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Book Notices

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1965
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Heilbroner, Robert L., Understanding Macroeconomics, Prentice-Hall, Englewood Cliffs, New Jersey, 1965, xiii + 242 pp., $3.95.

THIS NEW VOLUME, by the author of The Worldly Philosophers and several other popular books on economic topics, introduces the reader to the subject of macroeconomics, that is to say, to the methods of analyzing changes in over-all economic activity. In general, Heilbroner follows the standard outline of modern introductory textbooks such as Professor Samuelson’s well-known Economics: An Introductory Analysis. Readers without previous training in economics who wish to inform themselves about such topics as the causes of prosperity and depression, of unemployment and inflation, or the effects of fiscal and monetary policies on national income will find in this book a competent nontechnical exposition of the main ideas which have emerged since J. M. Keynes first presented the modern theory of the aggregative economic process almost 30 years ago.

Understanding Macroeconomics is addressed to a U.S. audience. The illustrative material is taken from the U.S. national accounts, and the institutional background of the analysis is that of the U.S. economy. Moreover, this orientation has also influenced the selection of subtopics: there is no discussion of the foreign sector of the economy, and the interaction between income, prices, and economic growth, on the one hand, and the balance of payments, on the other, is barely mentioned.

In view of the high expectations with which one opens a new book by this author, it is somewhat disappointing that—excepting a good chapter on economic growth—the present volume offers little beyond standard introductory textbook fare. One would have hoped that Heilbroner had turned his talent as a popularizer of economics to an exposition—understandable to the practicing economist and the general reader alike—of some of the more advanced ideas about economic growth, business fluctuations, and the combination of various economic policies found in the current literature. Nevertheless, readers without formal training in economics will benefit by a perusal of this well-organized and lucidly written primer.

Rudolf R. Rhomberg

Marcus, Edward and Marcus, Mildred Rendl, International Trade and Finance, Pitman, New York, 1965, viii + 616 p., $8.75.

AS THE AUTHORS point out in the introduction, this book is written “to explain the operations of international trade, payments and capital movements” to both “liberal arts and business-administration students.” In fact it is a very good introductory textbook in international finance, with only a sprinkling of trade theory and policy.

The book is divided, somewhat unevenly, into four parts. Part I deals, rather superficially, with some aspects of international trade theory. It is plainly conceived only as an introduction and, although it presents to the reader the flavor of theoretical analysis, such a general view does not permit a more systematic exposition of the body of the theory.

Part II, which makes up one half of the book and discusses international financial problems, presents the main achievement of the volume. The chapters on spot and forward exchange markets mechanism are the best introductory analysis of that subject this reviewer has encountered. The discussion of international financial instruments is useful and indicates the business bent of the book, while the balance of payments adjustment process is mainly discussed in monetary terms. The authors are familiar with the most recent developments, which is particularly evident in their analysis of short-term capital movements. The same knowledge is evident in the chapter on international financial institutions, but it is unfortunate that the authors discuss in some 20 pages all the main institutions, beginning with World War I, which does not permit a more comprehensive analysis of recent developments.

Part III of the book deals with some basic aspects of tariffs and other trade restrictions and then presents a short but competent review of the U.S. foreign, economic, and financial policy. Finally Part IV lumps together under the title “Growth and Development” the analysis of international liquidity, of customs unions and other regional groupings, of international trade effects of cyclical fluctuations, with chapters on economic development and some institutional and policy effects of economic growth on trade. The most interesting aspect of this section is the discussion of liquidity issues; it basically follows the line of Triffin’s analysis.

Zoran Hodjera

Bass, Lawrence W., The Management of Technical Programs: With Special Reference to the Needs of Developing Countries (prepared by Arthur D. Little, Inc., for Praeger Special Studies in International Economics and Development), Frederick A. Praeger, New York, 1965, xiii + 138 pp., $8.50.

THIS IS a monograph of 18 short chapters prepared by a Vice President of Arthur D. Little, Inc., based on materials used in a training course for Egyptian technical executives held in Cairo in 1964. The central interest of the book is “the analysis of policies and procedures for bringing scientists and engineers into productive action to solve practical problems.” There are 8 types of “technical programs” whose management is discussed: fundamental research, basic research, applied research, product and process development, technical service to manufacturing, technical service to marketing, quality control methodology, and quality control itself. Although some attention is paid to national needs in these fields, the main focus is on the organization of these technical functions within individual manufacturing companies.

The book is clear, written simply in nontechnical language, and full of insights and concepts that laymen will find stimulating and illuminating. The discussion of “defensive” and “offensive” technical management, or the way in which technical management in a company often has sprung from a one-man laboratory set up for quality control, or the author’s own method of quantitatively measuring company benefits from technical programs (“APTeC,” he calls it—Analysis and Projection of Technical Contributions to Profitability) may be cited as examples. The book will be of most use in those organizations in developing countries where there is already a considerable degree of specialization of function, and where managements are under competitive pressure to rationalize, innovate, and economize.

George B. Baldwin

Zolotas, Xenophon, Monetary Equilibrium and Economic Development, Princeton University Press, Princeton, New Jersey, 1965, xi + 223 pp., $6.00.

THIS BOOK is concerned with the problems of economic development and monetary stability, with particular reference to Greece. The main conclusion is that in the long run the aims of securing a rapid and sustained development, of maintaining relative price stability, and of attaining balance of payments equilibrium are by no means conflicting ones; in fact, the last two are prerequisites for economic growth. Professor Zolotas, who is Governor of the Bank of Greece, has written a readable book which will be useful to economists as well as to politicians in developing countries. Its great strength is that after setting out briefly the general principles of economic development, it shows how these principles have been followed in Greece. The author gives a comprehensive review of economic policy in his country since 1950, in a section that should be particularly useful to readers in developing countries.

In the second part of the book the problems and prospects of economic development are discussed, and the human factor in the development process is emphasized. The author observes that, although lack of capital is a great bottleneck in the less developed countries, it is largely overshadowed by an even greater shortage of entrepreneurial and organizational abilities, and by the lack of specially and technically trained workers in both the public and private sectors.

Discussing the prospects for Greece’s economic development, Professor Zolotas stresses that the national economy is now at a turning point. Developments in the next decade will show whether Greece will be able to break the grip of underdevelopment and raise the national income to the level of an economically advanced nation. Concerning underemployment, the author considers that surplus labor has been absorbed to a considerable extent by emigration, but as the economy develops the advantages of extensive emigration will be outweighed by its disadvantages.

The future growth of Greek agriculture will not suffice to ensure a continuous increase in the national product; therefore, the attainment of a relatively satisfactory average annual rate of growth in gross national product (GNP) will require an appreciably higher rate of increase in industrial output.

During the past decade Greek real GNP rose at an annual average rate of about 7 per cent; at the same time, there was relative price stability and equilibrium in the balance of payments. These developments, Professor Zolotas concludes, indicate that the right “mix” of monetary policies has been followed.

Rolf Evensen

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