Monday, October 01, 2007

Invasion of the Name Snatchers: Supply-Side Economics

I steal half the title from James Galbraith. Italy is a foreign country, and, besides, Paolo Sylos Labini is dead:
"At the beginning of the sixties some issues that were to become the themes of supply-side economics were passionately discussed by a few Italian economists: Saraceno, Sylos Labini, Fuà, Caffè, Napoleoni and myself. The Italian economy was clearly incapable of assuring adequate growth of the various sectors and of all regions. There were sectors (such as agriculture) lagging behind, whereas the take-off of some regions (the South in particular) was hampered by structural conditions and chronic ineffiencies characterised other sectors (in Fuà's and Sylos' contributions attention was brought to the tertiary sector). It was our condition that an active economic policy, aiming at producing some specific structural changes, could help growth, facilitate the take-off in the South and reduce the divergence between the growth of private consumption and the expansion of social services. Such a conviction had some important implications for economic theory. It offered stimuli and arguments to go beyond the demand approach of both Keynesian and monetarist economists. The supply-side theories developed in the United States have perceived such a need only in a partial and distorted way, essentially by concentrating on fiscal problems. In the sixties we were convinced instead that to overcome the limitations of the demand approach - institutionalised in current macroeconomic theories - a coherent general strategy of economic policy should be devised such that conditions accounting for the efficiency of the whole system could be positively changed. Such a general strategy can be labelled as (indicative) planning. Planning is not to be conceived as an alternative to the market. Indicative planning can make market more efficient; in its turn, the efficiency of the private economy allows for more advanced goals to be pursued by planning.

The events of the sixties and seventies appear to have invalidated our view on the need for indicative planning..." -- Siro Lombardini (1993). "Foreword", in Market and Institutions in Economic Development: Essays in Honour of Paolo Sylos Labini (edited by Salvatore Biasco, Alessandro Roncaglia, and Michele Salvati), St. Martin's Press
Re-reading the above, I see that Lombardini doesn't say that this group of economists actually used the label "supply-side economics".

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