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The article explores the relationship between the government and the private sector in the United States in 1967. The author feels that the term "private sector" is overly broad since it can refer to businesses ranging from local retailers to government-funded defense contractors as well as government-regulated utility companies. He calls for the privatization of government corporations as a more effective way to streamline certain businesses that are creatively stagnant. He also suggests that welfare reform and social policies such as federally financed medical care offer great hopes for a better society.

The article examines the actual role of cigarettes as currency in the German economy at the end of World War II, as opposed to popular mythology surrounding the events. Details are given describing the institution of a limited barter economy alongside the black market and traditional system and the presence of cigarettes as a primary commodity within them. Connections between the restrictions of Reichmark-American dollar exchanges are analyzed. Conclusions are offered suggesting that while cigarettes did serve in a monetary capacity, it was a limited one.

In this paper the concept of agglomeration economies is reviewed, and a method for identifying industries tempered by them is presented. Then, by way of illustration, the analysis is applied to manufacturing adjacent to New York City: the question is posed of whether agglomeration economies are evident, and whether these could be ascribed to the effects of agglomeration in nearby New York City. [ABSTRACT FROM AUTHOR]

This paper summarizes an attempt to deal with these issues. Like most theoretical work in rapidly growing fields, it is incomplete and the assumptions on which it is based are relatively crude abstractions. These abstractions, however, allow us to explore certain aspects of the interaction of the real and the monetary phenomena in a model of economic growth in which money, being government noninterest bearing debt, is introduced as an alternative asset to real capital. Under the assumption set out in Section I we have proved that in a growth model in which utility maximizing families are the basic economic unit of the system, the long-run capital stock of the economy is independent of the rate of monetary expansion. A rise in the rate of monetary expansion results in an equal absolute increase in the rate of change in prices; it reduces the stock of real cash but it does not affect steady state consumption. It therefore follows that the higher the rate of monetary expansion the lower will be the steady state level of utility. In the short run, an increase in the rate of monetary expansion is equivalent to a rise in government transfers to the private sector. It therefore results in an increase in consumption and a fall in the rate of capital accumulation. Finally, we have also shown that in the absence of perfect foresight, utility maximization guarantees the fulfillment of only one of the steady state stability conditions; namely, that the rate of capital accumulation be a decreasing function of the capital stock. Since there is no lag in adjustment of the actual to the desired stock of cash, an additional, necessary but not sufficient, condition for the stability of the steady state is the existence of a lag in the formation of expectations. [ABSTRACT FROM AUTHOR]

This articles suggests that the accepted analysis of price formation in black markets is defective and the conclusions based on it incorrect. The accepted treatment of price formation in black markets is based substantially on the standard analysis of price formation under discriminating monopoly. For instance, Professor Bronfenbrenner in a well-known article suggests that a monopolist would produce the output at which marginal cost equals the controlled or official price (which equals the marginal revenue on official sales), that he would make sales in the black market up to the amount at which marginal revenue in that market equals the official price, and that he would sell the rest at the official price. This analysis assumes that the black market price is a function of the quantity supplied in that market and is independent of the quantity supplied in the official market. This assumption is inappropriate. With a given total output, any change in black market sales necessarily involves a diversion of supply to or from the official market, and a corresponding diversion of demand. In other words, black market demand is directly related to a change in black market supply. It is, therefore, inappropriate to represent the black market demand as a fixed curve determining a different black market price for each quantity supplied in that market. In a situation with a given total output, the black market price changes only if the slope of the black market demand curve changes with different allocations of the total quantity between the official market and the black market. The marginal revenue in the black market is also constant, and the "discriminating" monopolist has no scope to vary his black market sales out of his total output--uniquely determined by marginal conditions in the official market according to the accepted analysis--so as to equate marginal revenue in the two markets.

Discusses the downside of informal organization in business management. Effectiveness and efficiency of informal channels on many occasions; Formal and informal organizations as not necessarily exclusive; Vertical abuse.

It is almost universally recognized that money plays a role of high consequence in aggregate economic activity and in the day-to-day operations of households and business firms. The function of money as a medium of exchange and as a potential source of increased efficiency in production and exchange is not developed. As the opportunity cost of holding wealth in the form of (non-interest-bearing) money rises because of higher rates of inflation, real capital becomes a more desirable asset relative to money and the long-run equilibrium capital-labor ratio and output per head rise to approach the steady-state values of a barter economy. Human and capital resources are required to supervise and deliver the commodity payments to labor and to the supplier of raw material. The introduction of money surely facilitates the increased use of credit and contracts. Unit costs of real goods and services, reckoned in terms of human time embodied in production and acquisition, are reduced from their barter economy levels.

