Suchergebnisse

I have given this review article its provocative title, not because the book with which it is associated is bad or should be buried. On the contrary, the book, as one would expect from the authors, is an extremely intelligent and well‐argued application of available techniques to the problem of designing demand management policies for the British economy. I have so entitled my piece because the book brought home to me, through its clarity and honest fullness of detail, just how impractical, undesirable and unlikely to appeal even to the British politicians of the centre‐left to whom they are offered, these policies are. Demand management has been a blind alley, and so, indeed, has the incomes policy which is part of the formula recommended in this book; the solutions to our problems lie along other lines and modes of thought.

Classical economics was thought to have been displaced by Keynesianism. Professor Patrick Minford, of the University of Liverpool, outlines a new classical economics that shares the economics of Adam Smith's 'invisible hand' but refines it in modern terms with the insights of rational expectations and demonstrates its importance for policy in the 1980s.

People in industry and government who should know better are hounded by the fear that intensified mechanisation by computer, micro‐chip and other advanced technologies will 'destroy' jobs. 'Where will the new jobs come from?', they ask mechanically. Professor Patrick Minford retorts that their fears are largely groundless because their reasoning is superficial. The long‐term outlook for employment could be bright if government helped rather than hindered fluidity in the labour market.

Government Ministers have called for research into the scope for reduction of state spending, both in the short and long term. Professor Patrick Minford of the University of Liverpool, in the first‐ever analysis to examine both macro‐ and micro‐economic implications of reform, offers detailed, politically neutral proposals for reducing state spending, and outlines the resulting benefits in employment, output and welfare.

The NIESR has been for 25 years at the centre of the British macroeconomic policy debate. This seems to be a good occasion to look back critically over that debate and the NIESR's role in it. That role it has always taken very seriously, even though it has often involved painstaking exposition to non-economists of well known economic issues. In this it has continued a tradition actively followed by Keynes, of policy commitment and persuasion as well as the pursuit of research and its dispassionate dissemination. This tradition is frowned on across the Atlantic; there 'scholars' are not encouraged to dirty their hands with policy, at least until retirement. So be it; here our society expects greater involvement by its scholars, and he that pays the piper must call the tune.

THE NEW CAMBRIDGE OR CAMBRIDGE ECONOMIC POLICY GROUP, (CEPG) School led by Professor Wynne Godley has received considerable attention in this country. Its policy prescriptions however are international as well as national. It is well known that it calls at regular intervals for comprehensive long-term import controls and reflation in the UK. It is less well known, and indeed a more recent occurrence, that it calls for 'co-ordinated' international trade - i.e. import controls for each country administered centrally by some body such as the OECD - and reflation. As protectionist pressures continue to grow throughout Europe and in the USA, the appeal of New Cambridge analysis may grow with it. We should therefore be aware of the nature of the arguments which it deploys in the attempt to make protection respectable.

THE AUTHOR EXAMINES THE NATURE OF THE ARGUMENTS DEPLOYED BY THE NEW CAMBRIDGE OR CAMBRIDGE ECONOMIC POLICY GROUP (CEPT) SCHOOL LED BY PROF. WYNNE GODLEY IN ITS ATTEMPT TO MAKE LONG-TERM IMPORT CONTROLS AND REFLATION IN THE UK RESPECTABLE. THEY SEEK HIGHER OUTPUT AND EMPLOYMENT. HE ARGUES EVEN IF THEIR KEYNESIAN MODEL WAS CORRECT, THEIR POLICIES COULD NOT RAISE OUTPUT, WOULD MISALLOCATE RESOURCES

In the Review of February 1981 the NIESR Model (hereafter NM) errors for 1972-80 for GDP and inflation were juxtaposed with the Liverpool Model (hereafter LM) errors reported in Minford (1980a) and other references. It was stated that this was a 'direct comparison'. It was also stated that my comparison of the LM errors with the actual forecast errors made by NIESR 'was not a proper one'. The object of this note is (a) to deny the first statement and (b) with respect to the second, clarify the sense in which my comparison (Minford 1980a) was indeed proper.