The structure of a modern economy the united states, 1929 89

THE STRUCfURE OF A MODERN ECONOMY Also by Kenneth E Boulding BEASTS, BALLADS AND BOULDINGISMS BEYOND ECONOMICS COLLECTED PAPERS: VOLUMES I-VI CONFLICT AND DEFENSE DISARMAMENT AND THE ECONOMY (edited with Emile Benoit) ECODYNAMICS ECONOMIC ANALYSIS ECONOMIC IMPERIALISM (edited with Tapan Mukerjee) ECONOMICS AS A SCIENCE *THE ECONOMICS OF HUMAN BETTERMENT (editor) THE ECONOMICS OF PEACE THE ECONOMY OF LOVE AND FEAR EVOLUTIONARY ECONOMICS HUMAN BETTERMENT THE IMAGE THE IMPACT OF THE SOCIAL SCIENCES LINEAR PROGRAMMING AND THE THEORY OF THE FIRM (edited with W Allen Spivey) THE MEANING OF THE TWENTIETH CENTURY THE OPTIMUM UTILIZATION OF KNOWLEDGE (edited with Lawrence Senesh) THE ORGANIZATIONAL REVOLUTION PEACE AND THE WAR INDUSTRY (editor) A PREFACE TO GRANTS ECONOMICS A PRIMER ON SOCIAL DYNAMICS PRINCIPLES OF ECONOMIC POLICY THE PROSPERING OF TRUTH READINGS IN PRICE THEORY: VOLUME VI (edited with George J Stigler) A RECONSTRUCTION OF ECONOMICS REDISTRIBUTION THROUGH THE FINANCIAL SYSTEM (edited with Thomas F Wilson) REDISTRIBUTION TO THE RICH AND THE POOR (edited with Martin Pfaff) THE SKILLS OF THE ECONOMIST THE SOCIAL SYSTEM OF THE PLANET EARTH (with Elise Boulding and Guy M Burgess) STABLE PEACE THREEFACESOFPOWER TOWARDS A NEW ECONOMICS TRANSFERS IN AN URBANIZED ECONOMY (edited with Martin and Anita Pfaff) THE WORLD AS A TOTAL SYSTEM *Also published by Macmillan The Structure of a Modern Economy The United States, 1929-89 Kenneth E Boulding sometime Distinguished Professor of Economics, Emeritus University of Colorado at Boulder with the assistance of Meng Chi !50th YEAR M MACMILLAN © the estate of the late Kenneth E Boulding 1993 Softcover reprint of the hardcover 1st edition 1993 All rights reserved No reproduction, copy or transmission of this publication may be made without written permission No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P9HE Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages First published 1993 by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world ISBN 978-1-349-12945-4 ISBN 978-1-349-12943-0 (eBook) DOI 10.1007/978-1-349-12943-0 A catalogue record for this book is available from the British Library Contents List of Figures and Tables vi Abbreviations ix Preface X The Structure of an Economy Human Capital Sizes and Proportional Structures of Total Output and Income Money and Prices Capital Structures The Role of Government The World Economic Environment Towards Understanding and Control What of the Future? 14 25 40 53 70 84 96 111 126 129 210 Notes and References Appendix: Data Tables Index v List of Figures and Tables Unless stated otherwise, all figures are for the United States and all dates are for 1929-89 Figures 2.1 2.2 2.3 2.4 2.5 Total population Live births and deaths, 1910-88 Total annual increase in population Population by age group, 1929-87 Labour force and population of labour force age, 2.6 Population in non-labour force, labour force and employment Employment by sector (percentages) Employment by sector (thousands) Per capita national account index Per capita real net product of the civilian labour force Major components of the gross capacity product (in constant 1982 dollars) Major components of the gross capacity product (as a percentage of GCP) National income by type of income Average gross weekly earnings and real compensation, 1947-89 Percentage share of aggregate income, 1947-87 Families, distribution by total income, 1947-88 Implicit price deflator (1) (gross national product) Implicit price deflators (2) (personal consumption expenditure, gross private domestic investment) Implicit price deflators (3) (exports, imports, government purchases of goods and services) Federal government deficit or surplus vs consumer price index, 1929-89 Purchasing power of the various forms of liquid assets, 1959-89 2.7 2.8 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 4.1 4.2 4.3 4.4 4.5 1929-87 vi 15 15 16 17 18 18 19 23 26 28 29 30 33 35 36 37 41 41 42 44 46 List of Figures and Tables 4.6 4.7 Average currency held per capita Per capita currency plus demand deposits, and GNP deflators 4.8 Components of Ml 4.9 Consumer price indexes: all items, rent and residential, 1913-89 4.10 Consumer price indexes: food, clothing and upkeep, 1913-89 4.11 Consumer price indexes: commodities, durables and non-durables, 1935-88 4.12 Consumer price indexes: transportation and medical care, 1935-89 4.13 Common stock price indexes, 1929-86 5.1 Balance sheets for the US economy: non-financial corporate business, 1945-88 5.2 Balance sheets of the household sector, 1945-88 5.3 Consumer credit outstanding 5.4 Mortgage debt outstanding as percentage of GCP, 1939-89 5.5 Mortgage debt outstanding by type of property, 1939-89 5.6 Mortgage debt outstanding by holder, 1939-89 5.7 Private domestic investment 5.8 Capital consumption 5.9 Real net private domestic investment 5.10 Increase in real capital 5.11 Interest rate vs interest as percentage of national income 5.12 Real rate of return and interest rate 5.13 Components of manufacturers' inventories by stage of process, 1953-89 5.14 Components of manufacturers' inventories by durability of goods, 1953-89 5.15 Inventories of manufacturing and trade, 1948-89 5.16 Sales by manufacturing and trade, 1948-89 5.17 Gross private domestic investment 6.1 Government expenditure 6.2 Federal outlays, fiscal years 1940-91 6.3 Federal receipts, fiscal years 1940-91 6.4 Government budget surplus/deficit (in current dollars) vii 46 47 48 49 50 50 51 52 54 55 56 57 57 58 59 60 61 61 64 65 66 67 68 68 69 71 72 74 75 viii 6.5 6.6 6.7 6.8 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 8.1 8.2 8.3 8.4 8.5 8.6 8.7 List of Figures and Tables Government budget surplus/deficit (in constant 1982 dollars) State and local government revenue by source, fiscal years 1927-88 State and local government expenditure by function, fiscal years 1927-88 Tariff indexes, 1929-87 Trade per capita vs GNP per capita for 114 countries, 1985 Relative shares of world trade: average of exports and imports, 1960-86 Relative shares of world