with the information and the tools which they need for more prudent decisionmaking. Senator CLARK. Are you familiar with the writings of Mr. Bertram M. Gross? Dr. COLM. Yes. Senator CLARK. I have before me an interesting article of his which appeared in the magazine "Challenge" for September and October 1965 entitled "Planning: Let's Not Leave It to the Economists." He makes the suggestion that national planning involves crossfertilization of many disciplines, and that we tend to look too much to the technical economists for answers. In his view, the overall planning scheme needs to involve a good many people who are not technically just economists. How do you react to that? Dr. COLM. First, let me say I wrote a letter to "Challenge" magazine bringing to their attention what I thought was a misstatement in one detail. Senator CLARK. Do you have a copy of that letter? Dr. COLM. No, but my assistant can get one. Senator CLARK. Could you produce one for the record? I would like to give you a general reaction. By and large, I agree with Bert Gross, with whom I worked when he was Senator Murray's assistant and working on the preparation of the Employment Act. I was on a technical committee with him. I worked with him later on the staff of the Council. I agree that planning and the concern of full employment should not be left to economists in the narrow, technical way he seems to define it here. But, Senator Clark, we economists are not quite as narrow as Bert Gross makes us appear. Senator CLARK. I agree. Dr. COLM. After all, over the longest part of the period in history when we had something like an economic science, it was called the science of the political economy, and some of us have not forogtten that. Senator CLARK. I studied political economy under Taussig at Harvard 45 years ago. However, "political" seems to be in such disrepute that it has been dropped. Dr. COLM. When I studied it, it was taken for granted that I had to take a full course in political science in addition to economics. So I think Bert Gross is building up a straw man. Perhaps in fairness to him, not entirely a straw man. We have in economics particularly in econometrics, people of the kind where I would agree with Gross that the administration, neither on the legislative nor executive side, should be left entirely to them. All I am saying is, most of the ecnomists, if you only think of those who over the years have been on the staff of the Joint Economic Committee or on the staff of the Council of Economic Advisers, would not fit what Bert Gross calls here the economists to whom we shouldn't trust the administration of the act. Senator CLARK. I will ask to have printed in the record at this point the article by Dr. Gross referred to, entitled "Planning: Let's Not Leave It to the Economists." I will ask Dr. Colm to furnish us with a copy of the letter which he wrote in reply to this article and ask to have that printed, too. (The material referred to follows:) [From Challenge, September-October 1965] PLANNING: LET'S NOT LEAVE IT TO THE ECONOMISTS (By Bertram M. Gross)1 The great excitement over national planning that has swept over the world since the end of World War II has tended to give economists a paramount role at the expense of other social scientists. Thus, there has been an overemphasis on the techniques of planning at the expense of the ultimate objectives. As a noneconomist associated with national affairs in various countries, I have enjoyed many opportunities to observe the remarkable contributions of economists to Government planning, Indeed, I have a private list of economists who deserve medals of honor for their work in helping defeat the Axis in World War II, preventing mass depression after the war, promoting industrialization in preindustrial societies, expanding the affluence of the West and humanizing administration in Russia and Eastern Europe. Yet the very success of economists in contributing to public policy has led to the dangerous and widespread fallacy that problems of economic planning and policymaking may be analyzed seriously only by economists and the tools of economics. Indeed, I unwittingly helped propagate this fallacy in my conference committee work on the final language of the Employment Act of 1946. Although the act did not explicitly require the members of the President's Council of Economic Advisers to be professional economists, it was widely interpreted as implying this. Only after many years of hindsight did I see that in drafting the committee report and various Senate and House floor statements at the time of passage, I should have mentioned the need for Council members skilled in analyzing the institutional, administrative, and social aspects and consequences of economic policies. At the verbal level, economists are the first to concede the importance of the noneconomic aspects of economic policies. Indeed, most of them would be willing to affix notarized signatures to the following proposition on national planning (1 of 20 recently prepared by an interdisciplinary group): "Many of the conscious objectives and unintended consequences, as well as many of the means required for goal formulation, implementation, and evaluation, are usually political, cultural, social, or biophysical rather than merely economic.' Many might even accept my statement that "national planning, as the most complex form of large-scale