Cohen, Stephen D., International Monetary Reform, 1964-69, The Political Dimension, New York, N.Y., U.S.A., Praeger, 1970, 201 pp., $13.50.
In this book Mr. Cohen presents a history of the negotiations that led up to the creation of the facility for special drawing rights (SDR’s) in the Fund with particular emphasis on what he calls “the political dimension.” His main thesis is that the liquidity discussions were primarily a result of Atlantic Community politics which resulted ultimately in a politically, rather than technically, determined scheme.
The author pays particular attention to the conflicting U.S. and French views and the role of Germany as a mediator between these views. A parallel is repeatedly drawn with other major issues in the Atlantic Community, such as the North Atlantic Treaty Organization (NATO) and control over atomic weapons. The gold-exchange standard, like NATO, is presented as the incarnation of U.S. hegemony in Europe, against which the new center of power, the Common Market, would naturally rebel.
The author has gained considerable inside knowledge of the discussions as a result of off-the-record interviews with U.S. Government and Fund officials. His descriptions of some of the crucial meetings and their interrelations are consequently quite revealing.
The book as a whole suffers somewhat from the fact that the particular angle from which the author approaches his subject, while interesting and important, does not provide anywhere near a full explanation of the result of the liquidity discussions. Why was it that negotiations between the Common Market countries and the United States (the other Atlantic powers receive little attention in this volume) led to a universal scheme for reserve creation in the Fund? Granted that the discussions were continually influenced by political considerations, can it seriously be maintained that their outcome was “dictated by traditional Atlantic political patterns”? Can the implicit verdict of the book that the SDR facility is technically inferior to, say, the CRU scheme be substantiated?
J. J. Polak
Bird, Richard, Taxation and Development: Lessons from Colombian Experience, Cambridge, Mass., U.S.A., Harvard University Press, 1970, xvii + 277 pp., $9.00.
Toward the end of this book Prof. Bird asserts that “Colombia has a long tradition of foreign tax missions, as well as a surprisingly good record of listening to them, not always with desirable results.” One can only hope that his own analysis and policy conclusions are also treated with respect by the Colombian authorities, since the results could be extremely desirable.
Bird’s examination of Colombia is a model of what a country case study should be. It is set in a wide context of developmental objectives related to growth, income distribution, employment, and balance of payments management. It emphasizes the role of taxation in relation to the attainment of these objectives, and accordingly gives considerable attention to the allocative function of taxation. At the same time the need is recognized to develop a structure of taxes with a high built-in elasticity of revenue in relation to national income if the need for resources for both recurrent and capital purposes is to be met (though, as an aside, one can regret the introduction of new and unnecessary terminology in the form of “ex-ante elasticity” and “ex-post elasticity” in place of “built-in elasticity” and “buoyancy”). Another merit of the book is that full recognition is given to the political and administrative constraints within which the Government of Colombia, as perhaps any government, has to act.
In this latter respect richard Bird takes a highly favorable view, in my opinion correctly, of earmarking as a tax device in developing countries. The dislike, if not the rejection, of earmarking by conventional public finance theory on the grounds that it distorts the pattern of expenditure from some hypothetical “optimum” pattern has always seemed to be somewhat questionable in the circumstances of countries with a low level of political and social cohesion, inadequate expenditures on services such as education which is so needed and widely demanded, and other departures from the model normally set out in the theoretical literature. Bird documents these circumstances for Colombia and concludes that “more rather than less earmarking of the right kind is what is needed in Colombia.”
One of the special contributions of this study is the discussion of the local government finance problem, which is typically given but a nodding recognition in tax studies of developing countries. About 20 per cent of the book is devoted to this topic, and there is in particular an extremely valuable discussion of experience, both successful and unsuccessful, with the valorization tax in Colombia (sometimes called the special assessment or betterment tax). This discussion concludes with the presentation of eight conditions which seem to be needed for the successful implementation of the valorization tax. In view of the growing concern over the problems of urbanization in developing countries, and the need for major expenditures to meet these problems, this is a highly relevant issue.
If, as we would hope, the Government of Colombia will take a favorable view of this study, it is also to be hoped that the author is correct when he writes: “There is good reason to expect that any government which is capable of raising real revenues in the ways proposed in this book will be a government which will spend the increases in ways relevant to and helpful for development.”
Taylor, Milton C. (Editor), Taxation for African Economic Development, New York, N.Y., U.S.A., Africana Publishing Corporation, 1970, 560 pp., $15.00.
