the public interest, in order to provide built-in incentives for a responsible exercise of their discretionary pricing power. The target rates would require Treasury approval and would presumably be set close to the competitive cost of capital. The whole scheme, Means says, would have to involve no more than 200 corporations.

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These recommendations rest on dubious assumptions and illusory expectations. First, it is doubtful that a dissolution program, especially in steel, would interfere with industrial efficiency. There is considerable empirical evidence to support George J. Stigler's view that "one can be opposed to economic bigness and in favor of technological bigness without inconsistency.' Second, there is evidence that 20 competitors are likely to afford more protection to the public interest than 5. Contrary to Means' claimobviously made prior to the Kennedy-Blough encounter-there is some safety in numbers. Third, the Means proposal-whatever the disclaimers is a scheme for Government price control. It would require governmental judgment with respect to reasonable target rates of return and governmental formulation of performance standards in the public interest. While the Means' proposal is less restrictive of managerial freedom than conventional public utility regulation, it is still a scheme for governmental price control. As such, it is subject to the same general reservations as other varieties of this control mechanism.

-WALTER ADAMS Professor of Economics Michigan State University

American Enterprise: The Next Ten Years. Edited by Martin R. Gainsbrugh. New York, National Industrial Conference Board, Inc., 1961. lix, 511 pp. $5.95, Macmillan Co., New York.

The views of more than 60 leading business executives, government officials, and economists which are brought together in this volume comprise a comprehensive examination of economic prospects and problems expected to confront the United States in the decade ahead. It would not be correct to call this collection of views a blueprint for the next 10 years, because they conflict at many points, as would be expected, and because

agreement is lacking even upon proper approaches to solutions of many of the existing or anticipated problems. At the same time, typical American optimism pervades all of the statements that this country will meet the challenge of the 1960's and somehow will solve even the most difficult problems satisfactorily.

The discussions are divided into four parts: our international position, our domestic markets, technology and its impact, and financing national growth. Increasing competition in world markets, including our domestic market, is accepted as a fact of life for this decade. Dr. Raymond Vernon sees even the underdeveloped countries becoming exporters of an expanding list of commodities of which textiles are a prototype, involving highly standardized and repetitive processes within the plant and demanding a minimum of training for most workers. An interesting point of view with regard to the European Common Market is related by F. W. MacMullen, who reported hearing the president of one large European chemical company complain bitterly that the only country to benefit from the Common Market would be the Americans whose knowledge of marketing in a large market would enable them to outstrip their European counterparts. Another optimistic view of our competitive position is expressed by Donald F. Heatherington, who notes an end of the period when the labor unions of Western Europe were not demanding higher pay and easier working conditions.

The domestic market of the 1960's is described as one of vigorous, balanced expansion, maintained and accelerated by population growth, research and development, improving productivity, and further advances in living standards. A basic change in the domestic market is anticipated. The 1950's were dominated by a suburbanization of the population which is reaching maturity. New products and new markets will need to be developed for the present decade. There is considerable discussion of prospects for private investment in our economy and its contribution to economic growth and a stable economy. Robert M. Weidenhammer sees limited possibilities for private investment in counteracting recessions because rapid obsolescence precludes investment in facilities before they are really needed. Worry about possible repercussions of a move toward disarmament is unfounded, according to William B.

Bergen, who predicts that if man's centuries-old dream of word disarmament should come true, our space exploration budget will expand at least as much as our defense budget declines.

The keynote of the discussion of technology was struck by Donald F. Valley, who noted that our ability to increase the standard of living, to compete in world markets, and to maintain the purchasing power of the dollar largely depends on achieving further gains in productivity and an equitable distribution of the benefits of such increased productivity. John W. Kendrick expects a slower rate of growth of real stocks of productive capital in relation to labor force and man-hours in the 1960's than that attained from 1948 to 1959. Hence, the possible acceleration in total factor productivity will tend to be offset in its impact on output per man-hour by a slower rate of growth in capital per man-hour. As a working tool of the conduct of collective bargaining, productivity will be deemphasized in the future, in the opinion of George G. Hagedorn. Views expressed by other representatives of business organizations include some to the effect that the present forms of labor unions are obsolete and that this will be a source of trouble in labor relations in the years ahead. Problems of adjustment to changing technology are summarized succinctly by Solomon Barkin, who cites the human cost, capital loss, and social waste that will ensue unless we adopt positive programs of adjustment, redevelopment, renewal, rehabilitation, retraining, and relocation for effective participation in a more productive and expanding full-employment economy.

