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3 14 Economics
complete the change-over? What will the position be at different points during
the transition period? These and many other questions arise as we go on com-
plicating the ini+:al exercise.
The ultimate aim of these exercises, which are meant to trace the path of growth
as it develops from the initial assumptions, is to permit more enlightened choices
in economic policy; the aim is therefore normative, economists pursuing their
dream of optimising the operation of the economy. For a socialist economy, the
basic option - more jam today or more jam tomorrow54 - is essentially political
and, as such, the concern of the policy-makers. Various ways have been sug-
gested for incorporating it into the theory of growth. Several authors use a dis-
count rate in order to weight future in terms of present consumption. Kalecki,
in his model, explicitly introduces a ‘decision curve’, and uses a parameter in his
argument which, although it cannot be quantified, is crucial, namely, the reluc-
tance of a government to reduce the level of consumption of the population in
order to speed up growth. Many models have been devised to determine ‘golden
rules’ of behaviour. But, given its initial state, how is any economy to reach its
golden age? A new set of problems looms: how choose the best of alternative
paths for passing from one state to another?
The above catalogue of questions discussed by theorists of growth is far from
complete,55 but will surely suffice to show that the theory of growth is anything
but simple.
As for its practical applications, the criticisms which have been referred to
above seem to derive from a misunderstanding of the r81e of the theory.
The purpose of growth theories is not to trace the course of an economy in the
past (this can be done by ordinary statistical methods), or to forecast its future
path (bound to fail, so great are the level of aggregation and the simplifications
introduced). In a socialist economy, moreover, the emphasis shifts from fore-
casting to the making of rational planning decisions, and it is this purpose that
the theory of growth aims to serve in two ways. It deals with problems which are
not in the least obvious, which are not superficially evident from the phenomena
considered and which, in addition to requiring the planner’s decision, accustom
‘variant thinking’ - to taking account of several alternative solutions. In no case
does growth theory provide ready-made pre~criptions.5~ At best, it sets out the
rules of ideal behaviour, providing a clearer analysis of the initial premises, the
evaluation criteria, and the consequences of adopting alternative solutions. Its
purposes are not narrowly pragmatic, although praxis is the ultimate purpose.
Contrary to what the layman may think, the choices the planner must make are
complex and intricate, and his freedom of action is limited by the initial conditions
and by political preferences. He is not free to raise the growth rate of the
economy at will, not only because, during the initial period, this would require
an excessive increase in the share of the national income devoted to investment
at the expense of consumption, but also because, above a certain growth rate
(different for each economy and for each period), the efficiency of additional
investment rapidly diminishes.
Moreover, planning aims cannot be unequivocally determined because of the
contradiction, already mentioned, between maximizing consumption in the short