From International Socialism (1st series), No.11, Winter 1962, p.3§.
Thanks to Ted Crawford & the late Will Fancy.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Studies in an Inflationary Economy
This volume comprises a series of essays published in economic journals through the nineteen-fifties, with the addition of two new chapters. These discuss various theoretical and practical problems of industrial economies with, in some pieces, particular reference to the economic hist, ory of Britain since the War. The theoretical pieces are in general, like much of general economic theory, rather dull and unrewarding, but the main bulk of the book contains masses of extremely interesting material – on the volume of British savings, on monetary policy, British capital exports, the finance market, taxation and profits etc. Necessarily, as these essays have been published earlier, this involves much repetition – more careful editorial pruning would no doubt have concentrated the impact of the book more.
As to the central thesis of the book, the nature and causes of British inflation in the 1950s, this is argued tersely and persuasively. In effect, it amount to a sort of short-term variant of the over-production explanation of depressions – the rate of increase of output tends, with the economy at full blast, to meet the ceiling of capacity at periodic intervals; and demand, kept at an increasing rate by the boom, then bids up the money value of real output. The solution, in Professor Paish’s eyes, is to run the economy at under capacity, the unused margin absorbing fluctuations – 5-7 per cent unused capacity (with 2-2½ per cent unemployment) is his estimate. As one would expect, the emphasis in the thesis is more on stability than growth. In addition, Mr Paish repudiates the argument that trade union pressure is the prime cause of the wage push that begins inflation – which should please some of the sillier trade union leaders.
What Professor Paish does not estimate, of course, is the political impact of 2-2½ percent unemployment (although, in 1951, Mr Gaitskell accepted such a figure as reasonable) – which scores, to a certain extent, the inadequacy of merely an economist’s view of the subject. However, this should not detract from the very stimulating argument in general and the wealth of information Mr Paish utilises to back his case up.
Last updated: 19 March 2010