Over-Production or Under-Consumption?

Fr McNabb discusses whether a glut of wheat is the result of not enough consumption ot too much wheat being produced.

From the ChesterBelloc Mandate

"The first of these reports traces the wheat crisis to a decrease on consumption rather than to an increase in production which has only kept pace with the growth of population." [The Times, 27th March.]

This report was presented to an international conference held in Rome, and preparatory to the second wheat conference to be held in 1932. The drawing up of the report had been entrusted to the International Institute of Agriculture.

Some reflections seem obvious.

1. It is, at least, not certain that the present wheat crisis is due to over-production. Yet the other day, when I was discussing the matter with a very prominent politician he assumed as undeniable that modern machinery had produced too much wheat. In economic language we were suffering from over-production. This politician by assuming the over-production of wheat was but voicing a wide-spread and perhaps dominant opinion.

Yet this report which though not infallible is perhaps the most authoritative statement to hand, counters other less authoritative statements by saying that, far from having over-produced beyond normal consumption we have only kept abreast of normal consumption!

2. Even if for the sake of argument we granted that there was an over-production of wheat it would not be an economic production; and for the following reasons:

Production is for consumption; and not consumption for production.

Production is not for production's sake (as Art is not for Art's sake); nor is, production for gain's sake. But production is for the sake of consumption.

But production under such circumstances of time or place that is not economically available for consumption, is not, economically speaking, production. The factors causing mere production to be uneconomic production are two :- (1) physical, as distance, difficulty of transport, &c.; (2) psychological, as desire of gain, overhead charges, tariffs. &c.

Strangely enough, it would seem then when physical difficulties are lessened by modern mechanical appliances psychological difficulties are increased.

From all this we may conclude that the more the area of consumption tends to be coterminous with the area of production (i.e., production for consumption), the more stable will be the resulting economic state.