administration, is *** a process of acquiring, maintaining, and utilizing power *** (and) involves the interweaving of the expertise of many experts under the guidance of administrators and politicians whose expertise lies in their ability as generalists ***" In terms of action, however, economists have achieved widespread preemption of legitimate roles in providing professional advice and conducting social science research on national economic planning. Their professional preemption of this field is even more solid-as well as more deserved than the preemption in previous decades of city planning by architects and industrial project planning by engineers. In fact, their routinized parenthetical statements on the noneconomic aspects of economic policy help solidify still further their professional monopoly and alleviate any transient qualms they may feel at studiously avoiding consultation with other social scientists. Let us now look at some results of this professional preemption and then consider some countervailing tendencies that may deserve encouragement. Until much greater progress is made in the comparative study of national planning, it will not be possible to provide figures on the role of different professions in national planning institutions and national planning research. Besides, the persuasive powers of economists are so great that their growing influence extends far beyond their increasing numbers in both these areas. 1 Bertram M. Gross, professor of administration at Syracuse University's Maxwell Graduate School of Citizenship and Public Affairs, has served as a consultant to the Governments of Israel and India. He was executive secretary of President Truman's Council of Economic Advisers, and is author of "The Managing of Organizations." Accordingly, let us rest content with a few scattered illustrations. In Latin America the Economic Commission for Latin America has fostered econometrics as the major tool of economic development. This has led to wasting good brains on "model building" that has little basis in empirical data and less relation to urgent problems of social reconstruction. In Asia and Africa economic analysis has diverted the attention of young intellectuals from the tasks of building institutions and nations, thereby contributing to their estrangement from administrators and politicians. In both areas professional preemption has tended to identify document writing with planning and divorce planning from Administrators and politicians feel they have been "sold a bill of goods"but rarely know what to do about it. action. In the United States the Joint Economic Committee of Congress is supposed to study carefully the President's annual economic program. Although it has conducted countless hearings, it has never arranged for testimony from social scientists other than economists. Although it has sponsored many special studies, none of these have dealt squarely with the institutional, administrative, social or cultural aspects or consequences of economic policies. The Committee's staff economists have labored hard to keep their political superiors on this narrow path. In November 1949, Leon H. Keyserling, a brilliant Government lawyer and administrator, became acting chairman-and 6 months later chairman-of President Truman's Council of Economic Advisers. For 3 busy years, under Keyserling's leadership, the Council and its staff performed the historic task of going beyond such specifics as the ups and downs of the business cycle and creating the "growthmanship" that did not become "conventional wisdom" until 10 years later. Rather than receiving credit for this momentous achievement, Keyserling was and still is-consistently sniped at by the established economic fraternity. The skills of a noneconomist in creatively using many tools of economics are rarely honored by those who regard someone as "in" only if he has a Ph. D. in economics and has published pseudo mathematical formulas in the American Economic Review. In the era of the Great Society, while debating such a question as "Can We Afford Our National Goals?" (see p. 16), economists blithely assume that an answer can be provided in the framework of national economic accounting. While distinguished men like Leon Keyserling and Gerhard Colm know this question transcends economics, they studiously refrain from any serious effort to handle its noneconomic aspects. Indeed, still suffering from criticism that he is not an economist, Keyserling must continue proving that he can handle economic tools as well as anyone else. This in itself helps perpetuate the fallacy that the conceptual tools of a past generation are sufficient for the present. In his capacity as Director of the Budget, Kermit Gordon made a so-called cost-benefit analysis of water supply projects on the west coast. He found that a low price to farmers encouraged the use of water in expanding agricultural surpluses, while a high price to cities discouraged its use where it was needed more. President Johnson is reported to have been rather upset by the apparent political implications of this analysis. But neither Gordon nor his staff were prepared to compare factually the political benefits and disbenefits of existing arrangements with those of various alternatives. In cost-benefit analysis, where the fallacy of economic oversimplification still reigns, the prevailing doctrine is that (a) beneficiaries