Employment Act of 1946 in the U.S. Although the Council of Economic Advisers is an advisory agency and has no authority to enforce its views, the Employment Act of 1946 placed it in a strategic position to formulate plans and programs and, in effect, to give real content to a general statement of policy with which few could disagree. In one very important area, however, much more work needs to be done and more experience is required. This is the analysis of the practical problem of administering a stabilization program. One of the most important aspects of this problem is the consideration of the effects of alternative policies upon the economic, political, and social structure. Under the terms of the Employment Act the Council has assumed several main functions: first, the constant review and appraisal of the economic health of the nation; second, the formulation of stabilization plans and programs designed to correct both short-run and long-run fluctuations and third, the appraisal of all types of economic plans and programs arising in all the various agencies of government and in the private sector of the economy with the purpose of determining their effect on economic fluctuations; correct maladjustments is to become possible.

In this article a number of the major tax problems of small business at the federal level is considered. Many persons also believe that the continued existence of the private enterprise system requires a vigorous growth of small business activity if private business is not to be monopolized by giant cartels or to be absorbed by governmental encroachments. No standard, generally acceptable definition of small business has thus far been formulated. It may be related to the nature of the industry, the market, the size of the investment, sales, net income, the number of employees, and other factors. The definition of small business for federal taxation must be arbitrary because it must be convenient and practicable. It cannot consider all the variable circumstances of each industry and concern. Some fairly definite factor, such as annual net income, will probably be necessary as a yardstick. At the present time, a tax differential prevails for corporations with annual net incomes below $50,000.

This article focuses on presents ideological trends in Poland. The state of the Polish mind is perhaps clearer, however, than that of other Central and East European peoples because of the extent to which underground activities flourished there. The Polish underground was one of the most fully developed and best organized on the Continent, the underground press one of the most numerous and rich, the organization of the "secret state" in Poland one of the most efficient. This, and especially the press consecrated to political, social, cultural, and literary problems, enables to take a deeper and wider look at the ideological trends of contemporary Poland as reflected in the activity and publications of representatives of the majority of the Polish people; that is, peasants, workers, and working intelligentsia. Polish contemporary political thought is renewing the best traditions of the century-long Polish fight for liberty and independence carried on under the slogan, "For your freedom and ours."

The importance of retained earnings as a source of funds for financing corporate growth has been widely recognized. Also well recognized is the considerable short-run variability of corporate saving. Accordingly, there have been a number of studies of the policies and behavior of corporations with respect to income retention. Having obtained estimates of the parameters in the micro-analytic model of the generation and application of savings in small business, it would be interesting to test the model by using it to project savings and debt change for a broader sample of firms or for the same firms over another period of years. Unfortunately, there are no data available for doing this. In any case, little substantive claim can be made for the particular parameter estimates obtained here as forecasting tools due to the special features of the population from which the data were drawn. Rather, these estimates serve to point up certain considerations that are pertinent to any attempt to forecast corporate saving and debt change on the basis of a micro model.

Recent literature on productivity indicates that the traditional definition is being modified to include such factors as quality, diseconomy, social value, and other measures considered by some more "relevant" to today's environment. What is needed, in the opinion of the authors, is the development of more and better "success indicators" that can be used by governmental agencies to assess and present the payoff of social services programs, and to improve them to the point that they warrant the public's confidence. The bulk of the criticism of social services governmental programs has been due to major differences between the expectations of the various client groups about services to be performed and expectations of agency employees who provide the services about the results to be achieved. Client satisfaction is not a new concept in measurement, either in the public or private sector. Elected officials exist by it. They point to such success indicators as number of terms in office, their voting records, their positions on issues, legislation they have introduced, legislation passed, committees they have served on, and other measures of performance.

In seeking to identify the second characteristic of public service which gives it great appeal, one must acknowledge the importance of the institutional aspects of bureaucracy. It is a characteristic which is also found, and carefully preserved, in many of the largest and oldest of our private organizations. In fact some have observed that at a given point in size there are remarkable similarities in organization and operating procedures between big government and big industry. Government agencies must have organization structures which are not dependent upon individual personalities for their perpetuation. This is necessary to a far greater degree than in the private sector, because the entire top management can change overnight as a result. By contrast, in the private enterprise situation regulations, policies, and practices unless directly dictated by law can be changed flexibly as required. In public practice the vast majority of rules, regulations, and policies are founded on laws and interpretations of laws. Change is often impossible except through the most painstaking, well thought through proposal.

