Since the outbreak of the Korean war, the United States has moved in partial war mobilization. Many have warned that these steps are not enough, that direct price and wage controls are needed immediately to check inflation. Others have raised serious questions about the ability of the American economy to support large arms expenditures for what may no an indefinite period.
This week the CRIMSON questioned seven of the University's best informed economists on the problems of economic mobilization and winning the "economic cold war." They are: Sumner H. Slichter, Lamont University Professor who has already written several articles and speeches on this subject; J. K. Galbraith, professor of Economics and a deputy director of the Office of Price Administration during World War Two; John T. Dunlop, professor of Economics who in February was a mediator in the Coal Strike; Edward S. Mazon, Baker Professor of Economics and dean of the School of Public Administration; Alexander Gerachenkron, associate professor in Economics and member of the Russian Research Center; John D. Black, Lee professor of Economics and an authority on agriculture; and Seymour E. Harris '20, professor of Economics and an expert in such fields as "welfare economics."
Today's article on the economic efforts of the cold war is the sixth in this fall's series on the current international situation. A seventh and concluding article will stress the political and sociological implications.
With prospects likely that the United States is in for an indefinite period of mobilization for defense, Harvard's economic experts find themselves in general agreement that the American economy can support prolonged arms and foreign aid expenditures and that it has every chance of outlasting Russia in a production contest that may last indefinitely.
Moreover, the economists agree--with many varying reservations--that so far this country has followed the right trail in setting up limited economic controls and abstaining from such direct measures as rationing and full price and wage controls.
The Production Contest
The cold war, even if it becomes much "hotter," is unlikely to weaken seriously such a dynamic and progressive economy as that of the United States, most of the economists point out in their comments, emphasizing America's high levels of output and national income.
Associate Professor Gerschenkron, Harvard's top authority on the Russian economy, estimates "very roughly" that Soviet national income today is about 90 billion dollars a year; this is only slightly more than a third of the corresponding American figure. Consequently, this strength, plus enormous comparative flexibility, should give the U. S. economy "a great edge," Gerschrenkron believes.
"For only a small relative percentage of our national income, we should be able to outbuild and outlast the Soviet Union," Dean Mason remarked, "even though the Russians have the head start."
Far from making the United States weaker through adding to our outlays, Russian policy may be making America stronger, Professor Slichter suggested. "The more intense the contest becomes," he said "the greater will be the stimulus to technological progress and the faster will be the expansion of our productive capacity."
"But it is important that the country substantially increase this productive capacity," Slichter warned. "Otherwise every increase in military expenditures would force a reduction in the standard of living of the people," he explained.
Accelerating the rise in productive capacity is even more important today than the problem of stopping inflation, Slichter feels. As a result he is strongly dedicated to any mobilization steps which will encourage investment and technological research. One of his strongest convictions, therefore, is that the draft should not curtail the training of young scientists.
Like all his colleagues, however, Slichter is also disturbed about rising prices and the inflation threat. But even so, he maintains that "it would be a mistake to control prices in ways that prevented substantial and continuous expansion."
Price Controls Opposed
While there is debate on whether inflation control or production encouragement is the number one goal, everyone agrees that economic controls are the means to the end. And there is also complete agreement that the current policy of "indirect controls" is the right policy to follow now.