Knowledge that Transforms

A NUMBER of the conceptual premises upon which statistical science and practice have long been based have recently been attacked and discarded as harmful to statistical development in the Union of Soviet Socialist Republics. It seems incumbent upon statisticians in other countries to study the Soviet theses, to determine the extent to which differences are real and not merely semantic, and to take issue with those appear to undermine the structure of upon which their own work is founded. The present paper is intended as a preliminary analysis of this kind and its conclusions should be regarded as tentative. The Soviet attack, in the writer's opinion, can best be interpreted as a new phase of the ancient conflict between dogma and science. The dogmas upon which it leans have the essential characteristics of those in a revealed religion. Pretending to be scientific, these dogmas are actually anti-scientific in spirit and in the consequences which would follow their general acceptance. They are part of a new orthodoxy which seeks to impose revelation and arbitrary theological dictates upon the reason and the scientific judgments of men. Freedom of and expression are incompatible with theocracy and they are debarred from Soviet statistical doctrine. In order to support this interpretation I must describe the recent promulgation of Soviet statistical doctrine in some detail. This occurred during a two day Conference on Methodology at the Central Statistical Administration of the USSR in Moscow on February 20-2I, I950. A summary record has been published and appears in translation in the official journals of some other countries.' Soviet leaders have previously pronounced orthodox doctrines in art and literature, economics, biology, and in other scientific fields. I am among those who felt there was reason to hope tllat as an important tool for scientific analysis, statistics could escape such a doctrinal imposition. This hope has been unfounded. The conference was opened by the Chief of the Central Statistical Administration, Mr. V. N. Starovskiy. He explained that harmful bourgeois influences and anti-Marxist distortion in Soviet statistical science and literature hamper its development. He identified the main obstacle to the development of statistical science as the formal mathematics school of thought which considers statistics (to be) a universal science for the study of nature and society based ultimately on the mathematical law of large numbers and not on MarxistLeninist theory. A report on the correct theoretical basis of statistics was then given by Mr. V. A. Sobol of Mr. Starovskiy's staff. Statistics, said Mr. Sobol, is a social science, whose tasks and theoretical foundation are formulated in the works of Lenin and Stalin. Its tasks are to aid in the building of a communist society. Its theoretical foundation rests upon historical materialism and (communist) political economy. Incorrect views, which insidiously lean upon the theory of probability, have been expressed by such writers as Academician V. S. Nemchinov, who supported the chromosome theory of heredity at the 6 August I948 session of the All-Union Academy of Agricultural Sciences. Among others tainted with heresy were Mr. I. Yu. Pisarev (also of Mr. Starovskiy's staff) who was the author of the article on Statistics in the Great Soviet Encyclopedia. Following Sobol's report, according to the record. there was lively discussion. Most of *A paper contributed to the Twenty-Seventh Session of the International Statistical Institute and published here with permission of the Institute and the Indian National Committee for the International Statistical Conferences of 195'. See, e.g., Vestnik Statistiki, c. I, 1950 (publication of the Central Statistical Office of the Ukrainian S.S.R.); and Statisticky Zpravodaj, Rocnik XIII, I5 rijna 1950, Cislo 809, pp. 253-69 (Statistical Bulletin published by the State Statistical Office of Czechoslovakia).

CCELERATED amortization, as it has been used both during World War II and in the present emergency, is a device to encourage expansion of essential industrial capacity by offering to private enterprise incentives which will have a minimum direct effect on market prices. While accelerated amortization has been widely viewed as primarily affecting the accounting for profits for tax purposes, it has in fact been more than this. A certificate permitting accelerated amortization has entitled the holder not only to the privilege of more rapid amortization of facilities for tax purposes, but also in many cases to larger gross revenues through higher prices for its products. This has resulted from the fact that many prices in our economy are cost-determined,' and that accelerated amortization has been recognized as an element of cost for some pricing purposes. This is especially true in our war or defense economy. The extent of this price or revenue concession is indeterminate, partly because of uncertainties concerning the volume of products likely to be sold and partly because of the complexities of the process by which military goods and their components are priced.2 At the present time, there are further uncertainties because of failure to clarify current policies. For this and other reasons the value to the recipient of a certificate of necessity permitting accelerated amortization, and the cost to the government of the privileges granted, are both highly conjectural. It is increasingly apparent that the program of accelerated amortization was entered into after Korea without any clear appreciation of what privileges it was intended to grant or what minimum concessions were necessary to induce the requisite expansion. There is, moreover, serious question whether, as a long run device in a society of high level mobilization, accelerated amortization will be a favorable device for strengthening the competitive forces in the economy. It is not surprising, therefore, that the program has been the subject of much criticism.3

to encourage international commerce make it important to have such knowledge currently. The writer, in Novemnber i95o, requested information on their foreign holdings from more than a hundred American manufacturing corporations.2 Seventy-two companies supplied the data which are summarized in Table i. As of May I943, the Treasury study showed the foreign assets of American corporations and individuals with a 25 per cent interest or more in companies abroad, as amounting to $7,365,000,ooo. About 6,ooo corporations and indi-

Rosewll G. Townsend, An Application of the Durand Method for Estimating the Size Distribution of A Given Aggregate Income, The Review of Economics and Statistics, Vol. 34, No. 1 (Feb., 1952), pp. 80-81

M ACROECONOMIC behavior in the long run is characterized by two seemingly contradictory features, namely, by certain persistent tendencies and by incessant change. But these features are part and parcel of the same pattern of historical development in the economic field as well as in other fields. This note is an attempt to conceptualize Keynes's and others' vision of what is relevant for understanding the secular behavior of advanced capitalism, of economies. Such an attempt will be made here by means of a series of propositions in order to provide an analytical frame of reference. Secular macroeconomic behavior is influenced by (a) certain endogenous characteristics of the economic machine, and (b) exogenous factors of a fundamental nature. It is possible to make rigorous long-run statements by indicating what stands out as the general trend under varying historical circumstances. Broadly speaking, we may say that the general trend of mature economies is what it is because exogenous factors react on the inherent or endogenous variables of the economic process itself. First, I wish to bring out the long-run aspect of Keynes's multiplier theory ' in order to see its bearing upon continuous stability in varying degrees of economic development. Here we consider the multiplier as a structural coefficient and the consumption function as historically given. Our fundamental theorems based on Keynes's long-run observations 2 are: employment corresponding to given fluctuations in investment. 2. The lower the average propensity to consume, the greater the preponderance of capitalgoods industries in the economy and the greater also the degree of instability associated with those industries.