The Collapse of a Romance

The New Republic, April 27, 1932


Carlyle, who was a romantic, called political economy the dismal science. And it is true that the roseate hopes of the earlier economists had well nigh disappeared by his day. Ricardo had indicated that there was not enough land to go around and Malthus that there were altogether too many people. Natural laws seemed to doom many to live on the edge of the subsistence line. In the United States, however, for fairly obvious reasons the earlier glow revived and business was ordained as the great romantic adventure.

Although the rebirth of glamor was dependent upon local American conditions, there was a genuinely romantic factor in economic theory; we did not create the romanticism, we only gave it the chance to flourish. Strange as it sounds, the economic man was himself a hero of romance. Of course another branch of the romantic tradition did not consider him as such; he figures there as withdrawing from the realm of romance into the counting room, there to engage in a prosaic grubbing into musty ledgers. But different romanticists rarely understand one another, and while the earlier tradition tended to prevail in the books, the new romantic spirit took possession of the scene of action.

The new hero of romance did not seek justification for himself in theory; the adventure was its own justification. But if he had turned to economic theory he would have found written warrant. For, in that theory, wants and desires were glorified power; at their magic touch the world was to be transformed; they were, when unshackled from legal artifice and political despotism, the sure source of prosperity and continual progress; the earthly savior of mankind. Wants stirred man to energy, rendered him creative, moved him to thrift and produced the embellishment of the world, urged him to exchange and so made man, apart from his will, the mutual servant of his fellows. The romance of business did not stop there. Economic man had another asset beside his desires; he had an unfailing intelligence which showed him just how to direct the energy, thrift, exchange, by which in satisfying his wants he made the world over. To the eye of the romantic who lived in the genteel literary tradition, this ascription of self-sufficient rationality seemed the negation of romance. How could adventure be cool, calculating, concerned with debtor and creditor accounts, and still be romantic?

But it was just at this point that the new romanticism of business so cleverly came in. Human imagination had never before conceived anything so fantastic as the idea that every individual is actuated in all his desires by an insight into just what is good for him, and that he is equipped with the sure foresight which will enable him to calculate ahead and get just what he is after. Nor did the imaginative flight pause with this conclusion. All the work of the world, from the most ordinary to the most extraordinary, is presided over by this omnipresent deity of calculating reason, who through his uniform presence in each separate individual is summed up by integral calculus into a virtually omniscient mind. Through its beneficent and overruling power, self-interest becomes a social lubricant instead of a cause of friction, and the zeal of each one to get ahead of everybody else promotes the general welfare. If there are those who seem to be left out of its distribution, there is always the assurance that the ways of Providence are proverbially mysterious.

It is characteristic of romance, of the glamorous and imaginative projection of excited emotion, to remain outside the sphere of argument. One is either inside the romance or outside it. It is true and is the standard of truth, if you are inside; it is silly or insane, if you are outside. Thus, when one says that the present world crisis is merely the consequence of the general acceptance of the particular romance which has gone by the name of business, one speaks from the outside. It is commonly assumed that the explanation of the economic crisis must be itself economic. So it must—if one stays inside the business dream. Since it is part of the dream that cool, far-sighted intelligence controls the operation of the energies and instruments by which desires are satisfied, one within the dream must seek for a rational explanation. From outside the romance, that fact itself gives the key to the explanation; we cannot call gambling an exercise of cool and calm rationality without sooner or later tripping up.

The dictionary defines gambling as staking money on some fortuitous event. Since business is in the condition it is, since it has brought about a state of universal insecurity, it is fairly evident that the bets have gone wrong. But more fundamental still is the fact to which the present insecurity testifies. As the function of intelligent control is to achieve order, stability, security, the whole theory of the relation between business and calculating intelligence is evidently sheer fiction. Business postulates insecurity and uncertainty. It thrives on it and increasingly creates it, in order that more business may be done.

If the existing insecurity were localized in one country or restricted to one class, some explanation of it might be found or invented which would be consistent with a definition of the economic process as a rationally guided process of satisfying wants. There would also then be some sense in blaming financiers and industrial leaders for their stupidity in bringing us to this pass. But since the essence of the whole thing is the romance of adventuring on the sea of uncertainty, one might as well subject Don Quixote to criticism on the basis of reason. Because wagering on uncertainty is the heart of the whole process, the banker, as insecure as the debtor, has ceased to function; the manufacturer is as doubtful of a market for his goods as the worker is of a market for his labor and the farmer for his products. That "securities" are now so largely insecurities is typical of the whole affair.

