Abstract
As we saw in the previous chapter, the operational instrument that characterises the true programming approach is that of the formalisation of the political preference function, which therefore must be at the foundation of the concept of an optimal economic policy. Such a function can also be considered as the basis for new cooperation between politicians and economists.
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Notes
- 1.
Frisch (orig.1970), “Co-operation between Politicians and Econometricians on the Formalization of Political Preferences”. In: Frank Long, editor, Economic Planning Studies, Reidel, 1976, Chap. II, p. 41.
- 2.
With a Memorandum of seven pages [UN Document E/CN/1/Sub.2/3, 1947], that followed on from numerous other interesting papers to the meetings of the sub-commission in 1947 (at Lake Success, the village in New York City, temporary home of the UN headquarters from 1946 to 1951); and the writing of a conclusive report, The optimal labour input [UN Document E/CN.1/Sub.2/6,13 pp], which constituted an answer to a request from the sub-commission; where in the introduction Frisch notes: ‘the form of … argument is abstract, but … concerns a very practical issue. The nature of the abstractions … believed … to indicate the strategic point where the difficulty lies and from where the search for a practical solution must start.’
- 3.
UN Document E/CN.1/Sub.2/13, 1949, pp.67. See the rich bibliographical documentation in the work already quoted by Kåre N. Edvarsen, 2001. This document was given to me personally by Frisch many years later after we met (in 1963), in its original cyclostyled editing (very poor) by the UN. Probably it has been never published by UN, except in a form of a Word document (and I have kept it jealously on the shelf dedicated to Frisch in the library of the Planning Studies Centre). As such, I believe that this report has never been republished, even in the great reprint of Frisch’s writings edited by Olav Bjerkholt (who was one of his most loyal collaborators, and put together a commendable and vast selection of Frisch’s works in two volumes in 1995).
To Olav Bjerkholt I am indebted for allowing me access to so many of Frisch’s papers, before the publication of his monumental anthology and after Frisch’s death (including some texts that remained in their original language). In turn, I have been pleased to give him some references to Frisch in the Italian literature. The appendix to the Report to the UN was published in English later (1955) in the Italian journal Metroeconomica (vol.VII, December 1955, fasc.III), entitled ‘The mathematical structure of a decision model: The Oslo sub-model’, with Frisch’s own indication that the text be presented as an appendix to the Memorandum for the UN. To be precise, in difference to the copy of the DE-UO given to me by Frisch, the original document even had as a sub title ‘A memorandum on analytical machinery to be used in discussion on cases of and remedies to unemployment’. Frisch wrote in the presentation note to the journal: ‘The present study, which gives a complete statement of the mathematics appears here for the first time.’
The attention to the preference function and to the decisional models was reproposed by Frisch later in 1961, with a less well-known article, published in English by another Italian journal: il Giornale degli economisti e Annali di Economia (n.20, February 1961, pp. 3–43), titled ‘Numerical Determination of a Quadratic Preference Function for use in Macroeconomic Programming’. This was, once more, about material drawn from the memoranda of the DE-UO. (Both papers are republished in the quoted collection edited in 1995 by Olav Bjerkholt.)
The two Frisch papers quoted in footnote 1, and on which we are basing our analysis, draw on all this old material, but they demonstrate that the last two papers before his death were dedicated to the issue about which Frisch was most concerned: the political preference function and its practical mathematical formalisation. This is the issue upon which he focused throughout his academic life.
- 4.
It is pathetic to think of the way this attempt was received at that time. But is encouraging to think how much the atmosphere has changed since then, even though it has not yet changed as much as is needed for the survival of the democracies of the Western type. (Frisch, (or.1962) ‘Preface to the Oslo Channel Model: A Survey of Types of Economic Forecasting and Programming’. In: Frank Long, editor, Economic Planning Studies, Reidel, 1976, Chap. III, p. 98)
- 5.
In these few words we can perceive Frisch’s great, perhaps excessive, optimism about the relaunch of a possible planning method in the 1960s. Frisch here referred to the fact that at the beginning of the 1960s significant interest in the adoption of planning processes, within their current economic policies, had been enjoying a successful reawakening amongst several European governments. However, Frisch did not live to see the manner in which these initial efforts (the methods of which he criticised) were immediately misused, and consequently how they created a particularly hostile atmosphere contrary to any form of planning (the 30 year period commonly known as ‘Reaganomics’), which has only recently been questioned on both a national and global scale.
- 6.
My attempt—he says at that time – was built on what I called the sub model. Its mathematical structure was prepared in advance in the DE-UO and it was quantified by the use of Norwegian data. The data was far from being as good as I had wanted, but they could at least serve as the illustration of the type of the analysis which I then thought—and still think—is absolutely necessary for reaching real solution of problems for the economy at large, national and international. The mathematical model had fourteen degrees of freedom. It was later published in Metroeconomica.
- 7.
