Knowledge that Transforms

ECONOMISTS who have made detailed comparative studies of wage rates within a plant or between plants in the same labormarket area are struck by the haphazard variations in such rates and by the irrationality of many intraplant and interplant differentials in wages.2 Actual wage facts seem contrary to what one might expect according to conventional wage theory. Demand and supply do not eliminate gross inequities or gross irrationality.3 Perfect competition seems to be the exception rather than the rule. Movement in response to varying rates does not take place even in the same locality. One of the most significant facts about wage rates is their variation for the same job in the same labor market.4 Instead of a single rate for the same work, there is usually a band or zone of rates ranging from the lowestto the highestpaying employer in a community. The wide diversity in plant wage levels in the same labormarket area is strikingly indicated by the local surveys made by the U. S. Bureau of Labor Statistics in I943 and I944 in order to establish, by occupational groups and labor-market areas, brackets of sound and tested going rates.

rrHE scheme of putting our federal debt wholly into two forms, consols and currency,l is obviously too radical for early political consideration. Its virtue is that of indicating a direction for policy which, wisely pursued, would perhaps involve numerous steps and only gradual institutional change. Much can be said for focusing attention upon the radical, ultimate objective, namely, an economy where all private property takes exclusively the forms of government demand obligations (currency or full currency equivalents), government consols (always in process of elimination, save during total war), corporate common stock, and fee interests in real assets (along with an inevitable minimum of business accounts-receivable and

ness cycles places a serious difficulty in the way of a quantitative theory. Mathematical models cannot be checked and even their significance is open to question. All useful laws are, no doubt, only approximations to reality, but in the economic case the approximation is intolerably poor. Time series, trend and seasonal apart, not only fail to conform to simple sine curves, but their shapes, their amplitudes, and their periods vary. Some economists have quite correctly said that there is no conclusive evidence of the wave nature of economic life. The mere fact that time series sometimes go up and sometimes down is insufficient; nevertheless, the impression that economic evolution is cyclic cannot be so easily dismissed. The two points of view can be reconciled by adopting the hypothesis that we are dealing with an oscillatory mechanism which is disturbed.

George Katona, Rensis Likert, Relationship between Consumer Expenditures and Savings: The Contribution of Survey Research, The Review of Economics and Statistics, Vol. 28, No. 4 (Nov., 1946), pp. 197-199