The article discusses the effects of business taxes on financial organizations. Business taxes are, in one essential, no different from any other category of taxes. They represent the transfer of income and spending from the private sector of the economy to the public sector. They consist of a portion of private incomes which would have been spent or saved voluntarily to satisfy the present and future requirements of private individuals and groups. All taxes have in common the force of redirecting or of reallocating the resources of a community. It is the hypothesis here that taxes on business cause a greater misallocation of resources than do taxes on individuals.

The article examines the theory of economic development in relation to underdeveloped countries from the view of economist Joseph Schumpeter. It presents the role of government in an underdeveloped country and the problem of financing innovations in underdeveloped countries. Schumpeter's theory is one of the very few theories, which aim at systematically explaining the process of economic development. Since the theory is exciting, widely known, and the major contribution of a great economist, it is inevitable that attempts have been made in the recent years to apply it to the case of present-day underdeveloped countries. It has been argued by many economists that the role of government in an underdeveloped country becomes essential either because the private sector has not the strength or lacks the willingness to enter certain activities or the private sector is willing to enter but sufficient ground has not been prepared for it to enter. It is this second reason which strongly suggests that, insofar as the public sector aims at providing basic facilities, it should be considered as enhancing the bourgeois interest.

It has been demonstrated that monolithic explanations of supervisory behavior fail to do justice to the diversity of roles empirically found. In order to explain why one particular supervisory system has the characteristics it does, it was found necessary to go beyond the usual analysis of organizational and technical factors and to consider the possibility that foremen constituted some form of occupational grouping which had its own role-definitions and its own mechanisms for transmitting these. Because foremen's occupation was embedded in two different types of organization, some discussion of organizational differences was necessary in order to show how accommodation between occupational and organizational principles was achieved. Despite formal differences, these two types of organization functioned in two ways which allowed occupational role-definitions to structure behavior. But a greater tension existed between these principles in the public authority than in the private sector companies. The nature of foremen's occupational role-definition was seen to correspond to generally held norms in the industry and to reflect both specific structural factors found historically in the docks and more generally, the nature of craft industries.

Focuses on the delay function in the analysis of factor substitution and shadow wages. Derivation of a twice-adjusted shadow wage function; Effect of the introduction of an underemployment adjustment to the market wage; Factors affecting the location of the compensated isocost curve.

Difficulty in utilizing cost control devices in the small business lies in a misunderstanding of the nature of cost control. Too often thinking on cost control is interwoven with some rather elaborate historical or standard cost system. Further, those who take the view that the income statement does not purport to and cannot present a picture of operating efficiency becloud the problem. Cost control has but one object and that is assisting management to attain its goals. It is axiomatic that an organization has control over its costs only when its management wants to control costs. Conversely, when management lacks interest in cost control, costs remain uncontrolled. It is management's function, among a great many others, to establish a profit goal. A wide awake management will look ahead and attempt to come to some conclusion as to what it is after and what it can reasonably hope to obtain. To achieve its profit goal, management must inaugurate a systematic plan of assuring proper expenditure and must establish upper and lower limits of expenditure. Finally, it will need to put its plan into effect at all levels of management from the top to the bottom of the organization.

In barter for re-trade, expected profit is a judgment regarding relative subsequent exchangeability of the new thing possessed in comparison with other, as yet, un-possessed desirable things. The test of this pre-judgment comes when the anticipated re-exchange is accomplished. If, subsequent to the first barter-exchange, no third person finds a prospective utility in the goods held for re-exchange, there is no second exchange and no accomplished profit for the trader; also if after a second barter exchange, the goods then newly received should prove not to have the expected utility, there can be no accomplished profit. Valuation is a part of the process of exercising sound judgment in consuming or trading, and forms the basis for all production and merchandising operations. And the ability to make sound judgments regarding consumptive wants and uses, and of trade opportunities exists quite independently of records as such. Reality of profit should not he read into a situation too soon or upon inadequate evidence. This is the basis of the so-called realization principle. When an objective test has verified a personal hope, conviction of reality may safely follow but not before. Anticipated profits are mere opinions and therefore subject to individual bias and mistaken judgment. Realized profits on the other hand have met an objective test, under conditions by which the utility of the goods has been further attested by the independent judgment of a subsequent receiver in exchange. But even such realization may prove to be an incomplete test of reality because today's gains may be consumed by tomorrow's losses if the goods last received prove useless.

