Search

This chapter deals with the Council for Mutual Economic Assistance, established as a parallel to the OEEC by the Eastern European countries. The commonest English abbreviation for this organization is Comecon, but we shall use the officially preferred CMEA. The CMEA was abolished in 1991 and was to be succeeded by the Organization for International Economic Cooperation (OIEC). But at the time of writing no decision was yet taken. This chapter examines first the CMEA, then, briefly the envisaged OIEC.

As the Organization for Economic Cooperation and Development (OECD) is the successor to the Organization for European Economic Cooperation (OEEC), we should study the latter as a preliminary to any discussion of the former.

The implementation of a multilateral trade and payments system was facilitated by the establishment of the Fund and the Bank. It proved more difficult to reach agreement on the reduction of customs duties and the abolition of quantitative restrictions and discriminations, partly owing to the fact that these matters were more closely bound up with balance-of-payments equilibrium. In order to avoid a recurrence of the protectionism of the 1930s vigorous efforts were necessary to dismantle these various kinds of trade barriers. This chapter is devoted to the action taken in this respect within the framework of the General Agreement on Tariffs and Trade.

On 8 April 1965 the member states of the three European Communities signed the “Merger Treaty” for the amalgamation of the three European “Executives” — the High Authority of the European Coal and Steel Community (ECSC), the Commission of the European Economic Community (EEC) and the Commission of the European Atomic Energy Community (EAEC or Euratom) into a single Commission of the European Communities. At the same time the three Councils of the three Communities were merged into one. Hence, since 1 July 1976 when the Merger Treaty came into force, the unified Commission of the European Commission has taken the only executive authority. Western European economic integration, however, started much earlier in the fifties, on a sectoral level.

Since the theory of the consumer’s behaviour is founded mainly on Gossen’s ‘laws’ or on the indifference curves, these are discussed first, followed by demand and the consumption and saving functions.

Still following the same pattern, this chapter will deal with the origins of the European Free Trade Association (EFTA), the most important provisions in its Convention and details of operation, concluding with a brief appraisal.

This chapter deals successively with the equilibrium level of national income, inflation, the quantity theory and the cash-balance theory.

Before examining in the next chapter how economic theory influences economic policy, it is worthwhile to dwell upon this relationship in the past. What were the repercussions of economic doctrines upon the policies of their times?

In this chapter, marginalism and two of its basic assumptions will be discussed. Finally, some comments will be made on price interdependence and the laws of supply and demand.

This chapter deals with the Council for Mutual Economic Assistance, established as a parallel to the OEEC by the Eastern European countries. The commonest English abbreviation for this organization is Comecon, but we shall use the officially preferred CMEA.

In this chapter, we will discuss the theory of comparative cost, the Heckscher-Ohlin theory, the theory of purchasing-power parity and the modern theory of balance-of-payments equilibrium.

After a digression upon welfare theory, a branch of economics concerned with efficiency, the most important contemporary economic theories and their impact upon economic policy are dealt with. Finally, we describe the main causes of disagreement among economists.

Because many theories are based on the assumption of complete substitutability, this concept will be studied first. After evaluating the optimum combination of factors of production and the optimum level of production, we will discuss supply and the investment decision.

As a rule, economic growth is not measured against production capacity, which is very difficult to estimate, but against national production. In this chapter, we define economic growth as a sustained increase in the net real national product (or income) per inhabitant.

The customary theory of distribution is greatly influenced by marginal theory. According to this theory, the first principle underlying demand for factors of production is that the factors’ marginal productivities should be in proportion to the sums paid for them. In the demand for a given factor, therefore, the price of the other factors must be taken into consideration if an optimal combination of factors is to be realized.

The following section deals with the commodity agreements. The one after that concerns UNCTAD, not only because this organization seeks to coordinate negotiations regarding these agreements, but also because it has attracted attention by its tendency to broach numerous subjects of a general nature.