Economic Malaise and a Positive Programme for a Benevolent and Enlightened Dictator
In a paper written in 1979,1 I analysed the economic malaise that in the 1970s had gripped the United States and other Western industrial countries after a long period of rapid growth, optimism and euphoria in the 1950s and early 1960s. The malaise continued and became more intense in 1980. All recent reports on the state of the world economy and the prospects for the coming years from national and international agencies—the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD), the Bank for International Settlements (BIS), the Commission of the European Community, the Institut für Weltwirtschaft in Kiel, et cetera2—are tinged with pessimism and gloom, predicting more inflation, near-zero or negative productivity growth, stagnating or declining gross national product (GNP) and high unemployment. The Reagan Administration in the United States has been warned of the danger of an ‘economic Dunkirk’, requiring the declaration of an economic emergency. And even some of those who, rightly in my opinion, reject the idea of declaring an economic emergency, call the present outlook frightening.
KeywordsReal Wage Gross National Product Money Wage Economic Emergency Persistent Unemployment
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Notes and References
- 4.H. D. Dickinson, The Economics of Socialism (London: Oxford University Press, 1939)Google Scholar
- and Oscar Lange, ‘On the Economic Theory of Socialism’, in Benjamin E. Lippincott (ed.), On the Economic Theory of Socialism (Minneapolis: University of Minnesota Press, 1939), pp. 57–143.Google Scholar
- For a critical discussion see Herbert Giersch, Allgemeine Wirtschaftspolitik, Vol. 1: Grundlagen, Die Wirtschaftswissenschaften, Reihe B: Volkswirtschaftslehre, Beitrag Nr 9 (Wiesbaden: Gabler, 1977), pp. 165–68.Google Scholar
- 5.A related measure that might be considered would be to offer the public purchasing power government bonds, indexed for the rise in the price level, to enable the small saver to protect his savings from the ravages of inflation. The interest on indexed bonds, determined by demand and supply in a free market, would, of course, be much lower than on non-indexed bonds. See also Giersch, ‘Index Clauses and the Fight against Inflation’, in Essays on Inflation and Indexation, Domestic Affairs Study 24 (Washington: American Enterprise Institute, 1974), pp. 1–23.Google Scholar
- 6.Harry G. Johnson, ‘Foreword’, in Geoffrey Denton, Seamus O’Cleireacain and Sally Ash, Trade Effects of Public Subsidies to Private Enterprise (London: Macmillan, for the Trade Policy Research Centre, 1975; and New York: Holmes and Meier, 1975), pp. xiii and xxxviii. See also Giersch, ‘Beschäftigungspolitik ohne Geldillusion’, Die Weltwirtschaft, Tübingen, No. 2, 1972, pp. 127–35.Google Scholar
- 14.For a careful analysis of how to separate voluntary from involuntary unemployment, see Giersch, Allgemeine Wirtschaftspolitik, Vol. 2: Konjunktur-und Wachstumspolitik in der offenen Wirtschaft, Die Wirtschaftswissenschaften, Reihe B: Volkswirtschaftslehere, Beitrag Nr 10 (Wiesbaden: Gabler, 1977), pp. 254–57.CrossRefGoogle Scholar
- 17.It will be recalled that since Joseph S. Schumpeter, economists distinguish between inventions, that is, discoveries of new or improved products or methods of production from theoretical work or laboratory experimentation on the one hand, and the actual production of new products or the use of new methods of production or marketing by innovating, risk-taking entrepreneurs on the other hand. (J. S. Schumpeter, The Theory of Economic Development, translated by Redvers Opie [Cambridge, Mass.: Harvard University Press, 1934, first German edition 1912].) See also Giersch, ‘Aspects of Growth, Structural Change, and Employment— A Schumpeterian Perspective’, Weltwirtschaftliches Archiv, Kiel, No. 4, 1979, passim. Google Scholar
- 19.The Report of the Independent Commission on International Development Issues under the Chairmanship of Willy Brandt, North-South : a Programme for Survival (Cambridge, Mass.: MIT Press, 1980; and London and Sydney: Pan Books, 1980).Google Scholar
- 21.The largely dubious policy proposals of the Brandt Commission have been critically analysed by P. T. Bauer and B. S. Yamey, ‘East-West/ North-South: Peace and Prosperity?’, Commentary, September 1980, pp. 57–63; and P. D. Henderson, ‘Survival, Development and the Report of the Brandt Commission’, The World Economy, London, June 1980, pp. 87–117. For a thorough discussion of the so-called New International Economic Order (NIEO), see Ryan C. Amacher, Haberler and Thomas D. Willett (eds), Challenges to a Liberal Economic Institute (Washington: American Enterprise Institute, 1979).Google Scholar