CHANCE OF A LIFETIME SIR,—No, sir, I was cold sober
and I still am : despite the tone of my original opening remarks, I do not regard the reputation of the Spectator as a matter for frivolity. As to the statistical adventure which ap- peared by way of rejoinder to my letter, I would be more than content to leave your readers to judge the major issue for themselves on the figures exactly as You printed them (although 127.9 in 1956 appears to be an error for 127.6, and the estimate for 1957, which presumably is derived from the Economic Survey, needs to come down pro rata). But the wisecrack which followed the statistics forces me into a brief Comment on technicalities. Of the 45 per cent. of the
British economy which lies outside the industrial sector, about one quarter represents public authori- ties and other institutions whose economic activity is largely irrelevant to the present debate. The rest con- sists of the transport, distributive and service trades; these would not normally be expected to be capable of maintaining economic growth for long if the industrial sector, which provides them with most of their work, was stagnating. Hence the behaviour of the two series has been providing something of a puzzle.
The official statisticians measure the changes in total 'real' Domestic Product by two independent methods, the first representing an indirect estimate taken from the 'expenditure' side (i.e., from estimated movements of the volume of consumption, investment and foreign trade), the second consisting of a set of direct estimates of the changes in the output of individual trades and industries. In principle the two methods should yield the same result, but in practice small discrepancies have to be admitted in the official tables. These are usually unimportant in long-run comparisons, but may unfortunately be significant if arguing with somebody who is prepared to base a case on very small changes, as, it seems, are you. Your adviser has given you the series which happens to develop most favourably to his case (although even there the increase is small enough): by contrast the complete picture is as follows:
Ratios, 1955=100 Industrial Domestic Product Domestic product Production (Production side) (Expenditure side) 1956 99.3 100.4 101.4 1957 101.7 101.7* 103.0t
Sources, generally, National Income and Expenditure 1957 and Monthly Digest of Statistics. Gross Domestic Product is valued at 1948 'factor costs.'
* Estimate based on London and Cambridge Economic Bulletin, which follows the official methods. t Estimate based on Economic Survey 1958.
If that is not a picture of a stagnating economy, I don't know what is.—Yours faithfully, King's College, Cambridge
ROBIN MARRIS
[Perhaps we can help Mr. Marris. A stagnating economy is one which is not growing. The figures quoted by Mr. Marris merely confirm that we were right to regard 1957 as a better year than either 1956 or 1955. In real terms the British public spent an extra £225 million, and industry's gross fixed in- vestment rose by £150 million last year. The Econo- mic Survey describes 1957 as a year of 'moderate expansion.' We agree.—Editor, Spectator.]
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