Abstract
Economic problems confronted in the stabilisation of business activity Activities capable of generating business prosperity must operate through gross domestic investment, consumer buying, government purchases and net foreign investment. For the United Stales of America, the last is smalt enough to be ignored. The first two both depend upon the decisions of private persons as to future prospects, and all are closely inter-related. To avoid wide fluctuations in a period of increasing productivity requires a constantly growing demand, and the pattern of private demand does not meet this requirement. Government demand is consequently of importance, since it is technically free from economic restraint. The use of credit may also be of importance, for example in increasing demand if there are willing borrowers. At present two-thirds of the United Stales’ labour force produces personal consumption goods ; the rest must be employed in personal investment or by the government. It is variations in employment in this latter group which is the primary cause of most fluctuations. Consequently, private investment needs not only to be maintained, but must actually be increased to ensure full employment, as 1958 has demonstrated. Thus, the government must act to increase demand in recession, since it is the only economic organism with the necessary latitude. Arguments are given for public works being less satisfactory as a stimulus than lax reduction or government purchases of current goods and services, and the author presents statistics which evaluate the practicability and scope of government activities of these kinds. - In conclusion, the author utilises the above arguments in an examination of recent developments in the United Slates.
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