THE DOLLAR SHORTAGE ONCE MORE A REPLY
| Date | 01 February 1955 |
| Author | T. Brennan |
| DOI | http://doi.org/10.1111/j.1467-9485.1955.tb00725.x |
| Published date | 01 February 1955 |
THE
DOLLAR SHORTAGE
ONCE
MORE
A REPLY
PROFESSOR
MACHLUP
is
perhaps not quite fair' in his criticism
of
my
theory of the causation
of
the dollar
'
shortage
'
based on a disparate
growth
of
productivity, a theory which has been accepted
first
by
Professor Williams and more recently by
Professors
Sir D. Robertson
and Hicks. He says
(or
rather quotes Professor Haberler's criticism
with approval) that
I
have never realised that a
'
real
'
dollar problem
could only arise through import displacement by the
U.S..
and that
I
confused the effects
of
a more rapidly
increasiitg
productivity with
the effects of the
actuul
preponderance already achieved of the
U.S.
(acquired
to
a large extent through superior productivity). He ends by
restating the view that the dollar shortage is the consequence
of
all
other countries' desire to live above their means.
Let us deal with these points in turn.
1.
His first quotations-somewhat abruptly lifted from their
context-show that
I
was not unaware
of
the problem of the mechanics
of increasing productivity. Indeed he supplies the emphasis to the
words that if there were
'
prodigious investment activity in the
U.S.'
its
'
competitive power
'
would rise faster and cause 'periodic pressure
abroad
'.
How anyone can interpret the analysis referring to an increase
in
competitive power
of
the
U.S.
as meaning anything but a deteriora-
tion of the relative position
of
British industries,
i.e.
a
disparate
increase in efficiency in rnanupdcturing in the
US.
rather than a uniform
increase in productivity,
or
an increase in productivity in agriculture
and mining which provide British imports. is certainly beyond me.
But
I
was interested not in an abstract model but in the Dollar
Problem.* And
in
that context
it
would be quite incorrect to ascribe
*
'
Dollar Shortage and Disparities in the Growth of Productivity,'
Scottish
Joicrnal
of
Political
Economy,
Vol.
1,
No.
3
(October
1954).
I
should,
perhaps,
be
grateful
to
Professor Machlup (and also
to
Mr.
H.
G.
Johnson-
cf.
note
3
below) for having mentioned my name at all
in
this context. None
of
his immediate predecessors did. But then he is sharply critical
of
any
reconsideration
of
age-old fallacies of blaming the dollar shortage on financial
recklessness, while his colleagues at last consented
to
begin to
look
at the
problem anew. In
so
far
as
I
am bound
to
be interested in the spread
and
acceptance
of
my
ideas among the orthodox (especially among the adminis-
trators) my special debt
to
Professor Machlup is reduced.
'
It
is,
of
course, entirely possible that an inferior country should get into
trouble because
of
its high price and income elasticity for imports.
In
the
context
of
the quotations
1
did not discuss that particular contingency
(c/.
below,
54).
149
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