In the financial sphere, the problems anticipated for the 1960's appear to be within the range of relatively easy solution. Adequate credit is expected to be available to meet the needs of consumers, business, and governments. All segments of the economy enter this decade with considerably less liquidity than they enjoyed at the beginning of the 1950's, but savings are expected to be large enough to meet all needs through our existing financial institutions.

The major contribution which this book makes is to bring together in one volume a discussion of a broad range of basic economic and social issues confronting the United States today as seen by an outstanding group of those in business, labor, government, and the universities who are dealing with these issues currently. In general, the state

ments of individual participants are left to speak for themselves, with relatively little attempt having been made to reconcile conflicting points of view, even in the records of the discussion which followed each formal session.

-ARNOLD E. CHASE Chief, Division of Prices and Cost of Living Bureau of Labor Statistics

Management Problems in the Acquisition of Special Automatic Equipment. By Powell Niland. Boston, Harvard University, Graduate School of Business Administration, Division of Research, 1961. 336 pp., bibliography. $5. This is a detailed, careful analysis of the experiences of 18 metalworking plants in purchasing special automatic production machinery. Such equipment, often tailored to the customer's plant, performs one or more repetitive operations without human intervention except for monitoring. The term "Detroit automation" is sometimes used to describe this type of machinery.

The book might be subtitled: "a guide to management on how to automate without going broke." The author provides a systematic description of key steps in the complex acquisition process and suggests some solutions for commonly encountered trouble spots.

Most of the book deals with the four problem areas which emerged as particularly important in the plants surveyed; "debugging," i.e., the long, uncertain, and costly period of trying to make the special equipment operate satisfactorily; the decision whether to make or buy equipment; the coordination of product and machinery design to reduce operating difficulties; and the financial appraisal of proposals for acquiring equipment.

The approach is empirical and practical; the viewpoint, that of business management rather than of the engineer. Excluded are problems of operating and maintaining equipment, labor displacement, retraining, and labor relations.

Although concerned with technical management questions, Professor Niland's findings and recommendations obliquely shed light on some broader economic issues connected with automation. Successful automation, for example, requires more engineers than conventional equipment for planning, developing, and debugging and broader gaged personnel at increasingly lower levels in the business organization to coordinate product and

machine design. Professor Niland finds that the "broad gaged specialist" and the "business manager of technical ideas" are increasingly sought.

The author's reservations about the economic soundness of some management investment decisions may be suggestive to economists trying to understand recent business trends. He found that "one of the traps into which their excessive enthusiasm led many of the organizations visited was adopting, implicitly or explicitly, a goal of complete mechanization, that is, having no operator but only a completely automatic piece of equipment. Such a goal sometimes has led to acquiring pieces of special automatic equipment which employed less than the optimum method of production, judged by the criterion of rate of return on investment."

This book is an important contribution to the growing field of automation studies. Although intended primarily as a guide for managers, its wealth of factual detail will be informative to economists interested in the process of technological changes as it actually occurs in industry.

-EDGAR WEINBERG Division of Productivity and Technological Developments Bureau of Labor Statistics

The Economics of Wages and the Distribution of Income. By D. J. Robertson. London, Macmillan & Co., Ltd., 1961. 242 pp., bibliography. $4.75, St. Martin's Press, New York.

This volume is intended largely for use as a text book at the undergraduate level in British universities. It is not a systematic exposition of wage theory along the lines of Hicks, Rothschild, or Cartter, although it makes skillful use of theory to throw light on the operation of the labor market. The substance of the book is broadly comparable with the content of those chapters on wages and wage determination in the better American texts on labor economics.

Professor Robertson's analysis of labor market institutions, processes of wage determination, the trend and structure of wages, and the growth, distribution, and labor's share of national income relates, of course, to Great Britain. Hence his book will have use in this country mainly as

supplementary reading. It will serve admirably in this role to point up the surprisingly numerous contrasts between the British situation and our own. These contrasts extend from the role of overtime work, which to some extent has become a regular part of compensation practice in British industry, to the structure and nature of collective bargaining, which is much more largely on 8 nationwide industry basis in Great Britain than here. The nature of British bargaining, in turn, gives rise to the phenomenon of the "wage drift”roughly the difference between the trend of negotiated rates and actual rates or earnings-which is not highly significant in the United States except in special situations.

