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most of my colleagues would have th e same a ltitude. T he main
questions are still unanswered. How signifi cant a re the limita ti ons of
economics for the purpose at hand? What a re the countervailing
arguments whi ch have motiva ted economi sts to continue in their
erring paths? Above all, what is the presumably beller alterna ti ve path
we should have followed?
Lekachman periodi call y decries the presence of unempl oyment,
arguing, as most economists have done for the last twenty-five years,
that it is a scandal in the presence of so many unmet needs. But , as
Lekachman says, " man y libera l economi sts have been reluctant
to
press [full employment] becau se of fancied infl at io n Irade-offs ." But
are the trade-offs "fancied"? Elsewhere, the author no tes that a t full
employment, " the wage structure shifts upward [and] prices will surely
rise at accelerating rates unl ess control s a re imposed o n prices and
profits. "
For all his appearance of di ss idence, Lekachman thus accepts the
common (though , to my mind, unproven ) wisdom of th e day that, in
the absence of controls, full employment is incompa tible with price
stability. He does not seriously discuss th e wides pread view that price
controls over an extended period produce con siderab le in effi ciencies in
the economy without in fa ct reta rding infl a ti on . This proposition is
certainly not indisputable, but there are reasons in both theory and
European practice to take it seriously.
In
what is probably the central chap ter, tha t on " the socialization
of economists," h e indeed argues that an excess ive reliance on markets
is one of the professional handi caps of the economists. On the same
basis, he attacks the use of national income as a criterion for economi c
policy and benefit-cos t analysis as a too l. The lay reader may not be
aware that every criti cism of the na ti onal income concept, such as the
famous example tha t national income will fall if a man marries hi s
housekeeper, has been recognized by those developing the nat io nal
income concept. They nevertheless fee l that th e measure is a very useful
one, and the criti cisms merely serve as qualifications. (Lekachman
adds, fashionably , tha t the na ti onal in come concep t is a "ma le inven–
tion." )
In
his zeal, the author even commits a fallacy or two:
" If
the
country goes prohibitioni st, GNP will decline both because the distill–
eries go broke and because the medi ca l costs of alcoholi sm shrink
toward invisibility." Unless the cap ita l and labor in the di stillin g and
medical industries becomes idl e, for which there is no reaSOIl , this is
simply fal se; politicall y,
I
would have thought the author would be a
little more cautious in linking his viewpoint with one of the mo re
bitterly-resented interferences with freedom in United States hi story.
