Apart from South Africa , which does at least have the excuse that its coal is exceptionally cheap , Britain and Soviet Russia now have the dubious distinction of using the most fuel per unit of national product of all countries in the world .sx If you have to run a country on the basis of Marxist economics and the labour theory of value , you must expect something like this .sx No doubt , according to official Marxist doctrine , the more coal you use the more valuable the products you turn out , because more labour is incorporated in them ; although even in Soviet Russia common sense sometimes breaks in .sx Our policy , since the industries connected with fuel were nationalised , has not been avowedly Marxist as in Soviet Russia , but has been , perhaps unwittingly , based on many of the same ideas :sx fuel industries are 'basic industries' , fuel ought therefore to be cheap , and the more that is consumed the better .sx This is the sort of muddled thinking which has already cost the country enormous sums .sx Until the advent of cheap oil in the last three years , the produce of the nationalised coal , electricity and gas industries ought to have been sold at much higher prices , on the one hand in order to bring some revenue to the Treasury , and on the other hand to compel industrialists and consumers to economise as they do in other countries .sx Bernard Shaw was a great dramatist ; but nobody now would suggest that his views on economics should be taken seriously .sx Many years ago he explained that the principal reason for nationalising the coal mines was that , as things were then , mines produced coal at a great variety of different costs , and that the primary duty of a national administration would be to average them out .sx Bernard Shaw's ideas , however , had great influence in the Labour Party , and one almost suspects that some of them still linger on in the administration of our nationalised industries .sx Otherwise it is hard to explain their refusal to allow regional differences in prices , or their long hesitation before closing down uneconomic pits .sx It is true that there have been some economies in fuel consumption in Britain during recent years .sx But they have been slow and reluctant compared with the movements in other countries .sx The United States , up to the 1920s , used fuel lavishly , mainly because it was so cheap .sx But consumption per unit of national product is now lower than ours , even though fuel is still comparatively cheap in the United States .sx The detailed industry-by-industry comparison of trends in this country and Germany , reproduced in Table =4 , presents a really alarming picture .sx An industry by industry comparison of fuel consumed per unit of product in U.K. and Canadian industry , shown in Table =5 , is also very revealing .sx In order to effect most of these economies in fuel consumption , costly investments are not required .sx We have some figures given in an official document , and similar figures were estimated by the late Professor Sir Francis Simon .sx A ton of coal per year for many years into the future could be saved by investing no more than +7 in economisers and other forms of heat recovery , +12 or +13 in new kilns and furnaces and in mechanical stokers , +17 in replacing and modifying boilers , or +25 in insulating buildings .sx With coal at anything like its present price , every one of these investments is extremely well worth while .sx Our fuel consumption has now begun to fall , but it has a great deal further to go , judging by the experience of other countries .sx The National Coal Board for many years was unable to meet all the demands upon it , and had to import coal at high cost , which it then re-sold at a much lower price .sx Nevertheless , the Board seemed to like this situation , and in the programme of 'Investing in Coal' which they published in 1956 they envisaged its indefinite continuance .sx The consumption of fuel , expressed as coal equivalents , had reached 254 million tons in 1956 .sx The figure subsequently fell , and rose only to 264 million tons in 1960 ; but the National Coal Board expected it to rise to 281 million tons by 1960 and 335 million by 1970 .sx To show how steadfastly a Conservative Government supports the administrators of nationalised industries we may quote a statement made by Lord Mills , the Minister of Fuel and Power , as late as 1958 , in which , while admitting that consumption had fallen to 250 million tons of coal equivalent for the current year , he still estimated that it would rise again to 300 million by 1965 .sx As coal became more difficult to sell , the Government seems to have become more determined to defend the coal industry , quietly blocking imports of cheap oil and of liquefied natural gas ( for which the transport technique has recently been discovered) .sx It seems all too clear that much of our 'investing in coal' has been wasted ; and we can now see some of the reasons why .sx ( d ) Electricity .sx Regarding electricity generation , which has taken a substantial share of the country's capital during the last decade , we do not see obvious signs of waste as we do in coal .sx At the same time , there has not been any real reply to the case made by Dr. I. M. D. Little in his book The Price of Fuel that electricity has been sold unduly cheaply to household and commercial consumers , to encourage its use for space heating , which could be more economically done by gas .sx The supposed purpose of nationalisation was to bring about a rational co-ordination between industries , but this certainly does not seem to have been done in electricity and gas ( any more than between road and rail transport) .sx The administrators of the nationalised electricity undertaking seem to have got their ideas from old-fashioned electrical engineers whose main purpose in life was to drive gas out of business .sx The Government has even permitted the nationalised electricity and gas industries to spend public funds , beyond the amounts reasonably required to make useful