Blake Dean

Culp
Economics
22 November 2015
Hazlitt Assignment

As shown through Hazlitts novel, Time Will Run Back, it can be quite
difficult to get managers to take more initiative over their job. One reason
that Hazlitt raises is that by using his own initiative, the manager is not
following the orders that have been given to him. For example, in Wonworld
every five years a new Five Years Plan is created, the leaders of Wonworld
specifically lay out the production of each commodity and service will be
created. With this plan each manager is told exactly how much of a specific
product his plant will be producing. In the words of Adams, if every plant
manager decided for himself what things his plant should produce or how
much it should produce of them, our production would turn out to be
completely unbalanced and chaotic (Hazlitt 120). Another issue hindering
the enlargement of initiative is the dependence on others to help an idea
become successful. Adams proposes this hypothetical situation: suppose a
plant manager invents a new machine that will increase production
possibility and help to better the firm. This machine will need to be built and
in Wonworld that means it must be approved by the Central Planning Board
so they can either give the materials needed or get someone to build it.

Either way that scenario goes there is a sense that the manager has
disrupted the preordained plan; venturing outside of what is normal can
also lead to chaos. Another reason given is the possibility of failure. In this
hypothetical scenario, the Central Planning Board would not take such a risk
on a possible failure of a project. If his machine does fail it would be a waste
of scarce materials and labor. This terror of fear inhibits any ambition or
initiative that a manager would like to try, because failing results in their
removal. The main problem that inhibits initiative from managers is the fear
of disrupting the norms of their society, any new idea would require different
equipment, labor and production types which would be unprecedented and
might fail.

Peters character in the book reveals many very negative realities of

socialism. In socialism the idea is held that pursuing the welfare of society
is where a man can promote his own welfare. While capitalism claims that
by pursuing your own welfare you will enrich society. Which raises the
question: which system works better? Under the socialist system the State is
the main authority. If a worker fails to meet the standard of the State, there
is no one else to whom they can turn to since their employment is decided
by the State. Where in capitalism, if a worker fails in the eyes of their
employer they are free to go to another one. This freedom will lessen the
exploitation of the managers employees because of the fear of losing his
exploited workers. Peter also claims that socialism is a dictatorship over

the proletariata few people make the economic plan, and the rest of the
people are ordered to carry out the plan. Socialism centralizes power in the
hands of a few that do not represent the needs and desires of the whole.
Under capitalism, the workers freedom to choose what he enjoyed and the
consumer was able to consume what he liked and reject what he did not.
This system facilitates the individual needs and desires to be met while
socialism ignores the individual. Also, in socialism initiative must come from
the select few and none can come from outside. This causes a stalemate in
creativity, evolution and advancement. In capitalism, the individual is
encouraged to try things and discover new possibilities. Peter also states
that, Under complete socialism, liberty for the individual is simply
impossible. Capitalism promotes the individual while socialism oppresses.

In the socialist Wonworld society it was nearly impossible to determine

which good to produce less of because they had no way to know what was of
more urgent need to those who consumed it. In Hazlitts novel, Peter raises
another hypothetical scenario: the Central Planning Board thought more
shoes needed to be made and they could only be produced by taking more
labor away from the production of wheat. If this change was made, there
would be no way to know whether Wonworld was better or worse off because
there is no room for feedback. Adams suggests that it could be perceived
through the volume of complaints, however in Wonworlds socialist society
complaining people were killed for speaking out against the government.

There is no objective guidance in showing which goods are in higher demand

than other goods. Any decision about the production of one good that will
affect another good is made in the dark because there is no way to compare
the impact in Wonworld socialism.

In contrast, in a market economy solving this issue is quite simple.

