Economic order : an introduction to theory and policy

It is a matter of basic self-respect for a citizen in our times to have at least a general understanding of the way society functions. This fact reflects the philosophical climate of our age: just as every thinking man in the seventeenth century was something of a theologian and in the eight eenth century something of a political philosopher, today he is something of a social scientist. In working toward his understanding of society, the student will find economics an area where systematic study will bring large rewards in an increased grasp of certain basic social realities. Though public policy is a basic preoccupation of the authors, long experience as economics teachers has convinced us that it is not practical to plunge at once into the ways and means of policy. The student will get further with the policy issues during his year or semester of study if he first lays a systematic groundwork. Accordingly, we have devoted Part I to a basic explanation of underlying economic problems and institutions. Before Part IV, which deals with public policy toward various sectors of the economy, we introduce techniques of sector analysis in Parts II and III. In Part V, before we come to policy with respect to economic stabilization, we set forth techniques of aggregative analysis. In Part VI the analytical framework precedes discussion of international economic policies. And in Part VII theoretical models of communism and socialism precede the institu tional treatment of these competing economic systems, while the discussion of the current economic status of China and India is set in a framework which analyzes the basic requirements of development in the underdeveloped areas of the world. (Note: possible variations in the sequence of classroom presentation are discussed in the Note on Organization which follows this Preface.)

Since pure theory can be most meaningful only if it is set in a factual context, we have tried wherever possible to make use of objective statistical data in developing our theoretical models., Examination of the treatment of demand curves in Chapter 6 or of the quantity theory of money in Chapter 23 (to cite only two examples) will enable instructors to evaluate the useful ness of this approach.

While author cannot claim to have filtered all of our own policy preferences out of our presentation, we have striven to be open about these preferences and to bring them to the surface in such a way that the reader who may disagree is enabled to formulate the grounds of his disagreement. Among the preferences we bring to the surface, we include some which most readers are likely to share, but perhaps should not. Looking back, we can see that our ancestors were complacent about many things which in the light of their basic standards they should have rejected; and it will be remarkable if our descendants do not find the same fault in us. Some correctives to such complacency may be found in the points of view of the other economic systems sketched in Part VII.