“It ought to be made a crime, chief,” said Adams, “for anyone to present his cigarette ration coupons or even to be caught holding actual cigarettes. The people who are now demanding cigarettes for their coupons are only undermining confidence in the government. They are precipitating a panic. Up to now cigarette coupons have always been as good as cigarettes themselves in any exchange. Most people came to want the cigarette coupons only for exchanging anyway. Why shouldn’t they be as good now as they ever were? After all, the government stands behind the coupons even if the cigarettes don’t; the whole wealth of Won-world stands behind the coupons. People should be forced to...”
But Peter took a different view. He promised that all outstanding cigarette coupons would ultimately be redeemed in actual cigarettes as the government had promised. There had been, he explained, a regrettable “inflation” in the number of coupons printed as compared with the number of cigarettes available. But this would be cured by the government’s refusal hereafter to issue coupons in excess of the available packages of cigarettes.
Meanwhile he extended the freedom of the market. He now permitted anybody not only to exchange ration coupons but to exchange the actual commodities themselves after they had got them from the government. He felt like kicking himself for not having done this sooner.
A striking development followed. A dual market sprang into existence—one in the coupons, as before, and another in the actual commodities. Usually the quotations for the commodities were close to, or identical with, the quotations on the coupons for them. But whenever any coupon got too close to its expiration date, or any suspicion arose that there might be fewer commodities available than the amount of ration tickets outstanding against them, or that a particular kind of ration ticket might not be honored for some reason or other, the price of the coupons fell in relation to the price of the commodity that they represented.
The most striking development of all was the gap that developed between the quotation for cigarette coupons and the quotation for the cigarettes themselves. The coupons now exchanged at only about half the value of the actual cigarettes.
This expressed itself in an odd way. A dual set of “prices” appeared on the Big Board—one stated in terms of cigarette coupons, and the other stated in terms of actual cigarettes. And the prices in terms of cigarette coupons were about twice as high as those in terms of cigarettes.
“This is a very bad thing, chief, for the government’s prestige,” said Adams. “People are permitted through the market publicly to express their distrust of the government’s promises. Through the whole price system, and through direct quotation of cigarette coupons in terms of cigarettes, there is a discount of 50 per cent on the cigarette coupons. You are in effect permitting people to say without fear of punishment that this is the extent to which they distrust your promise.”
But Peter refused to take repressive measures. “It is a good thing to know,” he said, “the real extent of public confidence in the government. In that way we can tell what measures destroy confidence and what measures restore it. In fact, it is wonderfully helpful to us to have the exact quantitative measure of fluctuations in confidence that this open market provides. If we suppress the freedom of the market we suppress the very information we need for our own guidance.”
And he set about to restore confidence in the cigarette coupons.
He ordered an increase in cigarette output. He extended the period for which the outstanding cigarette coupons were valid. He announced a reduction in the volume of cigarette coupons that would be issued in the next period so that these would not exceed the available supply of cigarettes.
And he had the satisfaction of seeing an immediate rise in the quotations of the cigarette coupons to a discount of only 20 per cent. Within a few months, as people saw that his promises were being kept, the discount on the coupons disappeared altogether.
He had ordered the record of daily market quotations of coupons and commodities published in the New Truth. On the day after the cigarette coupons reached “parity,” he circled the quotation in red pencil and silently handed a copy of the newspaper to Adams.
He could not resist a feeling of triumph.
Chapter 26
LIENA BOLSHEKOV is here, Your Highness.” “Show her in, Sergei.”
She had called for the appointment a few days before. What could she want of him? Peter had never met her to speak to, and his mind went back to his first night in Moscow when he had seen her at the opera. Her black hair and lovely legs were still vivid in his memory.
He was not disappointed. She was as striking off the stage as on. Her black Protector’s uniform was very trim; the trousers fitted just snugly enough to bring out the shapeliness of her hips and thighs. Her dark eyes were inviting.
“It’s so good of you to see me,” she began. “I’ve always been a tremendous admirer of yours, Your Highness—of your statesmanship and courage—but I didn’t realize till now how young and handsome you are!”
Peter blushed. He had been a great admirer of hers, he said.
“I’ve come to ask you,” she continued, “if we could possibly get you to act as a patron—the chief patron, of course—of our new pageant on The Growth of Civilization. It will depict the whole history of feudalism, capitalism, the class struggle, the final triumph of communism—”
“I’d be delighted,” said Peter. “You could have put my name down as a matter of course, or just telephoned me—” “But I wanted to see you, and I wanted to enlist your active interest. I do wish you could see what we are planning. Wouldn’t you like to see the sketches for the costumes and floats? I would so much appreciate your suggestions and ideas.” “I really know nothing about these matters,” Peter said. “But of course if you would really like me to—”
“That is wonderful of you, Your Highness. The sketches are at my apartment. There are too many of them to carry around. Do you think you could come up some night and look at them?”
