Building Counterfactual Pyramids
T he preceding Comment is an interesting example of what happens in co. authored pieces when contributors hold differing views. On the one hand, the Comment is a perplexing attempt to reassert some simple Keynesian economic verities; at the same time, its policy recommendations betray a reassuring scepticism about the practical application of such Keynesian simplicities. The end-product is a flaccid, ambivalent concoction. The observations that "the stimulus of a demand expansion alone would have been least effective in those regions heavily dependent on exports and might well have worsened the situation", that a "selective" and hence discriminatory investment programme was needed, and that "for a moderate expansion, the deficit need not have been so large as to entail unrestrained monetary expansion", can all be accepted. After all, we did argue that Keynesian techniques could have been ameliorative, especially during the (relatively short) periods of high cyclical unemployment, and the core of our original argument was that any expansionist unemployment policy in the I930s had to be highly discriminatory between regions and industries.1 Despite some ostensible agreement about policy prescriptions, we share very little common ground with Garside and Hatton on questions of analysis, method, and, at a deeper philosophical level, on how historical enquiry should be carried out. In the very limited space available we must attempt to pinpoint the major differences, taking our own thesis largely as read. Garside and Hatton seem to assert that full employment in the I930S was potentially i 822.42 per cent of the insured work-force and could have been attained with simple budget deficit techniques plus exchange "devaluation" against a strengthening balance of payments in an autarkic world. We doubt that Keynes would have agreed. Certainly, Garside and Hatton claim much more for the effectiveness of these simple expedients than did the mature Keynes. In the planning of post-war economic policy, Keynes argued that a domestic, unilateral solution to unemployment was at best unlikely for the United Kingdom, and he concentrated his own efforts on creating an expansionist framework for international trade as being the most favourable environment in which to pursue full employment at home.2