 1927. Then a rigidly planned economy was re-imposed for almost forty years. But even within this period, before the recent dramatic change, there were violent zigs and zags of policy. Khrushchev announced major reorganizations no fewer than six times in ten years, veering from decentralization back to recentralization in the vain hope of finding the magic balance.
He failed, as the present Russian imitation of market mechanisms is likely to fail, because the heart of capitalism is private property, particularly private property in the means of production. Without private property, “free” markets, “free” wages, “free” prices are meaningless concepts, and “profits” are artificial. If I am a commissar in charge of an automobile factory, and do not own the money I pay out, and you are a commissar in charge of a steel plant, and do not own the steel you sell or get the money you sell it for, then neither of us really cares about the price of steel except as a bookkeeping fiction. As an automobile commissar I will want the price of the cars I sell to be set high and the price of the steel I buy to be set low so that my own “profit” record will look good or my bonus will be fixed high. As a steel commissar you will want the price of your steel to be fixed high and your cost prices to be fixed low, for the same reason. But with all means of production owned by the state, how can there be anything but artificial competition determining these artificial prices in such “markets”?