Unequal Partners, Thomas Balogh. Two Volumes. Blackwells. 35/each. 253 pp, 296 pp.
Planning for Progress, Thomas Balogh. Fabian Pamphlet, 4/6, 48 pp.
Thomas Balogh’s Unequal Partners is a two-volume work reprinting essays, reviews, and articles spanning a period of over 30 years from the 1930s to the present day. Introductory passages in each volume—one devoted to “the theoretical framework”, the other entitled “historical episodes”—along with the short postscripts appended to each subsection of articles, serve to outline the development of Balogh’s thought from an uneasy neoclassical orthodoxy to his present socialist, if highly individual, position.
The politico-economic view which emerges from these volumes forms a background against which Balogh’s Fabian pamphlet Planning for Progress can be seen as a positive effort to indicate the prerequisites for a Labour Government which would have a genuine chance of implementing a step towards socialism.
The dominant theme of Unequal Partners is what might be called the Biblical Law of Capitalism—“to him that hath shall be given”: inequalities in economic strength and growth under a regime of unmodified capitalism, far from being inevitably evanescent, tend on the contrary to be cumulative and self-sustaining. A secondary theme, evidently to be explored in greater detail in a forthcomimg book, is the superiority of planned economies over those which are characterized by “decentralized decision-making”—a superiority derived essentially from that interdependence of economic decisions which passes unrecognized in institutional arrangements, and is inadequately provided for in the pricing systems of economies where decentralized decision-making is dominant.
The thesis that unplanned capitalism makes for progressively cumulative inequalities is explored on the level of trade between nations rather than in regard to the economic relations between regions, where similar problems may occur but where they are blunted by the intervention of supra-regional government planning for which no effective counterpart exists on the international level. The main source of unequal development is seen to lie in the asymmetrical impact of technical progress. This reduces the dependence of the industrialized countries on their raw material suppliers, and (through a virtually continuous process of displacement of their exports) drives weaker countries into a spiral of deflation aggravated by inadequate
This view of the processes of international trade is at variance with conventional economic theory and a good deal of the first volume of Unequal Partners is devoted to arguing the case against traditional theory. Whilst selecting what is clearly one of the most important and vital areas covered by the discipline of economics, Balogh is on firm ground in choosing to attack economic theory at its most vulnerable point— international trade theory, broadly conceived. The approach is simple enough: to show that the simplifying assumptions made in international trade theory are usually the wrong ones, and need only to be stated to be seen to be absurd. The factors bundled into the “ceteris paribus” clause of axiomatic theorizing turn out to be those which most merit attention, theoretical exceptions to be more often the rule. The typical assumptions of “given tastes”, “given resources” and international trading markets in which national economic strength does not count and where full employment is guaranteed, are some among the number of those assumptions that run more than a slight risk of absurdity, as these lend themselves at best only to an analysis of trivial and untypical changes. Nor does simpliste Keynesian theorizing come in for kinder treatment: simplifying assumptions about the stability of Keynesian “propensities” places the rigour of such theorizing under the same imminent threat of “rigor mortis” to which the neoclassical approach is already deemed to have succumbed. Econometric efforts to “prove” untenable hypotheses can hardly help. The economist may view the wider extensions of this energetic de-bunking approach to the sought-after rigour and empirical verification of his theories with some dismay; but it can hardly be gainsaid that in matters of international trade and international economic policy, economics can ill afford to pretend to the status of a completely scientific discipline whether on the level of pure theory or in the econometric testing of hypotheses.