“Well, if you wish.”
“Oh, that’s really wonderful. How about tomorrow night? Or how about tonight? That’s terribly short notice, I know, particularly for a man as busy and important as you are. But I’m so eager to get started.”
Peter made a pretense of consulting his desk calendar. He already knew that he had no engagement. It was Leninsday, and Leninsday evening was now almost invariably kept clear for his piano practice. But he wanted to give himself time to decide. He was tempted; but he realized that the very reasons that tempted him were the reasons why he should not go. She was a lure. She had certainly been asked to do this by her father.
“I’m terribly sorry,” he said finally (and as he really was, he sounded sincere). “I’m terribly sorry but I have a meeting with the Central Planning Board tonight—”
“Tomorrow, then?”
“I’m jammed up for the rest of the week.” He disconsolately thumbed the calendar pages. “Next week?” He turned the pages. “Sunday... Monday... Marxday...
Leninsday... Prolesday... Engelsday... Stalinsday... every one of them crowded. I tell you... I’ll try to break one of these engagements and let you know.”
She concealed her disappointment. “Oh, that’s so nice of you. Here is my address.” She wrote it on a card. “I’m afraid it’s not at all in the best neighborhood. It’s a little hideaway that I have all to myself—even father doesn’t know about it. But I simply must have a little place alone where I can work.”
Peter said he understood.
“I have a tiny favor to ask you,” she went on, “I don’t want too many people to know where my private apartment is.... And then besides, if people knew you called, there would be all sorts of gossip linking our names.... You know how people are. So, would you mind terribly parking your car a couple of blocks away somewhere... and walking the rest? When you can come, I won’t be asking anyone else.”
Peter was now sure that the whole thing was a trap. He felt a little sad about it, promised that she would hea
r from him in a few days, and gave a last glance at her hips as she left the room.
The free exchange of ration tickets, and the free market for consumers’ goods, had constituted, even before the return of the cigarette coupons to parity, a great personal triumph for Peter Uldanov. The army was still almost solidly behind Bolshekov, but civilian opinion was now mainly behind Peter. The people had had their first breath of freedom.
Practically everyone was now happier. A man could now get commodities, to the extent that they were available, at the times and in the proportions that he himself wanted them, rather than in the procrustean ratios in which they were originally doled out by the planning commissars.
And many people seemed to value the new freedom to exchange as much as the exchanges themselves. With the same overall production more wants were satisfied. Peter began to sense that this was equivalent to a great increase in production itself. For “production,” as he began to see more clearly than he had before, was not something to be measured by tonnages or volume, but only by the satisfaction of human wants. A thousand tons of something a man couldn’t use was not worth an ounce of something on which his life might depend. A factory “producing” the wrong things could hardly be said to be producing at all.
Peter took care to exploit the political value of this, his first real success. It went against his temperament, but he had decided that not merely his ability to stay in power, but his very life now depended in large part on showmanship. So he conferred more medals on himself, ostensibly in the name of Stalenin; held more air circuses; had himself amply photographed so that his face and figure would become familiar; gave dinners to the high Air Force officers; ordered long editorials written about the benefits that his free exchange system had introduced into Wonworld. Privately he still felt halfashamed. But as he looked forward to the coming showdown between himself and Bolshekov, between his world ideal and Bolshekov’s kind of world, he became a little less fastidious concerning his choice of means.
The free market continued to fascinate him. He learned new lessons from it every day. It had now ceased to quote anything in terms of cigarette coupons; everything was quoted in terms of actual cigarettes. The “price” of anything now meant its price in terms of packages of cigarettes. These became known, in turn, simply as “packs.” Thus when somebody asked “40 packs” for a chair coupon, nobody needed to ask “packs of what?” On the Big Board the quotation would be merely “40.” As there were twenty cigarettes in a package, when people wanted to make a more exact price they would specify, say, 40 packs and 8 cigarettes, or “40 and 8.” The Big Board would simply report this as 40/8.
Peter studied the relation of the Moscow market to the market in other cities and places. These markets were local, both because ration tickets were good for presentation only within a given district, and because people were still forbidden, without passports and specified reasons, to cross the boundary lines of these districts. He found that though there was practically an exact correspondence between prices in the different markets within Moscow, this did not apply to a market in a different district. In such an outside market, permanent differences seemed to exist in the relationship of one price to another, as compared with the relationships in the Moscow markets.
Adams also reluctantly learned lessons from the free market.
“Take this, for instance,” he said to Peter. “You would think that once people had decided what a fair price was, they would stick to it. In yesterday’s market, shirts were selling at 9 and 5; this morning they were 9 and 7; and this afternoon they’re 10 packs flat. Why these ceaseless ups and downs? Why can’t people make up their minds? If 10 packs is a fair price for a shirt, it ought to be that always.”