The present scene is only an exhibition of what is inherent in business all the time, but it now happens on such a scale that the uncertainty always characteristic of it has become too overt to be ignored. The only thing abnormal about it is that the normal insecurity has got out of hand to the extent that it cannot be concealed from general recognition. In other words, the essentially romantic nature of the idea that business is a rational way of expending energy for the satisfaction of human wants becomes apparent to those who have eyes to see. There are various "rational" explanations of the present breakdown. Each has its measure of truth, but all they explain is some aspect of the irrationality, the trading on uncertainty, which is business itself.

It is interesting to note the ways in which a recognition of the identity of business with betting on an uncertain event all but explicitly comes through. We hear every day and many times a day that everything would be all right if we only had "confidence." Undoubtedly. But confidence in what or in whom? The industrialist would be pleased if the banker had enough confidence to lend him money; the banker would be pleased if someone else had sufficient confidence to buy his frozen assets at a good price; the farmer would love to have confidence that if he plants a lot of grain and cotton he will get a good price next summer; the laborer would like to have confidence that he is going to get a job, and the depositor that he is going to get his money from the bank when he wants it. Meantime, the appeal to confidence sounds like a confidence game. Can anyone imagine anything more humorous—if it were not terribly tragic—than the appeal to put confidence in a situation of complete insecurity? Again we are constantly told that the whole basis of modern business is credit. What does that signify when credit tends automatically toward inflation and the only way to deflate is to withhold credit, except that the whole business of business is to trade on insecurity, concealing the insecurity as long as possible by an ingenious pyramiding of it?

The psychology and morale of business are based on trading in insecurity. They are criticized by serious moralists as if the animating spirit were that of acquisition. These accusations do not reach the mark. Business is a game which cannot be carried on without acquisition, any more than poker can be played without chips. But it is the excitement of the game which counts; acquisition is important because it enables the game to go on at a more furious pitch. We hunt the dollar, but hunting is hunting, not dollars. It is said that love of power over others is the dominant thing. But if you have a game which cannot be played except when power over others is a condition of success, love of power grows up as a secondary and derived fact, not as an original and animating force. I see no reason to believe that the majority of important and "successful" business men are sadistic, and love the cruelty arising from power over others for its own sake. I can see how zest for the game may cause even cruelty to take on a romantic visage and render it tolerable in contemplation.

In saying that business is intrinsically a gamble in uncertainties, it is not said that manufacture or transportation of goods is a gamble. They are technological operations, based on physical knowledge of physical materials and energies. The locomotive runs on coal and steam, not on psychical acts of "confidence." But for this reason production and distribution of goods are not themselves business. In business they become instruments of a game in which trumps are possession of capital as a temporary insurance against insecurity. But the game has such a wide reach that there comes a time when the insecurity of the masses spells insecurity for the one holding trumps. The essence of business, as distinct from the techniques of production and distribution, is of course profits. But why profits ? Anyone can give the answer. There must be profits in order to induce persons to "take the risks"; it is only fair that those who assume the risks should get paid for doing it. Since there is no explanation of profits which does not come down to this fact, what other evidence is needed of the intrinsic connection of business with insecurity?

Living is attended with risks; there will always be an element of uncertainty in it. One cannot object to business for taking account of this fact. But anyone whom the crisis has awakened from a romantic dream will object to any procedure which systematically sets out to glorify the process or trading in insecurity on the ground that this is the road to profits. We should at least get rid of the vast load of nonsense which now adds to our depression if we were coolly to take business for just what it is, i.e., the pursuit of profit, and cease glorifying it for what it is not. Personally, I believe there would be a great rise in the so-called native I. Q. of the average American if we would get rid of this one source of mental confusion and paralysis. But what is more objectionable is the piling up of insecurity. There is enough risk in living anyway without deliberately increasing it. Take money, for example. We are told that it isa medium of exchange. Well, if it were, it would of course add to the security of existence. As a matter of fact, it is something else. It is a medium for controlling exchange. Hence the concentrated possession of money is a means of intensifying insecurity. The ability to control exchange is the ability to stop it, to tax it, to deflect it. To create a risk and then make a profit by assuming it, is a good rule—for those who control money.

The breakdown in which we are living is the breakdown of the particular romance known as business. It is the revelation that the elated excitement of the romantic adventure has to be paid for with an equal depression. If one knew where the glamor of imagination would next find its outlet, one could predict the future. But the reason why no one has had any success in foretelling the great turns of history is precisely because they come from the imagination and its enthusiasms and not from logic and reason. I do not think the next voyage of imagination is immediately imminent. There is one stage of the present romance not yet exhausted. We are now being captured by the romance of introduction of planning into business. What could be more romantic than the idea of retaining business, which is the process of placing wagers on uncertainties for the sake of profit, and at the same time introducing stability and security into it? So that last act of the present drama will presumably be undertaken before the imagination takes its flight to a new field.