are not to be identified as concrete groups in the population, (b) benefits and disbenefits must be forced into the procrustean bed of monetary estimates, (c) alternative resource uses are to be explicitly formulated in the narrow context of single projects rather than in the political strategy terms of bargaining and conflict resolution on many fronts. Such illustrations could be multiplied ad infinitum. A genuine cost-benefit analysis of this professional preemption by economists, however, would have to recognize some beneficial side effects: (1) Providing economists with unprecedented access to elite circles handling major policy issues and conflicts. (2) Providing such elites with methods of legitimating political objectives through modern number magic. (3) Bringing economists away from the make-believe worlds of perfect competition and marginal utility and into closer contact with the pressures of public policymaking. (4) Bringing into the public service a dedicated group of people interested in the techniques of rational calculation. On the other hand, professional preemption by economists and their fascination with the techniques of planning have diverted attention from the plan's ultimate objectives and the noneconomic obstacles to their implementation, In preindustrial and industrializing countries it has diverted attention from the major prerequisite for economic development: the reshaping of traditional social structures. In the West, professional preemption has shifted attention from the tremendous social changes involved in the transition from an industrial to a postindustrial society. It has allowed economists to relax in comfortable obsolescence without facing the challenge of retooling their concepts to adjust to a greater number of variables. Indeed, as John Kenneth Galbraith suggests, "the priority of economics will continue to be defended-and with an enhanced vigor that derives partly from the sense of increasing obsolescence and the need to resist it." The problem of the economists' monopoly would be much simpler if the other social sciences were already as advanced as economics. It would harldy exist if two generations of other social scientists had already been working hard on problems bearing directly on national economic planning. It will probably fade away with the maturation (at least a generation hence) of organization theory, management theory, and general systems theory. In the meantime certain marginal tendencies toward improvement in the situation may be discerned. Taking together, they represent impressive potentials for continuing improvement that might someday make a qualitative difference. I do not recall that any American economist has yet reported on one of the most fascinating aspects of French national planning; namely, that there is not a single professional economist in the Commissariat du Plan. If there is one there today, he has crept in since last I looked and-I am sure is engaged in "transeconomic❞ work. The reason is not that the French love economists less, but that they like results more. To get results, the Commissariat has been kept leanly down to a small catalytic group performing vital general staff functions of communication, bargaining, performance checking and expediting. The Commissariat thus plays a vital role in developing common orientations on the part of Government officials handling fiscal and monetary measures, business interests, intellectual leaders, politicians and, last but not least, econometricians. While econometric studies have been moved out of the Commissariat, this merely means that professional economic analysis has not been confused with the broader tasks of planning. It does not mean that economists have been downgraded. In fact, the Commissariat has promoted specialized econometric studies of a far more advanced type than could ever have been developed within the atmosphere of a central planning organ. It is now able to exploit sophisticated studies (many carefully designed to meet its needs) by at least six outside research organizations. The difference between the quality of these studies in France and those attempted by the President's Council of Economic Advisers lends an additional touch to the grandeur that is De Gaulle. If Lyndon Johnson ever appreciates the difference, we may see some large-scale subcontracting by the Council of Economic Advisers. Although the potential is still stronger than the tendency, steps in this direction are already being taken or being contemplated in other countries. The major implication of such shifts is that, while stimulating the healthy differentiation and growth of economic analysis, they help clarify the fact that economic planning is more than economics. They help relieve a central economic policy body of the self-defeating idea that its only legitimate work deals with economic variables. Previously, the only escape from this idea (at least in the non-Communist world) seemed to be the creation of councils and boards representing various public and/or private interests and institutions. Now it is becoming clear that within the complex network of organizations in a government's "central guidance cluster" there may be a need for a central planning organ that provides certain general staff services. The second potential is a problem-fact orientation toward economic change. This approach gets away from a narrow disciplinary