“Well, Adams, I suppose people’s ideas change of what their wants are. Or maybe new and different people enter the market. A man who has been holding a shirt coupon with every intention of turning it in for a shirt, suddenly decides that he would like more cigarettes instead, either for their own sake or to buy something else. So when he comes to the market the supply of shirts offered is that much bigger. This means that shirts are less scarce and therefore less valuable. At the same time there is a still further demand for cigarettes, which means that people who have cigarettes can get more for them.”
“I don’t quite understand what you mean by these phrases, chief. I notice that you have been using the words ‘supply’ and ‘demand’ lately in senses I don’t believe I ever heard before. Take this word ‘supply.’ It means simply the existing stock of anything, doesn’t it?”
“Well, no... not exactly. In the sense in which I think of it, it means just that part of the existing supply that people are eager or willing to sell at a specified price.”
“And ‘demand’?”
“And in the same way, Adams, the ‘demand’ for anything is not simply the amount of it that people desire, which might be almost unlimited, but the amount that they are willing to take at a particular price.”
“Then both ‘supply’ and ‘demand,’ chief, seem to me rather complicated concepts. Does each mean the goods that people are willing to exchange at certain given ratios for other goods?”
“Precisely,” said Peter. “There’s no use talking about my ‘demand’ for a shirt unless you find out how many packages of cigarettes I’m willing to give up in exchange for one. And if you’re trying to get cigarettes from me, there’s no use talking about my available ‘supply’ of them except in terms of the things for which—and the ratios at which—I am willing to surrender them.”
“Whew!” said Adams. “Then one man’s ‘supply’ is another man’s ‘demand,’ and vice versa? My ‘supply’ means what I’ve got to offer, and my ‘demand’ means what I want in exchange for it, while your ‘supply’ means what you’ve got, which may be what I demand, and your ‘demand’ may be—”
“Right.”
“Well then, does the word ‘supply’ refer as you use it, chief, to an actual physical quantity of something, or does it refer only to something that is determined by the different scales of valuation of different people?”
“Well, we needn’t get into all these subtleties just now,” said Peter,, who was not quite sure what his answer to this should be. “The point I started to make in reply to your original question is really a simple one. You asked why prices change all the time. My answer is that these prices depend on the relations of supply and demand, and supply and demand are volatile things, constantly in flux.”
“It seems to me that you have been shifting your ground a little, chief. It wasn’t so long ago that I was quoting Marx to you, and his theory that the value of commodities depended on the relative working time embodied in them. And we both finally agreed that though the relative amount of working time had something to do with the answer, it was at best grossly oversimplified—because you had to consider the enormous difference in the skills of different workers, and the enormous contribution of land and machinery to the value of the total product. But now you are shifting the base entirely. Now you tell me that the value of different commodities has nothing to do with all the labor and sacrifice embodied in them but is determined simply by the relation of supply and demand.”
“That is right,” said Peter; “and that is the very problem that is now troubling me. I have a hunch that if we could reconcile those two conclusions we would be on the track of something really big.” “I confess I haven’t the slightest idea of what you’re talking about.”
“Adams, try to be a little patient with me for a moment. The worst part of it is not only that I haven’t the answer to the problem, but that I’m not even sure I can formulate the problem itself. I suspect that once we could make the problem clear, we would be halfway on the road to its solution. Let’s try....
“We have now established, in consumers’ commodities,” he went on, “what I have called a free market. Now as a result of that, as a result of allowing everybody to express his wishes freely—by allowing people to
exchange whatever they have for whatever they want at ratios that are mutually agreeable to them—we have established certain freely arrived at market ratios, rates or prices. We have found, for example, that a shirt exchanges for approximately 10 packages of cigarettes and a chair for approximately 40, which means that directly or indirectly a chair exchanges for about 4 shirts.... Now then, perhaps we are on the verge of formulating the problem that is troubling me. The fact that a chair exchanges for 4 shirts means that people considered collectively value a chair at four times as much as a shirt. Why?”
“Because it’s harder to get chairs than shirts, chief.” “Correct,” agreed Peter. “Because chairs are scarcer than shirts. But why are they scarcer?” “Because that’s the way the Central Planning Board planned it,” said Adams.
“Yes and no,” replied Peter. “The Central Planning Board did in fact schedule the production of fewer chairs than shirts. But it didn’t say, ‘We shall create a greater scarcity of chairs than shirts in order to make chairs four times as valuable as shirts,’”
“It scheduled fewer chairs than shirts, chief, because people need fewer chairs than shirts. Shirts wear out, get dirty, and have to be changed sooner and more often than chairs. Hence fewer chairs are made than shirts and hence chairs are scarcer than shirts.” For answer Peter picked up a glass ash tray on his desk. “How many shirts do these things change for?”
Adams looked up the market table. “They sell for one pack.”