¹ Cf. Hansen, Alvin, “Some Notes on Terborgh's ‘The Bogey of Economic Maturity’” (Review of Economic Statistics, 02, 1946)Google Scholar; Timlin, M., review of Terborgh, George, The Bogey of Economic Maturity (Canadian Journal of Economics and Political Science, vol. XIII, no. 2, 05, 1947)Google Scholar; Higgins, B., “The Doctrine of Economic Maturity” (American Economic Review, 03, 1946).Google Scholar See also B. Higgins, “Concepts and Criteria of Secular Stagnation” (in Income and Employment: Essays in Honour of Alvin Hansen, soon to be published by Norton); and Klein, L., review of Swanson, E. W. and Schmidt, E. P., Economic Stagnation or Progress (in Journal of Political Economy, 04, 1947, p. 168).CrossRefGoogle Scholar

² Especially in view of the publication of Klein's, Lawrence The Keynesian Revolution (New York, 1947)Google Scholar and Harris's, Seymour latest symposium, The New Economics (New York, 1947)Google Scholar, in addition to MissTimlin's, Keynesian Economics (Toronto, 1942 Google Scholar).

³ Cf. Samuelson, Paul, “Lord Keynes and the General Theory” (Econometrica, vol. XIV, no. 3, 07, 1946, pp. 1–3 Google Scholar).

⁴ Cf. Dillard, Dudley, “The Pragmatic Basis of Keynes' Political Economy” (Journal of Economic History, vol. VI, no. 2, 11, 1946, pp. 123–4 and 145-52)Google Scholar; and Klein, Lawrence, The Keynesian Revolution (New York, 1947)Google Scholar, especially chapter VII, “Keynes and Social Reform.” One passage from this chapter is particularly worthy of quotation here. “Keynes, it has been stressed, is not a radical. He wanted to reform capitalism in order to make it work better and to preserve it. How is it possible that any capitalist could object to a policy of the preservation of capitalism? The answer is that many capitalists are unaware of the precarious state of the system during a period of serious depression, and do not see the proper relationship between their own position and that of the system as a whole” (p. 184).

⁵ It is interesting to note that Pigou, who put up the strongest defence of neo-classical theory against Keynes's onslaught, has ended up a socialist. Cf. his Socialism vs. Capitalism (London, 1937).Google Scholar

⁶ The authors even attempt to leave the reader with the impression that Keynes and Hansen follow the Marxian tradition (pp. 7, 9-10, 174, 196). Of course, in so far as the theory of economic maturity is part of a theory of capitalistic development, there is one grain of truth in this contention; since the Marxian theory of capitalistic development includes some fundamentally sound analysis, it finds its way into any complete theory of economic development. Even Schumpeter builds on a Marxian foundation in this sense, and Schumpeter has recently declared himself opposed to collectivism, and in favour of the corporative state, in unmistakable terms (“L'Avenir de l'entreprise privée devant les tendances socialistes modernes” (in Comment Sauvegarder l'Entreprise Privée, Montreal, 1946), pp. 103–8.Google Scholar To suggest that interest in the theory of capitalist development makes a man a Marxian in the political sense is sheer nonsense: On this point see Dillard, , “The Pragmatic Basis of Keynes' Political Economy,” pp. 148–9Google Scholar; and Klein, L., “Theories of Effective Demand and Employment” (Journal of Political Economy, vol. LV, no. 2, 04, 1947, especially pp. 118–31Google Scholar).

⁷ Cf. Higgins, B., “Business and Economics” (Quarterly Review of Commerce, vol. XII, 1945–1946, pp. 1–8).Google Scholar

⁸ “Concepts and Criteria of Secular Stagnation,” loc. cit.

⁹ On this point, see B. Higgins, “The Doctrine of Economic Maturity,” loc. cit. pp. 135-6.

¹⁰ See, for example, Kalecki, M., Economic Dynamics (London, 1943).Google Scholar

¹¹ “John Maynard Keynes, 1883-1946” (American Economic Review, vol. XXXVI, no. 4 09, 1946, p. 516).Google Scholar

¹² Lest I be accused of being tarred with my own brush, let me hasten to add that I am not suggesting that the authors write as they do because they are “fascists.” The fascist label is as inappropriate in economic analysis as any other, and its indiscriminate use to describe anyone to the right of one's own political position has destroyed what significance it had. If the term had been reserved for advocacy of the corporative state (which is not quite what Swanson and Schmidt seem to want) it might have been useful. The question of whether arguments like those of the authors might lead to a species of fascism by plunging the American economy (and the world?) into another great depression unprepared is a separate question, and one that requires much more than economic analysis to answer.

¹³ “Expansion and Employment” (American Economic Review, 03, 1946, p. 41).Google Scholar

¹⁴ Domar suggests that acceleration of the rate of technological progress is preferable to a declining propensity to save for the maintenance of full employment. The extent to which technological advance can be speeded up by economic policy is doubtful at best; but in any case, a more rapid rate of technological progress will tend to raise both r and σ It is not possible on purely analytical grounds to say which would be raised more. Without evidence to the contrary, the conclusion must be that in advanced countries, policy should be directed towards continuous reduction in the propensity to save.

¹⁵ There are two types of situation in which an inflationary gap at full employment might occur. One is the “war economy” case; with the economy already in full-employment equilibrium, the government (or private enterprise) decides to undertake additional deficit-financed investment, The other is the “capital-scarcity economy” case; it is possible that in some economies spontaneous private plus minimal public investment will tend to exceed savings at high levels of income and employment, so that equilibrium could be established only with a price level higher than exists when full employment is first reached in the upswing. It is even conceivable that the investment function might cut the savings function from below in some economies, yielding an “explosive” situation; but there is no empirical or analytical evidence of such situations developing without a deliberate government policy of hyperinflation. Any of these situations would, however, call for an increase in the propensity to save, or restrictions on investment.

¹⁶ Not that such a policy would be easy to carry through. For one thing, the rise in propensity to consume would in itself tend to stimulate investment further; the administrative task would be even more complicated than in a war economy when both consumption and private investment are restricted. In addition, engineering problems may arise; the range of efficient “periods of investment” may not be sp great that a permanent rise in consumption and a permanent restriction of investment can be achieved together.