Must We Subsidize Socialism?

November 24, 1947

“Shall We Say: ‘No Aid for Socialism’?” So asks the leading piece in The New York Times Magazine of Nov. 9. It answers that if we don’t make unconditional loans and gifts to socialistic governments we will be “stultifying our own assertion that we believe in democracy, and will destroy the foreign democracies themselves.”

The author of this extraordinary piece is James W. Angell, professor of economics at Columbia. Mr. Angell actually finds it “hard to see much difference in principle” between the “type of threatened coercion” practiced by Hitler on his victims and the type involved in our own government’s not making unconditional loans or gifts to foreign countries. Applying this to individuals, the professor would presumably find it “hard to see much difference in principle” between a thug’s threat to beat, blackmail, rob, or murder a businessman and a banker’s reluctance to make the same businessman a loan or a gift unless the latter first sobered up or agreed to run his business in a less wasteful and reckless manner. Both, in the professor’s abstract vocabulary, are “threatened coercion.” Either the definition of “coercion” is being stretched extremely thin or Mr. Angell’s capacity for detecting differences is alarmingly undeveloped. What he appears to be saying is that you “coerce” everybody to whom you don’t give money, and on the asker’s own terms.

Mr. Angell, who teaches economics, puts aside economic considerations as mere irrelevance, and rests his case on political grounds. He seems to feel that, as a “democracy,” we are obliged willy-nilly to pour the American taxpayer’s money into other “democracies.” The shakiness of his standards becomes evident when he explains why Russia and its “so-called” satellite states are not democratic. “This is true not because they have adopted Communist forms of economic organization [his italics], but principally because they are governed by minorities which have ruthlessly suppressed opposition parties and individual free speech.” One implication here is that if majorities instead of minorities were doing the ruthless suppression it wouldn’t be so bad.

Even more extraordinary is the implication that Communism’s “economic organization” and its suppression of individual freedom are quite separate things which perhaps exist together in Russia only by accident. The professor seems capable of believing, in brief, that under an economic organization in which the rulers directly control every job and every medium of expression it is only a sort of unlucky coincidence that individual freedom should not exist.

“It is perfectly true,” confesses Mr. Angell, that certain European governments that have come to us for help “have nationalized some of their industries, and that a number of them have set up state trading monopolies of various sorts. But—so what?” If we treat this taunt as a serious question, we might begin by pointing out that the professor’s statement not only minimizes the extent of socialism and threatened socialism, but ignores altogether the currency chaos cited by the Harriman committee and the appalling network of economic restrictions that today disorganize and throttle European production. The uneasiness in Congress and the country about subsidizing socialistic governments Mr. Angell dismisses as “based on the allegation that socialism is somehow ‘a bad thing’ and morally reprehensible.” It “is not based,” he assures us blandly, “on the ground (quite possibly valid) that socialized economies are somehow less productive.”

The uneasiness, someone ought to inform him, is based precisely on that ground. The fully justified fear of many in this country is that, exactly as has already happened with our loan to Britain, any further help we pour into Europe will be more than nullified and offset by the wastage of socialistic systems that have destroyed the price mechanism and its incentives to production.

This, in fact, is the central dilemma of foreign aid. For the internal economic policies of Europe are immeasurably more important to its production and recovery than any dollars we can supply.