The Strategy of Direct Control in Economic Mobilization

Abstract

IT has become evident, from the discussions of the last few months, that the major unresolved question of mobilization policy in the United States is the role that should be assigned to direct price and wage controls. The disagreement holds, especially, for conditions of considerable but still limited mobilization. Given expenditures on the scale of those being made prior to the Korean War expenditures, it will be wise to recall, that were more modest in their achievement than in their volume there was effective agreement that direct controls were unnecessary. For full mobilization, a loose euphemism for what a country does if it has a full-scale war on its hands, there is something close to agreement that comprehensive controls over prices and wages are necessary or at any rate inevitable. But in mid-December, as this is written, plans are still being based on an intermediate situation. The transfer of resources to military use that is now in prospect promises to enforce an actual and perhaps a substantial reduction in civilian consumption. But it is not assumed that this will proceed to the point where, if the maximizing of military potential were the only criterion, the reduction in civilian living standards would have to stop. In this situation as the President indicated in his speech announcing the declaration of a state of emergency the decision has been taken to invoke direct controls. It would not appear, however, that this decision is based on an agreed or even a clear view of the role of these controls in the strategy of defense against inflation. This becomes evident from even a brief review of the discussion of recent months.