The aim of this exploratory study is to investigate consumer sovereignty in the public sector of the economy. If the consumer is to be sovereign he must control both the public and private sectors. Consumer sovereignty, as used here, is taken to mean a process of choice such that the society embodying it may be clearly seen as the result of that choice. Choice must be free, informed, responsible and personal. Freedom of choice is basic to this concept. Personal choice is stressed because choice must not be made for persons but by them. It was also stipulated that choice be informed and responsible. People who freely choose must live according to the consequences of their choice, they must solve their problems for themselves. And in order that the act of choice be meaningful it must be an informed choice. The federal budgetary process is introduced by the President's annual State of the Union Message which may be considered as an expression of his idea of the overall valuations of the nation. The leading problem of consumer sovereignty is twofold: first, how to achieve a process of economizing in the public sector which embodies the preferences of freely operating and informed persons, no one being excluded from the process; second, how to maintain a true consumer sovereignty in the private sector at the same time.

The resolution of conflict through citizen participation in the decision-making process is receiving widespread attention at the levels of both theory and practice. The view that decisions concerning the allocation of resources, both private and public, should allow the widest possible action on the part of the individual seems essential in a democracy and, indeed, is basic in American tradition. The rationale of antitrust policy has been to prevent restraints which hampered the determination of price and output through the free play of consumers and producers in the market place. The concern with increased participation rests in part on the assumption that the present decision making process fails to assimilate enough information about the desires of all citizens. Clearly, a process which increases the flow of relevant information should lead to improved decisions in the same sense that well-informed and rational markets lead to a superior allocation of resources in the private sector of the economy.

Historians and scientists have largely ignored the temporary federal agencies which controlled the World War II economy. One of the most important organizations, the War Production Board (WPB), which regulated the allocation of supplies and production, has been virtually disregarded. Yet many of the Board's problems probity of businessmen, military attempts to command the economy, relations between business executives in government and military leaders merit attention. Analysis of one of the major disputes, the 1944 struggle on industrial reconversion, raises these problems and reveals much about the relationship of business and the military in the wartime government. Powerful financial and industrial interests dominated executive positions on the WPB and used their authority to protect prewar competitive patterns and to support military demands. Distrustful of labor, generally unsympathetic to small business, and respectful of the military, representatives of these business interests resisted reconverting.

The article presents information on the essence of experience among entrepreneurs. The creation of a technology-based enterprise occurs when an entrepreneur starts a business to commercialize technology transferred from his previous source of employment. As the new firm develops, it in turn becomes a source of technology and entrepreneurs for a second generation spin-off and so on. Entrepreneurial learning becomes apparent when the principal of a first generation spin-off leaves to start another technology-based firm. Market and financial planning are key factors in the experienced entrepreneurs' performance. Entrepreneurs should strive to begin business with a market plan that focuses the technical activity and gives the firm a head start on the required product development. Careful financial planning is also necessary. Investors are reluctant to provide capital for a business venture when the requirements are uncertain. When these tools are combined with an experienced management team, the business has a sense of direction and a high probability of success.

The article discusses capital budgeting techniques for small business management. In capital budgeting the firm's limited supply of capital is rationed among investment alternatives from which the benefits or cash flows are expected to be received over a period of years. The small businessman is frequently faced with the problem of making investment decisions that may influence the future profitability and flexibility of his firm. All too often these decisions are not based on reliable forecasting and evaluation procedures. Instead, investment proposals are considered on a one-at-a-time basis with little effort being made to analyze the potential profitability of each proposal. In this article some of the procedures of capital budgeting have been illustrated. The correct application of these procedures, especially the present value method, can help most small business managers visualize the relevant factors in an investment decision and guide them toward more intelligent decision making.