preoccupation with traditional conceptul tools and traditional variables. It deals with whatever facts may be deemed relevant to a particular economic problem. A small band of pioneering economists have set a fine example. Prof. Albert Hirschmann of Harvard University has analyzed economic development in terms of strategies of "reform mongers" and their opponents. Prof. Everett Hagen of the Massachusetts Institute of Technology has studied the emergence of innovational personalities in preindustrial societies, a long neglected variable among the complex factors leading toward industrialization. John P. Lewis, who now heads the AID Mission in New Delhi, in studying Indian national planning, has delt directly with some critical problems in that nation's public administration. Prof. Neil W. Chamberlain of Yale University has used concepts from his previous work in business administration and collective bargaining to present a brilliant view of national planning as the management of national assets. Prof. Charles Lindholm, also of Yale, has exploited some of the best ideas of political science in analyzing the mutual adjustment decisionmaking which is inevitable in largescale planning. And Prof. Peter J. Wiles of the London School of Economics has frankly brought into the open the moral and legal considerations that often hide behind the Western economist's approach to national planning. Modern students of comparative government have pioneered in relating economic development (mainly in preindustrial societies) to sociological and political facts and theories. Major forces have been the Social Science Research Council's Committee on Comparative Politics under the leadership of Gabriel Almond, and the American Society for Public Administration's Comparative Administration Group led by Fred W. Riggs. But inter- and multi-disciplinary ventures by themselves can produce a babble of many tongues talking about more variables than a mind can grasp. These variables must be ordered. To do this "we must stop acting as though nature were organized into disciplines in the same way that universities are,' Russell L. Ackoff of the University of Pennsylvania puts it. This requires the use of systems theory. as Prof. While there have been quite a few worthwhile efforts in this direction, the most ambitious thus far has been initiated by Prof. Raymond A. Bauer of the Harvard Business School. As chairman of a committee of the American Academy of Arts and Sciences, Bauer was asked to appraise the impact of the American space program on the attainment of American goals. Finding that reliable information is currently available only on economic goals, he asked me, "If we have highly organized economic indicators, why can't we set up a system of social indicators as well?" As one who was in on the birth pangs of the Council of Economic Advisers' monthly Economic Indicators, I felt that we were not yet ready for such an undertaking. Wouldn't it first be necessary to develop an ordered set of concepts on which social indicators could be based? After long wrestling with this question, I rejected the idea of social indicators segregated from economic information. I also found it impossible to squeeze into the national economic accounts the many noneconomic variables that must be dealt with in national economic planning. The remedy, I concluded, lies in building a broader system of social accounts which, while not limited to calculations in monetary aggregates, would nonetheless include-and capitalize on-the basic concepts of national economic accounting. This should make it possible to deal more systematically with information that goes behind the data in the economic accounts and helps to explain the why and wherefore of economic performance. Toward this end, I have used modern systems theory in setting forth a structureperformance model of society at the level of the nation-state. System structure consists of interrelated subsystems (themselves composed of people and nonhuman resources) subject to various values and some central guidance. Structural information provides a balance sheet of human, cultural, and institutional as well as financial and physical assets. System performance involves acquiring inputs from the environment and transforming them into outputs to satisfy the divergent interests of various "interesteds." Performance information provides an activities statement that includes cultural and psychological satisfactions as well as different kinds of income and expenditures. An infinite number of permutations may be created by combining various subelements of structure and performance. In this way the model may be used to describe the unique characteristics of any nation—no matter what the level of industrialization or the type of political regime at any period of time. These descriptions may be used to define The substance of problems and decisionmaking. The informational content of communication. The goals (future system states toward which commitments are made) of planning. The measures of influence. The criteria of evaluation. With a little adjustment, the same model may also be used to analyze the private and public organizations that operate as subsystems in a society. A first presentation of this model can be found in my forthcoming "Toward a System of National Social Accounts" in Professor Bauer's "Social Indicators and the Space Program." |