THE COMMON MARKET
SIR,—May I—with the cautious disclaimer that I am not an economist—comment on Mr; Leybourne's article (March 6)?
It would be most unwise for anyone to suppose that the Geman Government has abandoned its firm belief in what is here called a 'social market economy'; that is, a liberal economy modified only by the claims on the whole community of its weak members and of those cultural needs that can never be cared for by commercial means. The economy of the Federal Republic is, of course, very far from being a free one in this sense, but to free it remains the determination of its government and of most of the industrial, financial and commercial enterprises by which it is managed. As Mr. Leybourne implies, it would be most unlikely that Chancellor Erhard would have installed as his successor at the Economics Ministry a man who did not share his views on this fundamental concept of how society should be arranged.
I can find nothing in Schmticker's speech at the Council of Ministers at Brussels on February 4 that could indicate a change towards a belief in planning. The passage (the only one that could be meant, I take it) about the need for co-odination of financial and commercial expansion policies between the members of the Common Market is a paragraph of the Rome Treaty (No. 103). It says that the finance policy of the members is a common interest about which the Commission and the various members (governments) should take measures as the situation needs them by a unanimous vote. Nothing about planning, only about empirically operating together to keep markets and prices in step. What Schmucker (Erhard) wants is to begin to operate, this clause, which is extremely and deliberately vague. They both believe that it is too much planning, including cartel- Mordecai Brienberg, who was described as a lec- turer at Berkeley, California, in our March 6 issue, asks us to state that he is correctly described as a graduate student.
agreements as well as government spending, etc., which causes the increasing inflation; though it is clear that an economy expanding as suddenly as the Italian one is bound to get overheated. That is, with care the inflation can be localised in time if not in space. The inflation in France which seems to have been chronic for generations is, though slower than the Italian one, more difficult to control, partly because of the huge expenditure of government in France and partly because of the psychological atti- tude of the French to the franc as an elastic measure of value and not a stable unit. This is not to suggest that the German Government is not causing some in- flation by public expenditure but it does seem to have less effect in Federal Germany, at any rate at present, than in France and Italy.
The difficulty lies in the word 'unanimous.'
Scharnhorststrasse 7/5. Bad G odesberg 1 Rh.,
Germany
SARAH GAINHAM
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