The discussion of the structure of relative wages in Great Britain-that is, wage differentials by occupation, industry, sex, and other characteristics-reflects the comparative absence of detailed British wage statistics. In particular, data on occupational wage levels and rate distributions by labor market and industry are meager. Unfortunately, Professor Robertson's book was evidently in press when the results of the 1960 Ministry of Labor inquiry into the distribution of earnings of manual workers appeared (Ministry of Labor Gazette, April and June 1961). This was the first such study since 1938.

There has been a strong tendency in this country during the postwar period to deny the relevance of wage theory for an understanding of the operation of the labor market. It has been fashionable to stress only the shortrun and institutional aspects of the process. This particular form of obscurantism appears to be diminishing. Institutional forces in the labor market need obviously to be taken into account, but it is important to understand that these forces (unions, employers and their associations, government) must operate within a context of underlying demand-supply relationships that place limits, certainly in the long run and often in the short, on the nature of viable actions. This book (chapter 5) contains a first-rate analysis of the role of market and institutional factors in wage determination that can be read with profit on both sides of the Atlantic.


Chief, Division of Wages and Industrial Relations Bureau of Labor Statistics

A Short History of the Labor Party. By Henry Pelling. London, Macmillan & Co., Ltd., 1961. 135 pp. $4.75, St. Martin's Press, New York.

The British Labor Party, embodying what may be termed practical idealism, gathered support and collected issues for more than 40 years. The party emerged at the end of World War II as a government with a mandate to implement a social and economic program, which in the main was absorbed as a permanent part of British national life. However, by the end of 1960, the party, rejected at three successive general elections, was "in a weaker state than at any time in a generation: its leadership in dispute, its policy equally indeterminate on major issues, its constitution under heavy strain, and its prestige humbled. The Liberal Party challenge, although not yet able to make any impact on the parliamentary situation, was looming on the horizon."

Carrying forward from his previous writings on the Labor Party, Henry Pelling analyzes the flow of the party's growth as a political organization, a national institution, and an expression of mass social attitudes. He makes no predictions, but if the Liberal resurgence in 1962 has any significance, it is that the Liberals increasingly are becoming the beneficiaries of discontent with the Conservatives and that the past historical relationship between the Labor and Liberal Parties might be beginning to reverse itself.

Pelling's description of the Labor Party in the 1960's, however, could have been a suitable description of the party at other stages in its development. The author tells of the shaky beginnings of the Labor Representation Committee, the forerunner of the Labor Party. The committee was fathered by the British Trades Union Congress in 1900 only after some 15 years of intensive debate, the trade unionist being most suspicious of the socialists who were promoting independent parliamentary representation. Subsequently, Ramsay MacDonald and Keir Hardie had difficulty in keeping their parliamentary Labor Party colleagues (particularly the trade union members of Parliament) on the narrow line of political separation from the Liberals. In the early period before World War I, a secret pact between Ramsay MacDonald and the chief Liberal whip, Herbert Gladstone, enabled Labor candidates for the most part to stand without the need to face Liberal opposi

tion, and this did much to assure the party's survival.

MacDonald's political astuteness and firm leadership, Arthur Henderson's managerial shrewdness, and the Fabian talent for comprising socialistic theory and practical politics overcame the periodic crises of defection of major personalitites, ideological disputations, and disparate interests of the party's varied supporters. Even in electoral defeat, the Labor Party over the long run continued to pick up liberal policies (free trade) and support, build up a tradition of loyality among the trade unions, and check persistent efforts by its own doctrinaire elements, as well as by others such as the Communist Party, to steer the Labor Party into adopting narrow ideological formulas out of tune with the British environment.

