Planning Ahead
By T. W. HUTCHISON
MR. MCMAHON' believes that Britain's economic performance, particularly as regards the balance of payments, 'will be a good deal healthier' in the later Sixties than 'at any time since the war.' He gives some cogent reasons for this optimism, though he seems rather bold in claiming that 'the UK is probably nearer to achieving a workable incomes policy . . . than any of her main competitors' (we seem to need One so much more than, say, Germany). He argues, justifiably, that Britain's 'technological backwardness (and general hopelessness) has been oversold.' But, whatever else they may favour, the probably prevailing political winds May not be very conducive to the rigorous Promotion of efficiency and growth in the short or middle run.
Mr. McMahon's essay is not so much con- cerned with forecasting the problems and solutions for financial policy in the rest of the decade, as with the general form of these problems, many of them perennial, and of their possible solutions. He holds that devaluation should be ruled out altogether, and he is strongly Opposed to flexible exchange rates (a favourite of the geometricians). He also warns against further dismantling of exchange controls in a quest for 'the cloudier glories of being Top Financial Centre.' Mr. McMahon argues as a genuine economist with a mature political judg- ment, not as an ideologue or a geometrician. A great deal of instructive discussion is packed into his 118 small pages, including useful analyses of the presentation and assessment of balance-of- payments figures, and of the present state of sterling convertibility.
Mr. Maddison, who for the last ten years has been surveying the economic scene from OECD in Paris, has also written a book' which will be valuable for, those trying to arrive at informed views on the prospects and policies for British economic growth. He sets out with clarity and expertise the records of growth for twelve leading Western countries (ten European plus Canada and the US) and the conclusions he draws are illuminating and convincing. But at one point he seems to come down too exclusively in favour of the quantity of investment as the significant growth-promoting factor without taking enough account of its productive quality, which is not, of course, indicated by his statistics of invest- ment ratios. However, he later corrects the balance and restores a role for managerial and labour efficiency by stressing 'the absorptive capacity of management and labour,' and the importance of 'fostering productive potential,' which may conflict with social investment and objectives (i.e. with regard to some regional policies).
His chapter on the role of government in promoting growth is especially interesting. German success has not been due to a 'miracle,' but to vigorous and clearly thought-out policies. His most serious criticism of British governments is for their 'lack of any clear policy for public enterprise.' Certainly one can hardly imagine vigorous public entrepre- neurs like Mattel, Nordhoff or Dreyfus having ever emerged on the English scene in the Fifties. Rightly (or leftly) the ideologues would never have given them a chance. Mr. Maddison emphasises that comprehensive economic growth policies, including an incomes policy, 'will almost certainly need some forum outside parliament' for articulate discussion of the issues, like the Economic and Social Councils in France and Holland.
M. Bauchees book' is rather uneven. The general overture on planning resounds with' platitudes, and his, theoretical chapter entitled 'Optimum and Alternatives' lacks lucidity and precision. But his account of the French experi- ence of economic planning since the siege conditions of 1944 is of great interest. Though firmly on the side of the planning experiment, and calling for its extension, M. Bauchet stresses the immense difficulties and defects, and he certainly fosters no illusions about growth with- out tears, or planning without political costs. Control of finance has been the Government's most powerful weapon, backed up by building controls. The forecasting, or generalised market research, and the carrying out of production plans, have gone fairly well. It's the lack of an incomes policy, and fundamental difficulties, or 'contradictions,' in the political implica- STERLING IN THE SIXTIES. By Christopher McMahon. (O.U.P. for the Royal Institute of Inter- national Affairs, 8s. 6d.) ECONOMIC GROWTH IN THE WEST. By Angus Maddison. (Allen and Unwin, 30s.)
ECONOMIC PLANNING : THE FRENCH EXPERIENCE.
By Pierre Bauchet. Translated by Daphne Wood- ward. (Heinemann, 35s.)•
THE ORIGINS OF SCIENTIFIC ECONOMICS: ENGLISH ECONOMIC THOUGHT 1660-1776. By William Lewin. (Methuen, 15s.) tions of planning, which worry M. Bauchet.
Paradoxically, the 'left' seems nervous of ex- tensions of planning because the logical next step is an incomes policy, while the 'right' tends to demand more planning (meaning a wages policy). On the incomes problem M. Bauchet describes the blessings of 4 per cent growth rates as follows: 'Shocking dishonesty in manipulat- ing the statistics . . . is reducing the entire popu- lation of France to a state of "psychological frustration” in which they feel themselves under- privileged, though the purchasing power of the majority has risen by over 25 per cent in the last five years.' Moreover, the 'logical' French, in their present somewhat torpid and bemused political condition, seem to be more or less accepting, or tolerating, a planning 'experience' which has been bringing them nearly twice the rate of growth of the British economy, though riddled with political tensions, 'contradictions' and illogicalities, which our empirical, realistic selves couldn't possibly be brought to swallow.
A study of the development of economic thought from 1660 to 1776 is a serious scholarly need. Mr. Letwin's book' is almost entirely concerned with the period 1660-1700 from which, certainly, the origins of scientific economics can be as plausibly dated as from any other time. Among the appendices is a manuscript on Interest by Locke, here printed for the first time. Mr. Letwin's conception of science and its criteria seems rather dubiously Cartesian and some of his criticisms of Petty as a crude `Baconian' rather misconceived. All the same, his book is a contribution to scholarship of lasting value with its distinguished studies of the leading seventeenth-century economists, Child, Barbon, Petty, Locke and North.
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