Frisch continues here to refer to details about data elaborations and mechanical computations that today are not so advanced as in his time. ‘Naturally I did not dare to reveal these mathematical background to the Commission at the time, but I had brought along extensive mimeographed tables to display what sorts of feasible policy alternatives where available, and also to show examples of optimal solutions. I tried, of course, to present the idea as simply and briefly as possible, but even so it was quite obvious that the members of the Commission got more and more into a state of panic in the face of such terrible waste of the Commission’s precious time. And they felt great relieve when I had finished my expose.’ [Frisch, (or.1962) ‘Preface to the Oslo Channel Model’ A Survey of Types of Economic Forecasting and Programming. Already published in: Frank Long, editor, Economic Planning Studies, Reidel, 1976, Chap. III, pp. 98–99)].
- 8.
A core that has been totally ignored, as we have seen in the official motivations for his selection for the Nobel Prize: a quid pro quo so surprising that it deserves to be rectified with a new prize to honour the substantial innovation that his work produced, and still is able to produce, through the concept of the programming approach for a new era of economics, intended as unitary (in the Myrdal sense: with the other social sciences, and with simple reference to the non-economic factors obviously to be included in the elaboration of the political preference function).
- 9.
Frisch, (or.1962) ‘Preface to the Oslo Channel Model’ A Survey of Types of Economic Forecasting and Programming. In: Frank Long, editor, Economic Planning Studies, Reidel, 1976, Chap.III, pp. 94–95.
- 10.
To carry such techniques of analysis and debate over into the field of optimum choice of economic policy making at the national level is the crucial problem of the Western democracies today. [Frisch, (or.1962) ‘Preface to the Oslo Channel Model’ A Survey of Types of Economic Forecasting and Programming. In: Frank Long, editor, Economic Planning Studies, Reidel, 1976, Chap. III, p. 95]
- 11.
The distinction between free and reduced form in the modelling of economic systems is a recurrent term in econometric studies. It is also a leitmotif in Frisch’s conception and construction of econometric modelling, and we will talk about it more extensively in Chap. 7, where we deal with the implications of the programming approach on modelling in general. [Frisch (orig.1970), Co-operation between Politicians and Econometricians on the Formalization of Political Preferences. In: Frank Long, editor, Economic Planning Studies, Reidel, 1976, Chap. II, p. 42)].
- 12.
More discussion on the separation of selection and implementation analysis has been developed by Leif Johansen in his already quoted Lectures, vol. I (1977/1978), Section 3.9 (pp. 227–233).
- 13.
Among the numerous works by Jan Tinbergen, which are at the basis of the programming approach and quantitative economic policy, there are: On the theory of economic policy, (1952); Economic Policy: Principles and Design. (1956); Mathematical Models of Economic Growth. (with Bos) (1962) and Central Planning (1964). See bibl. Refer.
- 14.
J. Tinbergen and H. C. Bos Mathematical models of economic growth, cited by Leif Johansen, Lectures on macroeconomic planning, I, p. 234.
- 15.
Frisch, on many occasions, put forward ‘a question in the Santa Claus spirit’, for instance the following to a politician: ‘Which one of some specified few alternatives would you choose if you had the choice?’. See also Frisch’s next quotation.
- 16.
In this way, Frisch named the procedure of collecting, identifying and isolating the more simple and pure, and possible, political evaluations before submitting them to the econometric analysis of the preference function.
- 17.
He always identified the analyst in the economist and, more precisely, in the econometrician. Personally, I prefer to increase the neutrality—from the disciplinary point of view—of the role of the expert, in consideration of the necessity of neo-disciplinarity in the field of planning (for this, see Archibugi 1992), which derives from the role that the ‘programming approach’ will play in economic analysis. In my vision, however, there is the same abstract division between the role of the politician and the expert (the ‘planologist’) in the planning process (even if sometimes the boundaries and also the roles are not so well defined) and it is opportune to call them ‘decision- maker’ and ‘analyst’. Both are ‘planners’, but with different roles: one is a political subject who plans and chooses in the name of a community (a ‘planning decision-maker’); the other is a professional subject, who never chooses, but displays accounting frames and scenarios on which the ‘planner decision-maker’ chooses and decides (‘planning expert’ or ‘planologist–analyst’).
- 18.
In a paper (to which we will return in Chap. 8) reprinted in Essays in Economics, Vol.2, Theories, Facts and Policies, Blackwell, Oxford, 1977.
- 19.
Here Leontief had a consideration which, without deserving to be omitted from our purely methodological quotation, deserves, however, to be recalled because of its ironic conceptual meaning:
Karl Marx would have rejected this as a utopian approach and so do the libertarian opponents of national economic planning. Both view the concrete shape of the unknown future as unfolding itself while time marches on. The only difference between these believers in the ‘invisible hand’ is that the latter are ready to accept and approve whatever might come, provided it has not be planned, while the former is convinced that, while unpredictable in all its details, the path inevitably leads to violent collapse of the present social and economic order (Leontief, ibidem, pp. 153–154)
- 20.