Read with the keen eye of a revenue man or a tax collector, this useful book would doubtless suffer more astute criticism. Scanned, on the other hand, by an averagely intelligent student of Africa with an interest in the problems of economic development, it stands up extremely well either as a useful work of reference for the expert, or as an informative set of essays about the use of taxation as a stimulus to economic development or as a means of controlling or guiding both public and private expenditure. The Africana Publishing Corporation probably will have another success with this book-they are the publishers of, among other things, the English version of the highly regarded Jeune Afrique Yearbook.
Prof. Taylor has collected 21 essays on theories of taxation applicable to the developing countries of Africa. The book is divided into five sections, each with an introduction by the editor, and the topics include fiscal policy, economic’ development, direct and indirect taxation, and tax policy. Among the contributors are Sir Arthur Lewis, Adebayo Adedeji, Nicholas Kaldor, and Prof. Taylor himself. Although the collection was originally assembled as material for students and teachers interested in the problems of public revenue systems, the style and layout suggest it could serve equally well as a useful guide for planning offices and ministries of finance.
The idea for Prof. Taylor’s book came to him while he was teaching tax principles and policy at the University of IFE in Ibadan, Nigeria. He is now Professor of Economics at Michigan State University.
Hunter, Guy, Modernizing Peasant Societies, London-New York, Oxford University Press, 1969, x + 324 pp. $6.50.
This book, resulting from a project undertaken by the author on behalf of the Institute of Race Relations and the Overseas Development Institute, both in London, attempts to answer two important questions about peasant societies seeking to modernize themselves. The first is whether it is possible for the traditional peasant societies to adopt a set of modern institutions and techniques borrowed from the developed countries and the laws of economic and social growth that evolved from their circumstances. The second is whether these societies in the twentieth century can look for guidance to the peasant phase of now developed countries and deduce from their experience the sequences which they can follow in their own development.
Mr. Hunter perceives a basic difference which separates the historical conditions of Western economic growth from the conditions which face Asia and Africa today. For one thing, Europe or America—when in the phase in which many of the developing countries are today—were characterized by an almost total absence of population pressure; the skills of their population in many ways were far better developed then than they are in today’s developing world; and, in addition, they had an immense area of the globe open to them for commercial enterprise, local settlement, and administrative vocation. In the early years of the industrialization phase, social conscience remained dormant and the consequences were pauperism, exploitation of children, and other abuses causing human suffering that would now be unacceptable as a cost of development.
These differences between past and present indicate that the process of transformation of the present-day underdeveloped societies cannot be easily repeated. Industrializing when the world outside was even more backward is qualitatively different from industrializing today when other nations are already at an advanced stage.
Mr. Hunter’s study is based not merely on intellectual perception of the social, economic, and political forces, but also derives heavily from his experiences in the major developing countries such as India and Pakistan. He has eschewed a temptation to present a neat and elegant theory, divorced from reality and for that the reader is richer. He is exposed to the more painful way of learning what it means for a country to strive for economic development in the twentieth century.
Deena R. Khatkhate
Grubel, Herbert G., The International Monetary System, New York, N.Y., U.S.A., Penguin Books, lnc.,1970, 208 pp., $1.65 (paperback).
This book is part of a new series of inexpensive texts and readings in economics, representing an important development in educational publishing. The claim made for the texts by the General Editor is on the grand scale—“they will differ from conventional books in their attempt to chart and explore new directions in economic thinking.” The text under review is of high quality: it provides a carefully balanced synthesis, presented in an original way and with extraordinary economy in less than 200 small pages.
The particular virtue of this text is its integration of the considerations concerning the system of exchange rates with the considerations concerning international reserves. Professor Grubel views the available policy instruments in the international monetary system as each involving welfare costs; but since these instruments are to some degree a substitute for each other, the use of any one instrument also involves benefits from avoidance of the costs incurred by using the other available instruments. Thus, flexible exchange rates involve costs in uncertainty; adaptation of domestic choices on the trade-off between various desiderata such as low unemployment and low inflation involves costs of enforced conformity; restrictions on international trade involve costs of misallocation of resources; and expansion of reserves involves costs in terms of alternative investment forgone (though this will be a cost for the world as a whole only where commodities such as gold are used as reserves; Prof. Grubel does not venture far into the largely uncharted area of the costs of fiduciary reserves for the world as a whole). Thus, none of these instruments is ideal in itself; the policy tools “together represent an interdependent system which works efficiently when the loss in welfare associated with the marginal increase in the use of any one variable is just equal to the losses associated with the marginal use of each of the others.”