trade: exports by major regions, 1960-86 Relative shares of world trade: imports by major regions, 1960-86 World trade total, 1865-1987 Exports and imports Foreign exchange rates of US dollars, 1967-89 World petroleum wholesale price, 1960-87 Crude oil and petroleum product imports, 1973-89 Federal Reserve discount rates vs prime rates, 1939-89 Corporate profit/(profit + interest) vs unemployment rate, 1929 44 Corporate profit/(profit + interest) vs unemployment rate, 1944-61 Corporate profit/(profit + interest) vs unemployment rate, 1961-87 Business inventories vs the unemployment rate, 1929-51 Business inventories vs the unemployment rate, 1951 68 Business inventories vs the unemployment rate, 1968-87 75 76 77 80 86 87 88 89 91 92 93 94 94 100 105 106 107 108 108 109 Tables 3.1 Income distribution by population fifths, families, 1988 4.1 Price deflators in the Great Depression, 1929-33 4.2 Liquid assets, 1959 and 1989 39 42 45 Abbreviations COMER GAIT GCP GNP GPDI ISEW MMMF NCP NNP NPDI OPEC PCE PIG Committee on Monetary and Economic Reform General Agreement on Tariffs and Trade Gross Capacity Product Gross National Product Gross Private Domestic Investment Index of Substainable Economic Welfare Money Market Mutual Fund Net Capacity Product Net National Product Net Private Domestic Investment Organisation of Petroleum Exporting Countries Personal Consumption Expenditures Profit and Interest Gap ix 1865 1866 1867 1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1882 Year - 21 535 22 690 23 866 - 13 299 13 299 15 780 15 780 16 463 - Year 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 - - 66 207 67 370 69 878 62 287 52 806 39 964 35 544 30 181 28 814 30 815 34 944 34198 - - 7.5A Trade total (bns of 1967 US$) (a) 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 Year 7.6C Exports Imports 7.6B 733.1 704.1 699.3 666.5 663.8 685.4 726.2 796.9 811.3 820.0 865.5 905.0 009.3 1133.6 300.9 397.0 381.0 141.4 36.2 40.0 42.0 29.1 25.1 27.3 35.2 69.0 - 22.7 - - 42.1 - 30.1 31.7 38.2 36.9 48.0 51.1 54.1 42.0 - - - 24.2 - 37.4 (billions of 1982 US dollars) GCP 7.6A (b) 6.31 5.21 3.85 3.05 3.04 3.40 3.43 3.43 4.09 3.97 4.17 4.63 4.40 3.00 2.36 2.61 3.41 6.87 Exports 7.6D 0.47 0.53 0.18 0.09 0.08 0.11 -0.22 -0.22 -0.21 0.91 1.08 1.50 1.03 0.10 -0.96 -0.76 -0.22 3.56 7.3F Net exports continued on p 202 5.84 4.68 3.67 2.95 2.96 3.30 3.65 3.64 4.30 3.06 3.08 3.13 3.37 2.90 3.32 3.37 3.63 3.31 (per cent) Imports 7.6E (a) World trade total, average of imports and exports, 1865-87; (b) exports and imports as percentage of GCP, 1929-89 7.5A Trade total Table A33 N 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 Year 39109 24 719 26 013 25 426 25 388 26 722 26 981 28187 19 106 29 566 31 234 30 370 33 158 33 639 37 020 38 083 - - Year 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 154 000 167 200 - 139 100 - 110 000 117 300 - 64 248 67150 71283 69 438 85 401 85 553 95 423 - 7.5A Trade total (bns of I967 US$) 7.5A Trade total (a) 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 Year 7.6C Exports Imports 7.6B (b) 