Knowledge that Transforms

A T THE present time, the problem of full employment is overshadowed in the public mind by the more immediate problems of rising prices and industrial disputes. This is natural in a period in which the level of employment is fairly satisfactory and our most urgent problems are those of an inflationary rather than a deflationary character. We may be confident, however, that public concern over the danger of mass unemployment will remain dormant or inarticulate, only as long as that danger does not seem immediate and pressing. The strength of the underlying public sentiment favoring government action to assure continuing full employment is attested by the fact that the candidates of both major parties in the last presidential election found it expedient to give this objective their full and unqualified support. The nature of the public sentiment on this issue was further evidenced by the passage of the Act of I946 which retained much of the substance, though it lost some of the bold language, of the original Full Employment Bill. Full employment as an economic norm seems destined to achieve in the twentieth century an acknowledged priority comparable to the position held by the division of labor in the eighteenth century, and by the optimum allocation of resources in the nineteenth century. The Great Depression showed that the division of labor and the optimum allocation of productive factors could not suffice for the maximization of wealth, and that positive policies to sustain the over-all level of operation of the economy were equally if not more essential. A growing sensitivity to the physical and mental suffering attendant upon large scale unemployment, and to its alarming political repercussions, is also responsible for the growing sense of public responsibility in this field. A substantial number of professional economists have remained skeptical of assured full employment as a national policy. Some have felt that the methods by which sustained full employment would be sought would be either ineffective or dangerous. Others have viewed the full employment objective itself as either meaningless or undesirable. It is with this second type of question, relating to the meaningfulness or desirability of full employment as a goal, that the present paper is exclusively concerned. No attempt will be made to consider, much less evaluate, the methods which might be required for its attainment.

M EASUREMENT of productivity, or of output per unit of input, has generally been limited to the input factor of labor. Failure to make similar calculations for other factors has left misinterpretations in the minds of many. This failure also has prevented a proper understanding of the production process and the close interrelationship of the factors of production. Research in the Bureau of Agricultural Economics over the last several years has provided data which make possible an examination of trends in productivity of factors other than labor in agriculture.2 The eight charts used in this article give examples of output-input relationships for agriculture as a whole. These charts do a reasonably good job of portraying the significant changes in agricultural productivity over the last third of a century. The story is certainly worth telling. But of equal importance to many are the techniques and problems of measurement which arise in an attempt to outline the story in a statistical fashion. A general knowledge of the nature of agriculture and of the agricultural production process is necessary to an understanding of the problems of measurement of output-input relationships in farm production. Agriculture in the United States comprises nearly 6 million individual farm units, although less than half of these farms account for the bulk of agricultural production. Only one-fourth of the farm labor is hired; the rest is supplied by farm operators and members of their families who are not paid stipulated wages. Around 6o per cent of the land is owned by the people who farm it, and the remainder is rented. The major products of agriculture are crops and livestock. Although all, or a major portion, of some crops are produced for direct human use, a large part of crop production is for livestock feed, as is the production from pasture and range lands. Not only is there close interdependence among the crop and livestock enterprises on individual farms, but because of specialization there is interdependence among farms and among areas. Dairy and poultry production in the New England area, for example, depends to a large extent upon supplies of feed grain from the Corn Belt States. And interdependence between agriculture and nonfarm industry is increasing. The outstanding development here relates to the input of farm power. About the time of World War I, farm power was furnished mainly by horses and mules. In the subsequent third of a century, animal power has been rapidly replaced by mechanical power in the form of tractors, trucks, and automobiles. This shift in form of power has had two notable results: (i) an increase in the productivity of farm labor and (2) an increase in the volume of farm output for human use, as land and labor formerly used to grow horse and mule feed have been diverted to production of products for the market. The latter development has been chiefly a change in utilization of feed crops. For example, much of the corn formerly fed to horses and mules is now fed to hogs, cattle, and poultry. Production of farm power has been transferred in large part from the farm to industry. Many more of the complexities and interrelationships in agriculture are brought out in the discussions of individual factors of production. These complexities present as a first problem what is to be measured in both the numerator and denominator of output-input ratios. Equally difficult problems emerge in 'This article is a revision of a paper originally presented before the Productivity Conference Panel, Washington, D. C., May 8, I947. The authors appreciate the cooperation of the Bureau of the Budget in preparing the charts used in this article. Both authors are economists at the Bureau of Agricultural Economics, U. S. Department of Agriculture. 2 The results of one study dealing with the measurement of changes in farm production have been published in the BAE processed report, Farm Production in War and Peace, by Glen T. Barton and Martin R. Cooper. A second and more comprehensive study is USDA Misc. Pub. 630, Progress of Farm Mechanization, by Martin R. Cooper, Glen T. Barton, and Albert P. Brodell.

Milton Gilbert, George Jaszi, Edward F. Denison, Charles F. Schwartz, Objectives of National Income Measurement: A Reply to Professor Kuznets, The Review of Economics and Statistics, Vol. 30, No. 3 (Aug., 1948), pp. 179-195