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The textbook theory of tariffs, and their converse, the movement to freer trade, has more elements than we need for the nineteenth century, but also lacks some. In the usual comparative statics, a tariff may be said to have ten effects: on price, trade, production (the protective effect), consumption, revenue, terms of trade, internal income distribution, monopoly, employment and the balance of payments.
In reading the two books under review, I was reminded of Senator Fulbright's book The Arrogance of Power—or at least of the title. Each of these two works, also dealing with the relationships of the United States to the less developed world, but each making a different point, can be summed up in a similar substantive phrase: Geiger's thesis would be “The Humility of Ignorance”; Kaplan's, “Commitment to Responsibility.”
The last several decades have each been broadly characterized by one or two central economic questions. In the 1920's the central problem was international capital transfers, or reparations and war debts; in the 1930's, the international spread of unemployment and destabilizing speculation; in the late 1940's, after the war, reconstruction; in the 1950's, defense economics and growth.
Not only can we identify them; it is on the whole fair to say that the central problems of the 1920's, 1930's, and 1940's have been solved. International capital transfer is accomplished by preventing war debts from accumulating, paying limited reparations in kind, and furnishing the capital needed for reconstruction, and in part for economic growth, as grants or on liberal loan terms.
Every profession is occasionally inflicted with challenges which loom large. The challenge may take the form of a book which purports to produce a fundamental revision—in economics these would include Keynes' General Theory, Hicks's Value and Capital, Samuelson's Foundations; or, in the narrower field of international economics, Meade's Trade and Welfare. Or it may be a methodological revolution. Or both. Older members of the profession may try to ignore the challenge. And some of these challenges, ignored, oblige by disappearing. Others have to be faced, sooner or later.