For instance, to be ‘static’ or ‘dynamic’ (according to the connection of variables that are of the same point of time or of different points of time); or to be deterministic or stochastic; all alternatives which do not concern the present subject.
- 21.
The ‘free form’ is defined by Frisch also as the ‘gross form’, or––the ‘Santa Claus’ form (for which see previous quotations). It is not important, according to Frisch, to understand the core in order to answer questions in Santa Claus form. The reduced form of the preference function is understandable for Frisch:
only in terms of the core: in terms of a set of variables equal in number to the number of degrees of freedom of the core. Mathematically speaking several reduced forms might (and in general will) exist. The choice of one particular reduced form is a practical question. (Frisch 1970a, reprinted 1976, p. 21)
- 22.
It is question always of the background paper (66 pp) prepared for a Seminar of the ‘Federation of the Swedish Industry’, published by Esselte Tryck, Stockholm. It has been republished in F. Long ed., (to whose pages are referred our quotations) and O. Bjerkholt ed. as well. It had been distributed also as Memorandum DE-UO (n.90).
- 23.
There are no good reasons to illustrate, here, the technical procedures that Frisch proposes (by way of example, in a provisional and illustrative way) on the formalization of the political preferences. For those further interested, such procedures are detailed for about 40 pages in the work in question (pp. 47–86, republished in F. Long, cit. 1976).
- 24.
Both essays expose in readable form what he had developed over the course of time, on the subject of the decisional model and preference function (with many overlapping phrases in both writings). The first represents a sort of the cast-form, from which the essential parts of the second could be moulded, the first being a ‘pot-pourri’ of terms Frisch intended to set forth, most likely in consideration of his greatest contribution to economic science (for which he was awarded the Nobel Prize). Doing so, it seems, therefore, that Frisch was sending a message to the public:
-
(a)
the role of the programming approach and of the formalization of the political preference function represented, for Frisch, the most significant of his results as a scholar;
-
(b)
the second essay, referred to above, introduces a profuse technical explanation of the formalization of the preference function, in which Frisch correlates the connections to the political–economic assessments, demonstrating the remarkable stature of the author as a great social and political scholar.
All this will be illustrated and commented in the next Chap. 7 of this Trilogy, the last dedicated, with Frisch, to the technical apparatus of the decisional and pragmatic modelling. Both essays expose in readable form what he had developed over the course of time, on the subject of the decisional model and preference function (with many overlapping phrases in both writings). The first represents a sort of the cast-form, from which the essential parts of the second could be moulded (the first being a ‘pot-pourri’ of terms Frisch intended to set forth, most likely in consideration of his greatest contribution to economic science, (for which he was awarded the Nobel Prize). Doing so, it seems, therefore, that Frisch was sending a message to the public:
-
(c)
the role of the programming approach and of the formalization of the political preference function represented, for Frisch, the most significant of his results as a scholar;
the second essay, referred to above, introduces a profuse technical explanation of the formalization of the preference function, in which Frisch correlates the connections to the political–economic assessments, demonstrating the remarkable stature of the author as a great social and political scholar of economic planning.
-
(a)
Bibliographical References to Chapter 6 (Vol. I)
Archibugi, F. (1992). ‘The resetting of planning studies’, in: A. Kuklinski, ed., Society, Science, Government, Warsaw: KBN.
Frisch, R. (1962). ‘Preface to the Oslo Channel Model: A Survey of Types of Economic Forecasting and Programming’. In: R. C. Geary, ed., Europe’s Future in Figures. Amsterdam, North-Holland. [republished. in: F. Long ed., Economic Planning Studies, Reidel, Dordrecht (see), 1976, (pp. 87–127)].
Frisch, R. (1970a). ‘Econometrics in the World of Today’, in: Eltis, Scott and Wolfe, eds, Induction: Growth and Trade. In honour of Sir Roy Harrod Oxford, Clarendon Press (1970).
Frisch, R. (1970b). ‘Cooperation between Politicians and Econometricians of the Formalization of Political Preferences. A Background Paper (Preliminary version) (mimeo). Oct 1970. (Republished in: Frisch. R., Economic Planning Studies, F. Long, ed., (1976). (pp. 41–86).
Johansen, L. (1977/1978). Lectures on macroeconomic planning: Vol. 1. General Aspects; Vol. 2 Centralization, Decentralization, Planning under uncertainty. Amsterdam: North-Holland.
Long, Frank. (1976), ed., Ragnar Frisch Economic Planning Studies Reidel Publishing Company, Dordrecht.
Tinbergen, J. (1952). On the Theory of Economic Policy. Amsterdam: North-Holland.
Tinbergen, J. (1956). Economic Policy: Principles and Design. Amsterdam: North-Holland. [trad. it., Milano: Angeli, 1969].
Tinbergen, Jan, Mathematical Models of Economic Growth (with Bos, H.C), 1962.
Tinbergen, Jan. (1964). Central Planning. New Haven, Yale University Press.
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Archibugi, F. (2019). The Political Preference Function. In: The Programming Approach and the Demise of Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-78057-3_6
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