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ebullientl y than in the past. H owever, unempl oyment in the United
States still hovers around the 7 percent mark and shows no tendency to
decrease; and Europe still di sp lays low grow th and unempl oyment
high by its standa rds.
In
short, there may be no cri sis in the old medical
sense of the word, but surely there is room for improvement and for
better understanding and poli cy.
T he economist's social role is supposed to be to exp la in wha t is
happening in the economy, p redi ct wha t wi ll happen, and g ive advice
for poli cies whi ch will change wha t is happening, presumabl y for the
better. T h e probl ems of economics can be classifi ed under three
headings: economi c stability, effi cient resource all oca tion, and di stri–
bution, thou gh of course these three have man y po ints of interacti on
and overl ap. By economi c stabilit y, I mean the p ro blems associa ted
with unempl oyment and infl a ti on, with maintaining the utilizatio n of
labor and other resources at a hi gh level, and keep ing prices fairl y
steady. Effi cien t resource all ocati on is designed to insure that the
resources tha t are used are used most productively, takin g account of
all social and priva te uses; in parti cul ar, this incl udes an appropria te
growth poli cy, balancing p resent again st future needs. T h e probl ems
of distribution are those of increasing the income of some groups and
decreas ing tha t o f others on the bas is of poverty, age, occupa ti on or
other cri teri a .
In
the pos twa r peri od, economi sts took an increasingly more
prominent role in policy forma ti on ; the Council of Economi c Advisers
was an institutio nal recogniti on in the United Sta tes. Economi sts h ave
not fail ed
to
take some credit for the successful performance of the
economy in the peri od 1963-1 966, and so it is to be expected that the
failures of the economy will be bl amed on them today. More than that,
there has been a percepti on among economi sts th a t their knowledge
and abili ty
to
predict and to control is vastl y grea ter than it was before
Worl d War II. T here are several reasons for thi s confi dence. One is the
transformati on in the analysis of economi c stability associated with the
name of Keynes; in its simpl es t form, it seemed to give a rema rkable
understanding o f deficient demand as a cause for unemp loyment and
therefore yield bo th a predi cti ve dev ice and a means of developing
suitable poli cy. A second reason for confidence is a great development
in both the range and th e systemati za ti on of economic da ta, the bes t
example being the n ati onal in come (gross na ti onal product ) da ta.
(Incidentall y, the introducti on of na ti o nal income accounting as a
systematic procedure is not due to Keynes, as both Harrington and
Lekachman imp ly.) A third was a major development
of
sta ti sti cal