new equipment and processes known to the public , in advertising against each other .sx Dr. Little's criticisms particularly applied to the fact that the scale of charges for household electricity gives consumers no incentive to economise during the peak hours , when electricity is most costly to the supplying authority , because expensive reserve capacity has to be kept in being to meet peak loads .sx Experience in other countries has shown that there are practicable devices for adjusting meters in order to charge more for peak hour use .sx Our nationalised electricity industry has stubbornly and irrationally refused to adopt them .sx The building of nuclear power stations has been criticized :sx though this form of investment is , I think , defensible on economic grounds , up to the point where the base or minimum load on the electricity system ( probably at 4 a.m. on a summer morning ) , constituting perhaps one-sixth of total capacity , is all supplied by them .sx It does not serve much purpose to work out a series of comparative costs of thermal and nuclear stations , under various assumptions , in pence per unit .sx The right approach is by an analysis of 'opportunity costs' .sx A nuclear station of 300,000 kw capacity , expected to last for twenty years , costs +42 million , plus +8 .sx 8 million for its initial fuel charge .sx Such a station obviates the need for a thermal station of similar capacity- additional capacity is going to be needed , even if not at the rate at which we are building at present .sx The capital cost of the thermal station would be +15 million , with a life of twenty-seven years ; so we can 'credit' the nuclear station with saving 20/27 x 15 =+11 .sx 1 million capital , and regard its net capital cost as +39 .sx 7 million .sx Running costs other than fuel , which are virtually independent of output , will be +0 .sx 5 million per year for a nuclear and +0 .sx 33 million for a thermal station .sx If the nuclear station works at 80 per cent load factor , which seems a reasonably cautious estimate , it will produce 2.1 billion kwh per year at a fuel cost of 0.149d./ kwh , as against 0.420d./ kwh for a thermal station .sx After allowing for running costs the net saving will be +2 .sx 23 million per year , or 5.6 per cent on the net capital cost of +39 .sx 7 million .sx This , however , still only represents costs as seen by the electrical engineer .sx When we take the costs of the National Coal Board into account also , we find a very much greater saving .sx As soon as total output of coal began to go down , during the last few years , the output of coal per manshift worked , which had been stationary for a number of years , leaped upwards .sx This was brought about only to a limited extent by closing pits :sx mainly , it appears , by the closing of uneconomic seams within mines .sx The movement of the figures of output per manshift appears to indicate that marginal coal may cost as much as +4 per ton more than average coal .sx If we take this saving into account , as we are fully entitled to do , we obtain an additional return of 8 1/2 per cent ( or less in proportion if the above figure of +4 is too high ) on our investment in nuclear power .sx By all means invest in nuclear power- but close down more coal mines .sx ( e ) Roads .sx At a special conference called by the Institute of Civil Engineers recently , a case was made for very large expenditure on both rural and urban roads .sx The economic return on such investments , in the form of faster-moving and less congested traffic , can be fairly precisely calculated , and fully justifies them , probably even to the extent of the +3,000 million which , it was suggested , should ultimately be spent on our road system .sx But here again , this expenditure should render redundant a considerable part of the railway system , which should be dismantled .sx The expensive 'modernization programme' for the railways was prepared on quite unjustified assumptions about the amount of traffic which they could attract .sx Demand for transport , measured in ton-miles , has been increasing more slowly than national product , and its future rate of increase is expected to be not much over 1 per cent per year .sx Road transport already carries over three-quarters of the ton-mileage of all traffic other than minerals and at its present rate of expansion will easily provide for this increase , and go on cutting into what remains of the railway traffic too .sx There can now be no doubt , and no denying , that hundreds of million of pounds have , since the end of the war , been wasted on misdirected 'investment' in the nationalised coal , electricity and railway industries .sx Because of this waste we have not been able to modernise the road system , cut taxes , or do the other desirable things that could have been done .sx There has been plenty of 'investment' , but how much effective growth ?sx Net capital investment from 1955 to 1959 inclusive was +8,949 million , which means an addition to the capital stock of 19 per cent .sx But the increase in the real net national product from 1955 to 1959-60 was only 9 per cent .sx Have we been putting our money on the wrong horses ?sx =6 .sx THE INTERNATIONAL INVESTMENT 'LEAGUE' .sx The final section of this booklet might be described , in a certain sense , as an anticlimax .sx After Dr. Aukrust's careful analysis of the Norwegian figures , and the extensive figures for other countries quoted above , it is going to be very difficult for anyone seriously to contend that increased investment is a sure way of increasing the rate of economic growth .sx However , there are many people , in responsible positions , who do not reason in this way .sx They reason in a simpler manner altogether .sx The procedure is to construct what is sometimes called a 'League Table' , ranking countries according to the percentage of their gross national product which they devote to investment ; and then to set out to show that their position in this table is related to their rate of economic growth .sx