An Introduction to Economic Analysis and Policy. By
Economics and Policy
J: E. Meade. (Oxford University Press. 108.)
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Mn. MEADE'S book is as near to .being the ideal sun:quark, of contemporary economics as could perhaps be 'achieved in practice. Anybody who despairs entirely Of the possi- bility of any assured body of economic doctrine, or at least any which can be brought into relation with policy, should read Mr. Meade's book. For he has succeeded in Purging the traditional economic teaching of the one or two principal assumptions which have most distorted it, and in grafting on to it at the same time the main developments *of the' last five years.. One could scarcely have thoug,ht this could be done so concisely, simply and intelligibly, if Mr. Meade had not done ft. He is singularly happy in being blessed with an exceptional flair both for economic reasoning itself and for genuinely lucid exposition.
Mr. Meade starts his argument with the assumption that usually in the capitalist world a great deal, of the existing labour and capital are involuntarily unemployed. This will seem a strange starting point to those brought up on traditional text-books, but a very natural one . to those whose knowledge of economies is confined to éinpiriéal observation. It gives Mr. Meade's book a realistic, feeling which will appeal greatly to the non-expert, reader. It also introduces at once all the questions raised by Social Creak, and other such doctrines, Is there a deficiency of purchasing power? Must there be a defitieney of purchasing power I Can the economic system work at all wit) the existing institutions?
Mr. Meade does not think that the monetary sfaern must inevitably prodnce permanent, depression, nor that capitalisiñ. cannot work, .nor that it is irrevocably destined to collapse for economic, reasom. He does ,think, however, that there is no reason why existing monetary and economic institutions should always ensure a sufficient total expenditure by the community to promote full employment, and he infers that' in these circumstances depressions will recur if nothing is done to stop them. The way to stop them, he thinks, is to attempt to regulate the total flow of expenditure and invest- ment by all the_ means, orthodox and unorthodox, which,. suggest themselves : such as banking policy, . public works, and the financing of social service expenditure by borrowing and even by new money. Some of the unorthodox policies here mentioned are an unexplored field_ of discussion. Yet they are of the first importance for practical policy, and Mr. Meade has much that is valuable to say about them.
. Mr. Meade also abandons the second major false assumption of traditional economics—the assumption that "perfect competition" is the normal state of private capitalism. He shows how the main structure of economic theory can be left standing if it is realised that "imperfect competition" is the predominant condition of present-day industry and trade— outside .a .very few markets,—and how the laws of imPerfect competition can be as accurately established as those of perfect competition in the old text-books. In thus interpreting the recent conclusions of Mrs. Robinson and other, economists on imperfect competition, Mr. .Meade enables the general reader to see what enormous steps forward this branch of
economics has made in the last,few years. , -
There is much else of great value .in,.Mr. Meade's .book, particularly his description of the distribution of incomes and the potentialities of redistributive taxation; It may be hoped that his excellent discussion of redistributive taxa- tion will bring SoCialists back to the real heart of their pro- blem, and divert them from the half-baked Marxist outpOurinia of recent years. By concentrating on this subjeet on the one hand, and on the problem of purchasing power and full
employment, on the other, Mr. Meade shows himself a thousand times more realistic than either the Marxists or the old theoretical economists. This is a,book written on real problems, and written with intelligence and clarity. . Any- one with, a disinterested desire for economic knowledge and economic reform ought to read it with gratitude.
DOUGLAS JAY,
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