Under this general approach. Prof. Grubel divides his treatment into three parts. He begins with the theoretical “characteristics of an efficient world monetary order.” He goes on to discuss in the light of the theory the main organizational prototypes—the gold standard, freely fluctuating exchange rates, the gold exchange standard, and centrally created reserves; in the latter context. Prof. Grubel gives welcome prominence to the neglected subject of interest rates on centrally created reserves, and gives a concise description of his concept of seigniorage as applied to international reserves. In the last part of the book, he describes recent developments, including the establishment of special drawing rights and the 1968 arrangements for gold, though the treatment of these is cursory.
Essentially, the book provides the theoretical background of these developments, and that is its special value. This book deserves an audience as wide as the group of people whose professional duties or personal interests lead them to pronounce or decide on aspects of its subject matter. The pros and cons of a freely fluctuating system of exchange rates, or of larger or smaller world reserves, are too often discussed in isolation and with an inadequate grounding in the full range of considerations involved.
Pollard, Sidney and David W. Crossley, The Wealth of Britain, New York, N.Y., U.S.A., Schocken Books, Inc., 1969, 303 pp., $9.00.
This book is an attempt to describe the sources and distribution of the wealth of Britain over a period of nearly nine centuries, from 1085 to 1966. The authors are well aware of the pitfalls that lie in wait for anyone attempting so ambitious a project, and they have avoided any generalized juxtaposition of data from the nine centuries. They are also concious that the material available for their study is very unevenly distributed over the period, and they warn the reader, in particular, of the lack of reliable information for many centuries on such matters as per capita income and wealth.
Nevertheless, the book offers to the reader a well-documented economic history (mainly of England rather than of Great Britain as a whole) focused on the changing ways by which the population earned their living, and on the distribution of the national product. The authors have made great efforts to piece together all the available data, and to illustrate them from contemporary writings. The result is an illuminating study.
J. Keith Horsefield
OTHER BOOKS RECEIVED
Katzner, Donald W., Static Demand Theory, New York, N.Y., U.S.A., The Macmillan Company, 1970, x + 242 pp., $9.95.
De Gregori, Thomas R., Technology and the Economic Development of the Tropical African Frontier, Cleveland, Ohio, U.S.A., The Press of Case Western Reserve University, 1969, viii + 531 pp., $12.50.
Van Home, James C., Function and Analysis of Capital Market Rates, Englewood Cliffs, New Jersey, U.S.A., Prentice-Hall, Inc., 1970, x + 180 pp., $3.95 (paperback).
de Closets, Francois, En Danger de Progrès, Paris, France, Editions Denoèl, 1970, 317 pp., F 21 (paperback).
Flanders, Allan (Editor), Collective Bargaining, Baltimore, Maryland, U.S.A., Penguin Books, Inc., 1969, 431 pp., $2.45 (paperback).
Reid, Graham L. and Kevin Allen, Nationalized Industries, Baltimore, Maryland, U.S.A., Penguin Books, Inc., 1970, 196 pp., $1.65 (paperback).
Oficina Internacional del Trabajo, Hacio el Pleno Empleo, Ginebra, Suiza, Oficina Internacional del Trabajo, 1970, viii + 500 pp., $4.00, Sw F 17 (paperback).
King, Timothy, Mexico: Industrialization and Trade Policies Since 1940, New York, N.Y., U.S.A., Oxford University Press, 1970, x + 160 pp., $2.50 (paperback).
Bergsman, Joel, Brazil: Industrialization and Trade Policies, New York, N.Y., U.S.A., Oxford University Press, xiv + 281 pp., $5.75 (paperback).
Link, Max, Die Ursachen des industriellen Aufstiegs Mexikos, Zürich, Switzerland, Orell Füssli Verlag, 1970, 229 pp.
Linder, Staffan B., The Harried Leisure Class, New York, N.Y., U.S.A., Columbia University Press, 1970, viii + 182 pp., $7.00.
Cetron, Marvin J., Raymond Isenson, Jacob N. Johnson, Ambrose B. Nutt, and Howard A. Wells (Editors), Technical Resource Management: Quantitative Methods, Cambridge, Mass., U.S.A., The M.I.T. Press, xx + 236 pp., $10.00.
Mueller, Gerhard G. and Charles H. Smith (Editors), Accounting: A Book of Readings, New York, N.Y., U.S.A., Holt, Rinehart and Winston, Inc., 1970, xvi + 429 pp., $5.95 (paperback).