Hazlitt’s conclusion, Chapter 24, restated his thesis: the conceptual necessity of following the money in order to consider what an individual would have done with his money, had the state not intervened to “break his window.”
It did not ask that most crucial of questions, “What is to be done?” Lenin asked it in 1902, parroting an earlier revolutionary, Cherneshevsky, who had asked this four decades earlier.
In 1946, there was not much to be done. When Hazlitt finished his manuscript on March 25, it had just turned spring. Given the topic of his book, it was economic spring as never before in America’s history.
The United States was the economic colossus of the world. Never before in history had one nation attained this degree of economic supremacy. Canada and the United States were almost a single trading zone. They had emerged from World War II physically unscathed.
The managerial transformation caused by the war had not been foreseen in 1941. It had restructured American manufacturing. The mass production techniques of the wartime industries would soon go into full gear to meet demand from the consumer economy.
There was another huge advantage, one unforeseen by most analysts. The mass inflation of the Federal Reserve during World War II had been suppressed by price and wage ceilings. The government adopted rationing as the means of allocation. By the end of the year, most of these ceilings were repealed. Prices adjusted upward. In doing so, the price and wage floors of the 1930’s ceased to have any influence. Prices after 1946 were above the old floors. Production adjusted to the new demand. The depression did not reappear, because the conditions that had caused it — price floors — no longer functioned.
Meanwhile, the world’s economy was in tatters. Western Europe was rubble. Japan was, too. England was close to bankruptcy, a shell of its former financial self. It would soon surrender its empire, which it could no longer afford to police. India and Pakistan gained their independence in 1947. Hong Kong was not yet the powerhouse it was to become. The same was true of South Korea. China was poor, and in 1949 it fell to the Communists, and it soon became much poorer. The Soviet Union was an economic basket case, and it would remain a basket case until it went out of existence in December 1991. It had military power, but nothing else.
The United States could export to any society that had dollars. New lending arrangements, private and federal, began to make available American production to borrowers. America banks had money to lend, and the Western world was ready to borrow on terms favorable to the American banking system.
(For the rest of this chapter, click the link.)
