Discussion of Dr Antonio Sacristán Colás’ Paper
Professor Levhari said that Professor Sacristán’s paper had focused on two questions, the role of the state in the determination of the real wage rate, and the effect of a change in the interest rate on prices. On the first point he said that the main issue was whether the profit-wage frontier could be pushed outwards, through technical progress, so that real wages could be increased without an upheaval. On the second point he said that Sacristán had considered the interest rate as a cost item which pushed prices up. On the other hand, Keynes had argued that a rise in the interest rate would reduce aggregate demand and thus reduce prices. He said that more empirical research was needed to support one view or the other. He then asked Lord Kaldor why he considered central planning always to be superior. He suggested that a comparison of the development of Austria and Hungary, which started off at a similar level after the Second World War, seemed to speak in favour of more decentralisation.