Preface

Preface In September of 1961, at a place ideally suited for an undis turbed .exchange of ideas, a group of fourteen men spent one week together considering critically the early drafts of the papers finally presented in this volume. Including the editors, the group came from the following disci plines: economics, statistics, business administration, history, law, philosophy, political science, and sociology. In addition to their academic backgrounds, some of the participants in the symposium came from extensive experience in public service. The title for the volume was chosen in irony, of course. The "new argument" in economics and public policy is, as anyone familiar with economic history knows, even older than pre nineteenth-century socialism. Mercantilism and sumptuary laws, the latter even found in rather undeveloped tribal societies, antici pated many of the notions now revived in the present adoration of the "public sector."

Perhaps most of the participants in our symposium had feelings about our topic similar to those expressed by President Wallis in his theme-setting essay. The fashionable scolding of the "private sector," while imploring compassion for the allegedly starved "public sector," for political and emotional reasons, has not really produced a novel or intrinsically viable problem. There are more attractive and meaningful issues which realistically demand ex amination. But sometimes men must devote themselves reluctantly to a final inquest, especially when it is necessary to separate promising ideas from sterile and inhibiting principles. Toward the later fifties, the intriguing dichotomy, the public sector vs. the private sector, appeared ever more frequently in ix x Preface economic, sociological, and journalistic wrItings. At times, it seem.ed to serve the same purpose (and have the same emotional connotation) as the favorite antithesis of the early and middle fifties, "developed" vs. "undeveloped" countries.

As the history of social theories shows, the pleaders and engi neers of "social change" usually need a dichotomy, a "polariza tion" of social reality. Once it was proletariat and bourgeoisie, imperialist and colonial people, rural and urban areas, developed and underdeveloped; and now it is the private and the public sector. These semantic devices usually imply merely a preferred direction of change. "Social change/' so the proponents of the dichotomy insist, must transfer power, prestige, income, influence, expenditures, etc., from one to the other. Depending on the viewpoint of the observer, the transfer is inexorable and progressive, or reactionary and wicked. The authors who have contributed to this volume tend to dis agree perhaps, either on pragmatic or philosophical grounds, in regard to the exact balance between the private and the public sectors for any particular area of life. But they do share, it would seem, an abiding distrust of the notion that history, that social change, is a one-way street.

THE EDITORS Contents PAGE Contributors Preface CHAPTER v ix 1 NEOMERCANTILISM AND THE UNMET SOCIAL NEED-ERS by W. ALLEN WALLIS 1 2 THE ECONOMIC ROLE OF THE STATE by GEORGE J. STIGLER 12 3 GROWTH OF THE "PUBLIC SECTOR" AS A By-PRODUCT OF PRICE-FIXING AND OF SEGREGATING COST-BEARING FROM BENEFIT-SHARING by KARL BRANDT 24 4 PRIVATE AND PUBLIC EXPENDITURES: A REAPPRAISAL by ERNEST VAN DEN HAAG 51 5 CAN PEOPLE BE TRUSTED WITH NATURAL RESOURCES? by J. W. MILLIMAN 72 6 PUBLIC POLICY AND THE FOREIGN SECTOR by WILSON E. SCHMIDT 107 7 THE EXPANSION OF THE PUBLIC SECTOR THROUGH FOREIGN POLICY by J. FRED RIPPY 181 8 THE CONTRAPRODUCENTE CONSEQUENCES OF THE FOREIGN-AID PROGRAM IN BOLIVIA by WILLIAM S. STOKES 145 xi xii Contents 9 TRADE-UNIONISM AND THE "PUBLIC SECTOR" by SYLVESTER PETRO 185 10 THE UNAUTHORIZED GROWTH OF BUREAUCRATIC POWER by LOWELL BLAKE MASON 201 11 ART AND THE ARTISTS "CITIZENSHIP"