1110.0 1152.5 1178.5 271.1 373.5 1422.7 478.2 498.6 563.7 590.8 620.8 651.5 723.9 762.2 831.4 904.1 986.5 081.5 186.0 82.3 66.2 65.0 59.2 72.0 70.1 66.9 70.0 76.9 87.9 94.9 82.4 83.7 98.4 100.7 106.9 114.7 128.8 132.0 39.9 47.1 46.2 54.6 57.4 63.3 69.7 67.5 76.9 83.6 87.9 92.8 101.9 102.4 103.3 114.4 116.6 122.8 134.7 (billions of 1982 US dollars) GCP 7.6A Table A33 continued 8.27 6.45 5.92 4.75 5.72 5.30 4.72 4.78 4.98 5.63 5.98 4.98 4.77 5.49 5.44 5.45 5.54 5.90 5.81 Exports 7.6D 3.41 3.88 3.54 4.04 4.44 4.42 4.39 4.13 4.26 4.46 4.44 4.30 4.49 4.39 4.17 4.31 4.28 4.32 4.51 (per cent) Imports 7.6E 4.87 2.57 2.38 0.71 1.28 0.88 0.33 0.65 0.72 1.17 1.54 0.68 0.28 1.09 1.27 1.14 1.27 1.58 1.30 7.3F Net exports N N 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 41 332 41 550 45 391 47 881 56 267 60 694 60116 - - - - - 37 921 39 726 40 584 43 452 46 412 47 250 45 710 45 215 48 049 54 865 56 584 56 863 - 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 186 900 198 800 209 400 221 000 239 400 262 000 292 000 283 200 321 000 392 800 484 600 508 835 548 448 588 488 632 193 706 842 751 223 683 150 622 964 606 814 630 194 636 330 679 911 773 805 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 295.5 361.1 453.9 511.2 540.7 640.6 763.2 885.5 891.2 945.4 062.5 184.7 317.6 389.0 430.7 516.0 506.1 627.3 785.3 899.5 997.7 108.4 258.6 374.4 138.4 143.6 155.7 165.0 178.3 179.2 195.2 242.3 269.1 259.7 274.4 281.6 312.6 356.8 388.9 392.7 361.9 348.1 371.8 367.2 397.1 450.5 530.1 587.6 152.1 160.5 185.3 199.9 208.3 218.9 244.6 273.8 268.4 240.8 285.4 317.1 339.4 353.2 332.0 343.4 335.6 368.1 455.8 471.4 526.9 566.6 605.0 643.9 5.81 5.84 5.92 6.05 6.46 6.18 6.34 7.98 9.71 9.23 9.21 8.94 9.50 10.93 11.93 11.59 10.32 9.36 9.54 8.58 8.72 9.31 10.61 11.32 4.87 4.96 5.32 5.48 5.66 5.64 6.09 6.80 8.67 7.46 8.23 8.85 9.32 10.23 10.84 10.56 9.57 9.52 11.00 10.38 10.86 11.64 12.04 12.24 0.94 0.88 0.60 0.56 0.80 0.54 0.24 1.18 1.04 1.77 0.98 0.09 0.18 0.71 1.09 1.03 0.75 -0.16 -1.46 -1.80 -2.14 -2.33 -1.43 -0.92 204 Appendix: Data Tables Table A34 (a) Foreign exchange rates of US dollars, 1967-89 (b) World petroleum wholesale price, Libya (Es Sidra), 1960-87 Absolute 7.7A Germany Year (Mark) 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 3.9865 3.9920 3.9251 3.6465 3.4829 3.1885 2.6714 2.5867 2.4613 2.5184 2.3236 2.0096 1.8342 1.8175 2.2631 2.4280 2.5539 2.8454 2.9419 2.1704 1.7981 1.7570 1.8808 (a) Index 7.7D 7.7B 7.7C Japan Germany Japan (1973 = 100) (Yen) (currency units per US dollars) 362.13 360.55 358.36 358.16 347.78 303.12 271.30 291.84 296.78 296.45 268.62 210.38 219.02 226.63 220.63 249.06 237.55 237.45 238.47 168.35 144.60 128.17 138.07 149.23 149.43 146.93 136.50 130.38 119.36 100.00 96.83 92.14 94.27 86.98 75.23 68.66 68.04 84.72 90.89 95.60 106.51 110.13 81.25 67.31 65.77 70.41 133.48 132.90 132.09 132.02 128.19 111.73 100.00 107.57 109.39 109.27 99.01 77.55 80.73 83.53 81.32 91.80 87.56 87.52 87.90 62.05 53.30 47.24 50.89 (b) 7.8A World petroleum wholesale price (US dollars/ ba"el) 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 