Due to the freedom consumers have to choose which products they want or
need; one can simply look at the demand of the two items in question and
that will tell you which one is more valuable than the other and can answer
the question whether lowering the production of one will positively or
negatively affect society. In fact, this happens naturally in a market
economy; through supply sold suppliers can see what consumers prefer and
what they dont. These market signals force the economy supply to equal so
it can reach equilibrium, so that the consumer can receive the product he
values more highly and supplier can receive a profit off of his product. In
socialism the price is set by the state and this does not let market signals to
be seen. Prices are an indicator of consumer preferences; a high price
indicates a larger preference because consumers are willing to pay more for
the project. On the other hand, a low price indicates lower preferences
because suppliers will set prices at the highest point where they will still
make profit. A higher price also indicates a relative scarcity of that product,
while a lower price indicates an abundance of that product. Instead of a
state imposed price, fighting a high price with a high price is the most

effective strategy to bring the prices back down. When a price is too high,
the price will outweigh the value that the consumer has for an individual
causing the suppliers not to make enough profit, forcing them to bring the
price down to one consumers are willing to pay. Similarly, a lower price will
eventually rise because suppliers cannot afford to keep producing at too low
of a price, so the price rises naturally towards market equilibrium.

In Chapter 32, Peter introduces the economic concept of private

ownership of the means of production in Freeworld. Private ownership of
the means of production is a key factor of capitalism. It means that the way
in which a product is produced and the gains or losses is all owned by a
private citizen, not the state. This helps the supplier benefit by receiving
profit for the product he sells. It not only benefits suppliers, but when the
means of production is privately owned, it means that more production will
take place for the market as long as a profit is still being made. This is
important because it is a defining aspect of capitalism. Private Ownership of
the means of production focuses on the individuals ability to buy and sell
what they please without the government setting a limit or price to inhibit
them from reaching the markets full potential. In our market economy we
live within this principle, all surplus product is unearned income and all sold
product is earned income for the supplier. Where as in a communist society,
the government would control the means of production, causing the market
not to meet its potential.

Adams attempts to inflict a price ceiling on beef and sees this as

helping the poor who cannot afford the beef at higher prices, however Peter
sees the reality of the price ceiling. Peter first points out that the supply and
production of beef didnt fall until Adams instituted his price ceiling, and once
it was instituted there was a noticeable fall. Peter says, It went up because
you cheapened the value of the monetary unit by printing more money.
Essentially what Adams did was compromise the supply of money, not with
real value but by pumping more and more money in the economy. This is
called monetary inflation. Peter says that because of this monetary inflation,
although the poor man may have more goldgrams than he once did, the
value of them has fallen while the prices have risen. In reality, the poor man
will not have to give up anymore of the percentage of his income than he
would have before inflation. However, because of the price ceiling it will be
more difficult for the poor man to find beef because the supplier will be
willing to sell less. Adams attempts to make the argument that beef is so
important to the people that the price should not be able to rise too high.
This argument falls flat because there will always be someone who cannot
afford this beef. No matter how low the price, someone will be impoverished
enough to not be able to afford it. Also, by limiting how high a price can get
you are limiting the amount of beef that will be sold in the market.
Producers cannot afford at certain prices to produce as much as they
previously had been able to, making it more difficult for everyone, not just

the poor, to buy beef. Considering Adams believed beef was an essential
commodity, this removal would be extremely harmful effect.

Adams is wrong both to prohibit the replacement of old machines to

new machines and to require it because each companys opportunity cost of
getting a new machine is different and to demand that all companies do the
same thing is to ignore the differing opportunity costs. For one company the
old machine may still be in very positive shape and the marginal amount
they would produce is not worth the expenses of receiving the new machine.
Another company may not sell enough of their product, so they do not want
to spend the money to get a machine that will make more than what they
can afford to make. Another possible situation is that a company may find
that the marginal benefit outweighs the marginal cost of the new machine
and they would experience better business and the new machine would help
so they have it put in. We must not ignore the fact that companies are not
identical and their opportunity costs and budgets all are much different. An
engineer cannot make the decision whether to switch to the new machine
solely on the production rate. He must look at how much of a product the
company actually needs to produce, how much it would cost them to get
this new machine and if the marginal benefit outweighs the marginal cost of
this replacement. Every company is different and needs different things to
make their supply equal to demand, and for some the machine might be the
answer, but for others it might do more harm than good.