The article presents response of the author on comments made by Lewis E. Hill on the papers "Toward a Reconciliation of Institutional Economics and Its Critics" and "Beyond the Market Economy Building Institutions That Work," by Clarence E. Ayres that were published in the March 1970 issue of the periodical "Social Science Quarterly." Under appropriate arrangements for doing things, that is, under an appropriate institutional structure, the propensity to truck and barter naturally entails the creation of markets, which are themselves arrangements for effecting exchange. In the U.S., the institutional structure is such that markets permeate most of the economy. For example, in August 1970, nearly 84 per cent of total civilian employment was in the private sector, all of which consists of regulated and more or less unregulated markets. Thus, employing scholar Robert L. Heilbroner's system of classification, the economy of the U.S. would be appropriately designated as essentially a market system, as the author did in his introduction to Ayres' classic. "Institutionalism and Economic Development." But Ayres objects to him, that the U.S. economy is an industrial economy. Unfortunately, his is not intended to be a cross-classification, which, if correct, would be a suitable complement rather than a substitute for the one that the author employed, since Ayres says prefatorily, and the author flatly denies that the U.S. economy is a market economy.

In the June 1957 issue of "The American Economic Review" journal, Earl R. Rolph undertook to show how the public debt should be managed to minimize the total interest charges while using the size and composition of the debt to achieve any given stabilization goal. Rolph states that "the composition and size of an outstanding national debt is optimal when the marginal utility of each kind of debt instrument is made proportional to its marginal cost." Without regard for whether the author is correct in considering it desirable to minimize interest costs, the purpose of this paper is to show that Rolph has made two analytical errors which may seriously damage his analysis. A graphic analysis is used to determine the distribution of money and debt maturities needed to maintain a given gross national product. Only debts of two maturities are assumed, one short-term and one long-term. Starting with any given distribution of long-term and short-term debt, if the government were to buy back an amount of long-term debt and sell an equal amount of short-term debt to the private sector, the amount of genuine money in the economy would be unchanged.

This article deals with voluntary organizations in the U.S. Free, individualistic Americans, from this country's beginning to the present day, have banded together in thousands of voluntary organizations to get something done. Voluntary groups are so inextricably interwoven in the fibre of American government that they have actually become a part of government, itself. Voluntary organizations have tremendous power. The formal government listens to these groups which make up the informal government. Voluntary groups are also interested in parliamentary law. They are interested in it as a means of achievement.

The article discusses methods of demand curve estimation. It discusses several short-cut methods of demand curve estimation suitable for use by small business managers. Pragmatically, it is recognized that smaller businesses must often price close to cost in order to compete against larger companies in the market place. Such large companies provide formidable barriers to market entry for the small business manager through heavy advertising expenditures and aggressive display and merchandising techniques. Given such competition, the small business manager quickly ascertains that his demand curve is elastic, and discovers that he must price low in order to sell his product. While this may not seem fair, it is a fact of business life. Generally, as a firm engages in heavy advertising and promotional techniques there is a tendency to lock in consumer preference for a particular branded product. Therefore, the larger firms in any industry, the firms engaging in heavy advertising, will generally face more inelastic demand curves than will the smaller firms.

This article presents the author's reply to Richard Martin Friedman about his comments on the article "Principles of Debt Management." Friedman's first criticism concerns the case of a two-dimensional debt structure consisting of long-term and short-term securities. The author held that the substitution of short-term for long-term debt in such a way as to leave private expenditures unchanged would require that the total debt increase, and that more and more short-term debt would be needed to offset a unit of long-term debt. Friedman asserts that the latter point is incorrect. Less and less short-term debt would be needed to offset a unit of long-term because the special attractiveness of short-term debt, what the author called its moneyness features, diminishes as more of this debt becomes available. Friedman is clearly right in this observation. The gross national product isoquant should have been depicted as concave rather than convex. Attention may be called to his demonstration of the precise character of such an isoquant in the limiting case. This finding is a positive contribution.

This essay utilizes a simple dichotomous market model drawn from economic theory to analyze the emergence of administrative corruption. The paper argues that the ideal-type of modern bureaucracy posits a system analogous to the mandatory pricing system of market economics, while corrupt bureaucratic systems more resemble the free market. In the latter model prices are determined by supply and demand, rather than by fixed schedules prescribed and enforced by some central authority. On the economic market when a government attempts to maintain the mandatory pricing system but finds that supply and demand are greatly out of balance, there is the likelihood of the emergence of a free market system regardless of official intentions. The result has come to be called the "black market." In some settings, under certain circumstances one may similarly find the emergence of "black-market bureaucracy." The author suggests what some of these circumstances might be and concludes with some observations and questions about the control of this kind of bureaucratic black marketeering, its utility in economic and political development, and its future in the underdeveloped world. [ABSTRACT FROM AUTHOR]