The Online Library of Liberty

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• Associate Editors
• Editorial
• Bibliographical Essay: Economics and Ideology: Aspects of the Post-ricardian Literature
• I: Political Economy
• The Classical Model of Political Economy
• Modernization, Ideology, and Economic Freedom
• Individualism Vs. Collectivism?
• The Industrial Revolution and Literacy
• Parliamentary Enclosure and Uprooted Labor
• Smith's Critique of Monopoly
• Ricardo and the “dual Development”
• Ricardo On Money
• Inflation and Political Crisis: Germany
• Inflation and Unemployment
• Government and Inflation: the Mccracken Report
• II: Concepts of Liberty
• Liberty and Its Components
• Is the Right to Freedom Vacuuous?
• Liberty, Slavery, and Utilitarianism
• Individualism, Freedom, and Society
• Liberty and Habeas Corpus
• Should Britain Have a Bill of Rights?
• Locke, Women, and Freedom
• Locke, Women, Freedom, and Individualism
• Locke, Property, and Individualism
• Children, Freedom, and Individualism
• Liberty and Mental Illness
• Sismondi and Liberty
• Mill: On Liberty
• Mill, Freedom, and Happiness
• Freedom of Speech and Moral Development
• Freedom In Kant, Hegel, and Marx
• Marx, Freedom, and Property
• Neoconservatives, Liberty, and Equality
• Freedom: the Politics of Justice and Existence
• Liberty and the American Revolution
• American Libertarians
• III: Economics and Public Policy
• How Economics Influences Political Theory
• Why Democracies Choose Deficits
• Inflation and the Welfare State
• Monetarism and the Depression
• Asian Monetary History: Gold & Silver
• Specie Money Vs. Antibullionists
• Inflation Effects On Capital
• Consumption of Public Health Services
• Factory Regulation and Vested Interests
• Poverty Programs and Government
• The Costs of Regulating Market Information
• Rent Regulation
• Engels On Economics
• IV: Social Analysis
• The Depoliticization of Society
• Is Philosophy Politically Subversive?
• Plato's Republic As a Political Dystopia
• Cicero and Modern Political Philosophy
• The Roman Jurist Gaius and Social Thought
• The Myth of Social Hierarchy
• Contract and Political Thought
• Private Vs. Public: the Domain of Freedom
• Montaigne and the Value of Tolerance
• Commerce, Utility, Character, and Republicanism
• Quintin Skinner and Western Political Thought
• Public Choice
• Editorial Board
• Contents of Vol. 33 No. 2
• Contents of Vol. 33 No. 3

Government and Inflation: The McCracken Report

Robert O. Keohane

• Center for Advanced Study in the Behavioral Sciences

“Economics, Inflation, and the Role of the State: Political Implications of the McCracken Report.” World Politics 31 (October 1978): 108–128.

An analysis of the problems of inflation made in the report of an influential committee headed by Paul McCracken poses important issues for democratic government. In 1975 the Organization of Economic Cooperation and Development (OECD) sponsored a committee of eight prominent economists to consider “the recent serious deterioration of economic performance” in the advanced capitalist countries. Their report, Towards Full Employment and Price Stability can be viewed in three dimensions: (1) as explanatory theory; (2) as policy science; and (3) as a set of largely implicit recommendations for political arrangements compatible with modern capitalism.

The main defect of the McCracken Report as an explanatory theory is that it attributes the main economic phenomena it considers to causes which it fails to define adequately. Inflation in recent years, it claims, has to a large extent been caused by political factors. Among these are increases in popular expectations, the development of inflationary expectations, increased union militance, and the growing dependence of the U.S. economy on the international situation. Similarly, the causes of recession, such as a diminished level of public confidence, have a political origin. Yet the authors of the McCracken Report fail to analyze these political causes with sufficient care.

The report's approach to policy science is also questionable. It advocates steady growth, on the grounds that a democratic capitalistic economy cannot endure the inflationary pressures of growth at more extensive rates. This recommendation presupposes that the continuation of capitalism is desirable. This, however, is an ideological assumption which the authors of the McCracken Report ought to have defended explicitly. So far as the report's recommendations for policy are concerned, the authors give no reasons for believing that their slow growth policy has a reasonable chance of being adopted.

II

Concepts of Liberty

Controversy reigns as to the nature, history, and morality of liberty. This set of summaries ranges over a wide diversity of concepts of liberty as analyzed from the perspectives of philosophy, law, history, political philosophy, and psychology. Such interdisciplinary approaches illuminate the relationship of liberty to rights, utilitarianism, individualism, legal doctrines, marriage, women's and children's status. In addition, in these summaries relating to liberty, we witness the dissenting voices of such thinkers in the liberal tradition as Locke, Coke, the American Revolutionaries, Sismondi, Mill, Thoreau, and Szasz, No less illuminating in refining our analysis of freedom are the several non-liberal voices which serve as a counterpoint in the following summaries.