2.58 3.17 3.37 4.50 13.84 11.59 12.31 13.87 13.71 21.06 35.87 39.83 35.49 30.89 30.15 30.15 14.60 18.52 Total 7.9C Libya 7.9B Algeria 1973 1974 1975 Per cent 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 100.0 100.0 100.0 6256 6111 6055 7312 8807 8364 8455 6910 5993 5114 5049 5437 5067 6223 6679 7402 7978 2.2 3.1 4.7 136 190 282 432 559 649 636 488 311 170 240 323 187 271 295 300 265 2.6 0.1 3.8 164 232 453 723 654 658 554 319 26 0 0 Thousands of barrels per day Year 7.9A 7.8 7.5 11.8 486 461 715 1230 1380 1144 1356 1261 1129 552 337 325 168 685 754 1064 1224 7.9D Saudi Arabia Table A35 3.4 4.9 6.4 213 300 390 539 541 573 420 348 366 248 338 343 314 318 285 205 180 7.9E Indonesia 10 3.6 7.7 4.6 27 19 98 0 223 469 280 298 535 555 304 35 48 Iran 7.9F 7.3 11.7 12.6 459 713 762 1025 1143 919 1080 857 620 514 302 216 293 440 535 618 809 Nigeria 7.9G 406 18.1 16.0 11.6 794 867 804 412 422 548 605 793 1135 979 702 700 690 645 690 481 7,9H Venezuela 2.8 2.7 3.9 177 162 239 388 622 611 493 302 171 189 174 283 232 309 292 539 771 846 21.2 17.5 14.0 599 517 467 538 455 447 482 547 630 770 807 848 999 910 1325 1070 0.3 0.1 1.2 16 71 87 179 318 439 533 522 685 826 748 816 699 655 747 763 40 9.4 8.4 5.5 40 25 29 36 585 511 332 275 211 229 231 225 197 175 189 188 864 16.1 14.0 13.2 1241 1171 1179 1009 1178 1310 1344 1528 1364 1613 1812 1858 1829 1008 853 798 continued on p 206 5.3 6.4 6.7 429 431 388 327 316 282 294 247 244 272 242 320 466 329 391 406 422 7.9I 7.91 7.9K 7.9M 7.9N 7.9L Other Neth Virgin Other OPEC Canada Mexico Antilles Islands non-OPEC Crude oil and petroleum product imports, 197>-89 N Vl 7.9B Algeria % 5.9 6.3 7.8 7.5 7.1 5.2 3.3 4.8 5.9 3.7 4.4 4.4 4.1 3.3 7.9A Total % 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Year 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 6.2 8.2 7.8 7.8 8.0 5.3 0.5 0.0 0.0 0.1 0.0 0.0 0.0 0.0 Libya % 7.9C 16.8 15.7 13.7 16.0 18.2 18.8 10.8 6.7 6.0 3.3 11.0 11.3 14.4 15.3 7.9D Saudi Arabia % 7.4 6.1 6.9 5.0 5.0 6.1 4.8 6.7 6.3 6.2 5.1 4.3 2.8 2.3 7.9E Indonesia % 4.1 6.1 6.6 3.6 0.1 0.0 0.7 1.0 0.2 0.5 0.3 1.5 0.0 0.0 Iran % 7.9F 14.0 13.0 11.0 12.8 12.4 10.3 10.1 6.0 4.0 5.8 7.1 8.0 8.3 10.1 Nigeria % 7.9G 9.6 7.8 7.7 8.2 7.0 6.8 8.1 8.4 10.1 11.9 12.7 12.0 10.7 10.9 7.9H Venezuela % Table A35 continued 7.9I 7.91 7.9K 7.9L 7.9M 7.9N Other Neth Virgin Other OPEC Canada Mexico Antilles Islands non-OPEC % % % % % % 8.2 5.3 1.2 5.8 3.8 11.8 7.1 5.9 2.0 5.3 2.4 14.1 7.3 5.6 3.8 2.7 14.0 5.1 5.8 5.2 6.4 2.7 5.1 13.9 4.4 7.7 6.6 5.6 3.3 14.6 7.5 2.9 8.7 5.5 3.3 19.7 3.7 9.4 13.4 6.2 3.4 25.6 3.4 10.8 16.4 5.6 3.7 26.6 11.6 5.2 13.8 3.5 28.1 5.4 4.6 16.1 15.2 4.9 0.8 26.9 5.0 13.0 11.2 3.9 0.4 25.9 4.4 12.7 9.8 0.4 4.1 27.1 7.3 10.1 13.5 0.5 3.3 25.1 9.7 11.4 9.6 0.5 22.9 4.0 N ~ 1.50 1.50 1.50 1.50 1.50 1.50 - - - - - - - 1.00 1.00 1.00 1.00 1.00 1.00 - - - - - - - Note: For columns 8.2-40, A 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 (per cent) B.JA B.IB Prime rate/ Fed Res commercial discount Year rate banks (a) Net interest Corporate profit 5.55 