Knowledge that Transforms

In recent years increasing use has been made of systems of social accounts, and a variety of new types and new forms of presentation have been suggested. The general features of such systems are: (a) the division of an economy into a number of groups or economic entities, mostly themselves a complex of elementary units, and (b) a summing up in the form of accounts of the transactions of various kinds between these economic entities. As a rule, the economy of one country is investigated, implying that all other countries are regarded as one single group. The economy considered may be split up into a number of separate groups. It is customary to distinguish between consumers' households, business enterprises, and the government sector. If special attention is to be given to banking problems for example, banks will constitute a separate group.

J. Tinbergen, Tjalling C. Koopmans, Jacob Marschak, Francois Divisia, Jacques Rueff, B. Chait, La loi de divergence: Discussion, Econometrica, Vol. 17, Supplement: Report of the Washington Meeting (Jul., 1949), pp. 124-128

The violence of exchange-rate fluctuations in countries which in the past, have had unregulated markets for foreign exchange has frequently led to the conjecture that a system of market exchange rates may be inherently unstable. The condition of stability, of course, is that: a rise in the price of foreign currency shall reduce the excess demand for such foreign exchange. The relation of this condition to elasticities of demand for imports and elasticities of supply of exports has been investigated in considerable detail by Alfred M a r s h a 1, Mrs. Joan R o b i n s o n, C. W. B i c k e r d i k e, A. J. B r o w n, and others. All of the investigators have considered a world economy consisting of only two countries, and the conclusions they reached are as follows: (1) If exports are produced under constant price both at home and abroad, stability requires that the sum of the important demand elasticities at home and abroad must exceed unity. (2) If the elasticity of supply of exports is zero at home and abroad, the exchange market is always stable regardless of the demand elasticities. (3) In the intermediate case, stability requires that y1y2(e1-fe2+1) + e,e2(ql +2-1) shall be positive, where Yl and Yq2 are import demand elasticities at home and abroad and where e1 and e2 are export supply elasticities. Brown considers an additional complication in which each country's exports consist partly of imported materials, and concludes that the presence of such imported materials increases the stability of the market. It is easily shown, however, that this conclusion is incorrect. If exports are produced at constant supply price, the condition of stability, after allowing for imported raw materials, is: r +'r2y2 > 1 where Yi and y2 are elasticities of demand for imports of finished goods, and where r1 andr2 are the' ratios of the value of exports retained by domestic producers to the total value of exports. Since these ratios are less than unity, and will be considerably less than unity if imported materials comprise a large part of the cost of exports, it follows. that the exchange market may be unstable even when q1 + 112 exceeds unity. If exchange markets are 'stable as of given supply and demand schedules, the possibility still remains that they may be made unstable

Parmi les nombreux concepts qui se rapportent a l'atre humain, les uns sont une construction logique de notre esprit. Ils ne s'appliquent a aucun etre observable par nous dans le monde. Les autres sont 1'expression pure et simple de l'exp6rience. A de tels concepts, B r i d g m a n a donne le nom d'operationnels. Un concept operationnel est equivalent a l'operation ou 'a la serie d'operations que l'on doit faire pour l'acquerir. En effet, toute connaissance positive depend de l'emploi d'une certaine technique. Quand on dit qu'un objet a une longueur d'un metre, cela signifie que cet objet a la m6me longueur qu'une baguette de bois ou de metal dont la longueur est egale a celle de l'etalon du metre conserve a Paris au bureau international des Poids et Mestires. I1 est bien evident que nous ne savons reellement que ce que nous pouvons observer. Dans ce cas, le concept de longueur est synonyme de la mesure de cette longueur. Les concepts qui se rapportent a des choses plac6es en dehors du champ de l'experience sont, d'apr es Bridgman, depourvus de sens. De meme, une question ne possede aucune signification s'il est impossible de trouver des operations qui permettraient de lui donner uine reponse. (C a rr e 1, L'homme, cet inconnu.)

H. O. A. Wold, Harold Hotelling, Tjalling C. Koopmans, Rene Roy, De la theorie des choix aux budgets de familles: Discussion, Econometrica, Vol. 17, Supplement: Report of the Washington Meeting (Jul., 1949), pp. 187-191