The institutional strength of the party and its deep roots in the Nation became apparent during the crises of the 1930's. The separation of MacDonald from the party in 1931 did not have nearly the effect that might have been expected, although he had nurtured the party from birth and come to dominate it as no one else had. Of some 288 Labor MP's elected to the Commons, only 7 went with MacDonald, 1 of them his son Malcolm. The party survived the ineffective parliamentary leadership of George Lansbury and successfully constrained the power of contending personalities such as Herbert Morrison and Ernest Bevin. And when the party's turn came to resume responsibility as junior partner in the World War II Churchill coalition, and subsequently as a majority government under Attlee, it emerged as a well-led, cohesive, purposeful organization.

Knowledgeable observers of British politics have argued that much of what is Labor Party tradition must sound today, even to Labor supporters, as little more than the nostalgic myths of passing pioneers. The Labor Party, though pragmatic, has still to contend with a tradition of justifying programs and issues in terms of class interest and a mission to establish an undefined social welfare society. Measured by Labor Party standards, a system under which political parties seek public office by competing for popular support (including that of nonpartisan trade unions) through the collection of appealing issues would appear opportunistic if not principled. Yet such an approach would possibly

be more appealing to a generation of Britons aware of the unfulfilled predictions of social theory. Pelling's views on this would have been valuable, since he is so knowledgeable on the mutual influence of British and United States labor. This, however, does not detract from the book. It is lucidly written and the analysis skillful. It is well worth the interest of both labor specialists and general readers.

-HERBERT E. WEINER United States Embassy Ottawa, Canada

Education and Professional Employment in the U.S.S.R. By Nicholas DeWitt. Washington, National Science Foundation, 1961. 856 pp., bibliography. (NSF 61-40.) $5.50, Superintendent of Documents, Washington. Students of international manpower comparisons are again indebted to Nicholas DeWitt for his comprehensive study of the Soviet Union's techniques for developing and utilizing its labor force. Although not all of Dr. DeWitt's material is new, he has made a worthwhile contribution to this difficult area of research by bringing together, in one volume, a considerable amount of information about the Soviet educational system and the employment of professional and specialized manpower which will be an invaluable reference source to scholars for many years.

Dr. De Witt emphasizes that the Soviet planners utilize human resources as one of the means of achieving their goals of economic power. It is for this reason that the Soviet citizens' rights and privileges of occupational choice, as well as their entire physical and mental training, are subordinated to the needs of the collectivist state. The point is consistently made that the Communist Party, which represents only 4 percent of the total population, is responsible for planning of the Nation's economic and social development. Although this planning may appear to the outside world to be quite efficient, the author asserts that in operation it is quite inefficient, particularly in respect to higher education.

The philosophy of those who control the educational system of the Soviet Union is clearly demonstrated in their approach to the problem of the inadequate supply of young workers who will be entering the labor force during the early 1960's. This shortage, which is a byproduct of the severe

population loss suffered during World War II, is being met by lowering the terminal age of general schooling to 15, instead of 17 or 18. The net effect of this educational "reform" is expected to reduce drastically the numbers of youth who would otherwise be in various types of secondary schools in the early 1960's. The more gifted student will be able to continue formal, full-time education, while the majority of Soviet youths will be impressed into the labor force.

Dr. DeWitt believes that the long-range objective of the reform is to refine and improve the quality of Soviet labor. One may conjecture that this act of expediency may very well result in an overall reduction in the quality of the Soviet labor force, because Soviet authorities offer the privilege of extensive education to only a few of the best qualified students. Soviet education makes little provision for late bloomers and slow learners. The burden of proof of talent rests with the student. The educational policy is designed not to find and develop talent but to make use of the talent that rises to the surface. This is in contrast to the stated aim of the United States' educational system, which accepts human nature as it is and attempts to bring out the best in each individual.

The author's careful exposition of the training and use of semiprofessional workers in the Soviet Union would have been strengthened if more attention had been devoted to the implications of the utilization of technicians. Any comparison between the United States and the Soviet Union as to the number of professional and technical graduates employed must take into account the fact that the supply of scientists and engineers in the Soviet Union can always be considerably extended because of the availability of large numbers of formally trained technicians who can perform the more routine jobs. This means that Dr. DeWitt's observation that the U.S.S.R. educates two or three times the number of scientific and technical manpower trained in the United States may be an understatement which should not be overlooked by those concerned with the adequacy of the American labor force.


Manpower Development Officer

Office of Manpower, Automation and Training

U.S. Department of Labor

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