Main trends of research in the social and human ... - unesdoc - Unesco

342 Economics
With minor reservations, this can be applied to the well-known growth theo-
ries of the British economist R.F. Harrod and the American E. D. Domar. Their
models describe, not so much the actual, or expected movement of the factors
of growth over time, as the relationships which must be realized in order to
achieve balanced growth in conditions of full employment of all the factors.
Abramovits points out quite rightly that these are not so much theories of
growth as ‘properly speaking, theories of the requirements of steady growth at
full employment. They make no assertions with respect to the likely develop-
ment of capital formation over time’ (A Survey of Contemporary Economics, Vol.
11, p. 170). This could be put in another way by saying that these models assume
as the general rule that there is perfect adaptability as between effective demand
and the supply of factors, whereas, in actual fact, this happens only in a real
planned economy, when the planning authority defines the desired growth rate,
together with the volume and structure of effective aggregate demand, duly re-
lated to the supply and structure of the factors of production; in particular, the
planning authority must adjust the total volume of real investment (real capital
formation) to the increase in available labour and to the opportunities offered
by technological progress.
The tendency to overlook, or at least minimize, the need to differentiate in
dealing with different socio-economic systems has been accentuated as capitalist
countries move towards planning and socialist countries make a growing use of
the market mechanism. In its various versions (one of the best known is that of
Tinbergen), the theory of convergence attempts a synthesis of this double move-
men t .
The present authors consider it to follow, from the entire line of their reason-
ing, that (particularly in regard to the theory of growth), it is vital to make a
distinction between capitalism and socialism in any proper analysis of contem-
porary economic problems. Should the convergence theory imply a negation, or
even a diminution, of the methodological validity of this distinction, they would
consider it a hindrance rather than a help in dealing with the problems discussed
here.
Certainly, the convergence theory could be taken differently. It could be taken,
for example, as an attempt at generalization in considering the ways in which
various countries are moving towards socialism. To discuss this, however, would
go beyond the scope of the present study. But the very fact that the question of
convergence has been raised emphasizes the desirability of including the compar-
ative analysis of socio-economic systems as a fully-fledged, integral part of the
main body of economics. The main purpose of such analysis would be to study
the comparative effectiveness of the different ways and means of directing eco-
nomic processes, and the type, quality and consequences of economic decisions
taken under different systems.
But an analysis contrasting capitalism and socialism must not be limited to a
surface examination of the institutional structures each provides for dealing with
the various parts of the economic process - the purely institutional framework
for planning, for example. The inquiry must go deeper. It must go into owner-
ship and the class and group interests ownership entails. Capitalist countries -