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Economics 341
the sense of being deduced only from the logic of economic calculation: they
must also include a political content, and relate to a specific scale of values.
This is of tremendous consequence for all the relations between society and the
individual. Without going into these problems, it is perfectly obvious that, as the
r6le of planning increases, the political mechanisms which constitute an essential
element in the analysis of the working of a modern economy must be examined.
This point has not yet been given its due attention either in economic theory
(which tends to take for granted the general criteria adopted for the evaluation
of the aims of economic policy and the means of implementing it) or in political
science - particularly as regards the rBle of the State- which seems to have adopt-
ed the general idea of ‘big government’ (with positive or negative overtones)
without paying sufficient attention to the specific relations between the rapidly
expanding economic rBle of the State and the evolution of political mechanisms.
E. Models and socio-economic systems
In discussing above what seemed to be the vital problems of contemporary economics
and the directions of its future development, it has been suggested that,
at each of its stages, economic analysis must pay due regard to the particular
conditions that go with a particular level of the forces of production and the
associated socio-economic and political system. Obviously, a theoretical analysis
cannot explore each situation in all its details, but must resort to techniques of
typological classification, and to models.
Recent economic literature reveals a better understanding of the significance
of specific conditions in the sense just mentioned, and pays increasing attention
to e.g. the need to differentiate between growth in pre-industrial and industrial
countries respectively. Further progress in this direction may be expected to lead
to a differentiated approach for the advanced, developing and other countries in
an intermediate position between the two.
It is even more important, from the methodological point of view, to adopt a
differentiated approach in dealing with different socio-economic and political
systems, not only because of controversies about the respective merits of capitalism
and socialism but also because of the significance of actually making the
differentiation itself.
The need to make this differentiation is often implicitly denied in contemporary
growth theory when attempts are made to construct universal growth
models irrespective of the socio-economic and political differences. The result is
that many vital relationships are overlooked. In a capitalist economy, for example,
it cannot be assumed that there is an aggregate effective demand for the
growth factors that are available, and a failure to pay due attention to this point
markedly reduces the cognitive value of growth models. This is particularly
true of neo-classical theories which, in discussing the process of economic
growth, take it for granted that there is a perfect competition equilibrium (investment
equals savings) at full employment level, that the demand for labour
and other forces of production is fully balanced with effective supply, and so on.