In 1970, public confidence in the ability of economists to guide government to uninterrupted propserity was so high that the Nobel committee in Stockholm created an annual prize in the field. 1970 was the end of the so-called "Go-Go" years on the stock market, when anyone could make a buck, gasoline was still 35 cents a gallon, there was little unemployment and low inflation. Government could anything.

By 1979, however, the world had turned upside down. Policymakers could not wring 13 per cent inflation out of the American economy. Unemployment was rising. Gasoline price soared to levels that resulted in gunfights in filling stations, while oil threatened to bring down the dollar and the rest of the international mentary system with it. Even some economists said that maybe the world would be in better shape if policymakers had pursued randomly-chosen policies.

Western politicians often couldn't apply traditional economic prescriptions because the results would threaten their political survival. And the few times they did apply these remedies, they didn't work. So policymakers have tried to reduce government's interference in the economy, in the hope that free-play of the market forces would revitalize it. But democratic government cannot force painful adjustments upon a populace determined to always have more, not to speak of doing with less. The Americans bailed out Chrysler and the British saved their national steel industry.

The price of gold--the traditional barometer of public confidence in stability--is above $600 an ounce. The president of a major Western nation murmurs publicly about the possibility of war this year. Americans grumble about the inability of government to do anything. Clearly, 50 years after the fabled stock market crash, people are searching for another Keynes.

The Crimson interviewed John Kenneth Galbraith, Warburg Professor of Economics Emeritus; Stephen A. Marglin, professor of Economics; and Francis M. Bator, professor of Political Economy at the Kennedy School of Government and asked them to talk about the future of the American economy and their own troubled profession.

John Kenneth Galbraith

The biggest problem facing the economy is "people who want to solve the problem of inflation without doing something that is politically unpopular."

The solution for inflation: "good strong legal control or corporate prices and incomes, control demand by putting higher prices on luxury expenditures which is a better place to save than cutting the consumption of low income people, and keep a close eye on corporate indulgence in the defense budget."

Galbraith predicts the country will accept his ideas "as a result of the force of circumstance and not as the result of any persuasion by economists. Sooner or later politicians will figure out that there is nothing else to do."

Economists "who make these predictions do so because they are asked and not because they know."

A wish for the 80s: "a group of economists slightly less conscious about winning establishment applause. Economics is a historical process and policies must accomodate to historical process and policies must accomodate to historical change. Keynes's economics is not appropriate to a world of strong unions, large unions and big government, and Keynes is the last person in the world who would have expected it to be so."

Stephen A. Marglin

What I learned as a student in this very university 25 years ago was that we could have our cake and eat it too--full employment and price stability--and that all we had to do was convince a few Neanderthal Republicans to accept the truth with a capital K for Keynes. But it isn't as simple as that. The problem is not simply one of finding mindless conservatives. Conservatives did see that we couldn't have our cake and eat it too. And as long as they were not the ones to be unemployed, unemployment wasn't too harsh a price to pay for maintenance of capital and the capitalist system. In the period after World War II, by the late 60s, the problems of trying to maintain full employment and stable prices came to a head. We were running into an increasing inflation which by those standards out of line--although it wouldn't be today. Today nobody has a solution within the capitalist system to the problems of maintaining profits, stable prices and investments--new capital formation--other than unemployment, the famous tradeoff.

We will see in the 80s that there is no solution within the present institutional order. I predict wage and price controls on a permanent basis in the 80s. The conservatives who argue you can't have price controls without dislocations are right. We'll have controls, and that's where planning comes in. Planning without controls. Because of problems generated by capitalism, these controls will necessitate more controls and more planning.

The question is, who will do the planning, and in whose interest? Will the economy come to reflect the ideal on which this country was funded--participatory democracy--or will it reflect the operation of the economy as it is--authoritarian and hierarchical? Planning can be participative or authoritarian.