Cold War and the Economic Life:

...And, in the light of history since World War II and prospects visible in the future, it is clearly neither an economics of emergency, nor an economics contrasted with the economics of peace, nor an economics of transition...

...It is rather a collection of problem areas, unified in treatment by two underlying, intertwined assumptions, both of which represent recognition, however tardy, of fairly obvious fact...

...His attitude is revealed, for example, in his feeling that the rationality of public expenditures can be questioned in ways that private expenditures cannot...

...Although Schlesinger is scrupulously careful to point out the need for extensive government participation in economic life, the limitations of the financial orthodoxies that give a balanced budget priority over national security, and the inadequacy of a free enterprise approach to economic development abroad, his norm is still a private enterprise market system...

...Finally, Schlesinger endorses clarity of, and coordination among, objectives of American policy—and, as a corollary, endorses integrated frameworks for aspects of policy making such as budgeting and economic mobilization...

...Our best policies will never be inaugurated unless they can be smuggled in among poor ones...

...Anyone who wants to get his feet on the ground in the field will find what he needs here: chapters on the fundamental logic of economic or rational choice, gross national product and its allocation, economic capacity and national power, economic mobilization, the budgetary process, international trade, Soviet growth and underdeveloped areas...

...We should, for example, be prepared for a more rapid rate of Soviet growth than we think is most probable (and this being so we need not, for policy making, indefinitely trouble ourselves to determine exactly what Soviet growth rates are...

...and he supports this thesis by arguing that American productive capacity simply is not large enough, in view of American's attitudes about the share of national income they are willing to give up, to support a large enough foreign aid program to validate the claims optimistically made for it...

...In a later chapter, he argues, again reasonably, that aid to underdeveloped countries is inevitably a less important factor in their growth than its advocates optimistically assume...

...Schlesinger also tends to recommend policies that are tailored to what he believes to be the most probable developments his policies must take account of, whether they are, for example, developments in Soviet industry or in population growth in underdeveloped areas...

...The second is that an economic system is as important a mechanism for providing collective goods, such as national defense as a mechanism for satisfying individual consumer demands in the marketplace...

...This lingering habit of thought is striking because of his obvious intention—successfully realized when he is explicit—to guard against such a bias...

...The second argument bears on the first, but Schlesinger does not answer the obvious question: How large an industrial capacity do we want...

...Like a cowboy who remains bowlegged after giving up horse for jeep, he repeatedly reveals an only limited appreciation of the extent to which government economic participation is normal and no more dubious than private consumption and enterprise...

...Reviewed by Charles E. Lindblom Department of Economics, Yale University COURSES IN THE economics of national security are beginning to make their appearance in American universities as economics faculties become aware that between the economics of war and the traditional economics of peace lies a field inadequately tended...

...As consumer or spender, both for military purposes and for foreign aid, the central government is more a participant in the economy than a rule-maker for other participants...

...It is not without major arguments or themes...

...He argues, for example, and not unreasonably, that an attempt to stay ahead of the Soviet Union in industrial capacity would probably be foolish because even without industrial superiority we shall have the capacity to provide for our defense...

...So far as one can see, it is here to stay...

...National security economics is not, however, even potentially a branch of economics like monetary theory, national income analysis or industrial organization...

...It is not surprising, therefore, that Schlesinger's book ranges widely...

...I confess to speaking for a relatively small minority in alleging the futility of pursuing these conventional virtues of rational decision making...

...National security is thus the application of all useful parts of economics to the analysis of government's active role in meeting those collective needs that impinge on the nation's security...

...Given the impossibility of being consistently wise in policy making, I would suspect that, if we were to aspire seriously to internal consistency in our policies, they could only be consistently foolish...

...The first is that in these days of cold war, if not even earlier, government has become a central actor in, and not merely a regulator of, economic life...

...The most disappointing feature of the book is that it is not pertinacious, a defect accounted for in part by its comprehensiveness and in part by Schlesinger's desire to communicate some essential facts and principles about national security before ascending to refined analysis...

...but, even where Schlesinger would apparently like to promote one, he is careful to explain the ground on which it might be attacked...

...Consequently the work is solid, lucid, dispassionate, informative, honest, balanced and judicious—rather than fragmentary, polemical, original and provocative...

...These are the feasible ways in which men make policy...

...but I should nevertheless suggest that for policy making on the scale required for national security we shall have to come to learn the virtues of jerry-building, improvisation and even in-consistency...

...He hopes to achieve a comprehensive statement of what our problems are and what economics has to offer in dealing with them...

...The book attempts to bring to bear a rich tradition of economic analysis on a set of problems often discussed as though any one opinion is as good as any other, provided that it is equally buttressed by cliches...

...The alternative tactic, which I believe we can usually afford, is to anticipate a greater variety of possibilities, including eventualities that, even if relatively improbable, would be extremely dangerous if they did materialize...