6.67 8.40 10.95 10.35 8.49 7.31 5.93 5.12 5.47 5.04 4.15 3.21 2.28 1.59 1.26 8.2-4D 3.14 8.67 15.82 23.53 24.75 21.60 19.97 16.80 14.18 18.91 17.05 14.45 9.66 4.41 1.66 1.01 (per cent) 81.25 86.39 89.89 91.32 72.72 67.12 56.23 24.60 -53.36 -57.77 21.17 39.69 56.81 61.06 52.02 60.44 Unemployment rate AI(A+B) 8.2-4C = corporate profit, B = net interest 11.33 8.57 2.74 -3.81 -3.79 2.28 4.81 7.80 8.03 5.93 7.70 11.06 13.91 14.47 14.14 13.25 (per cent of national income) 8.2-4B 8.2-4A (b) GCP 8.5-7B 1.7 -0.4 -1.1 -2.5 -1.6 -0.7 1.1 1.3 2.5 -0.9 0.4 2.2 4.5 1.8 -0.6 -1.0 1.58 -0.40 -1.21 -3.26 -2.14 -0.84 1.21 1.30 2.35 -0.85 0.36 1.87 3.23 1.08 -0.31 -0.47 (per cent) Invent IGCP 8.5-7C continued on p 208 107.3 99.8 90.8 76.6 74.6 83.8 91.1 100.0 106.5 105.4 110.3 117.6 139.3 166.8 196.4 214.0 (billions of dollars) 8.5-7A Chg in business invent (c) Table A36 (a) Federal Reserve discount rates vs prime rates, 1939-89; (b) corporate profit/(profit + interest) vs unemployment rate, 1929-87; (c) business inventories vs the unemployment rate, 1929-87 N ~ 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1.50 1.50 1.67 1.93 2.00 2.07 2.56 3.00 3.17 3.05 3.16 3.77 4.20 3.83 4.48 4.82 4.50 4.50 1.00 1.00 1.00 1.34 1.50 1.59 1.75 1.75 1.99 1.60 1.89 2.77 3.12 2.15 3.36 3.53 3.00 3.00 (per cent) 8.1A 8.1B Prime rate/ Fed Res commercial discount Year rate banks (a) Net interest Corporate profit 10.84 9.52 11.65 13.67 13.01 14.55 14.39 12.86 12.30 11.95 14.01 12.83 12.15 10.74 12.56 11.65 11.46 12.32 1.21 1.00 1.17 1.08 1.21 1.25 1.26 1.34 1.44 1.70 1.73 1.82 2.09 2.53 2.49 2.66 2.94 3.08 (per cent of national income) 8.2-4B 8.2-4A 8.2-4C 8.2-4D 1.59 3.72 3.79 3.67 5.78 5.19 3.20 2.92 2.81 5.37 4.25 4.01 4.15 6.62 5.33 5.39 6.51 5.38 (per cent) 89.96 90.49 90.87 92.68 91.49 92.09 91.95 90.56 89.52 87.55 89.01 87.58 85.32 80.93 83.46 81.41 79.58 80.00 Unemployment rate AI(A+B) (b) Table A36 continued GCP 8.5-7B -1.0 6.4 0.5 4.7 -3.1 6.8 10.2 3.1 0.4 -1.6 5.7 4.6 1.4 -1.5 5.8 3.1 2.4 6.1 217.5 221.0 244.7 271.9 276.7 304.4 344.8 362.5 382.7 394.2 424.6 446.5 471.3 490.1 524.7 545.3 572.1 608.0 (billions of dollars) 8.5-7A Chg in business invent (c) 0.46 2.90 0.20 1.73 -1.12 2.23 2.96 0.86 0.10 0.41 1.34 1.03 0.30 0.31 1.11 0.57 0.42 1.00 (per cent) invent !GCP 8.5-7C N 00 4.50 4.50 4.54 5.63 5.61 6.30 7.96 7.91 5.72 5.25 8.03 10.81 7.86 6.84 6.83 9.06 12.67 15.27 18.87 14.86 10.79 12.04 9.93 8.33 8.21 9.32 10.87 3.23 3.55 4.04 4.50 4.19 5.16 5.87 5.95 4.88 4.50 6.44 7.83 6.25 5.50 5.46 7.46 10.28 11.77 13.42 11.02 8.50 8.80 7.69 6.33 5.66 6.20 6.93 Note: For column 8.2-4D, A 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 B 5.51 5.04 4.41 3.69 3.74 3.48 3.41 4.82 5.81 5.49 4.79 5.50 8.31 7.57 6.94 5.97 5.76 7.04 7.50 9.54 9.47 7.41 7.09 6.89 6.11 = net interest 3.26 3.38 3.57 3.79 4.04 4.03 4.34 4.95 5.15 5.13 5.31 6.27 6.50 6.16 6.51 6.87 7.73 9.12 10.15 10.81 10.33 10.06 9.76 9.53 9.26 = corporate profit, 12.72 13.15 13.89 13.49 12.41 12.27 10.95 8.97 9.70 10.13 10.09 8.45 9.12 10.07 10.80 10.73 9.77 8.04 7.69 5.96 7.86 8.81 8.59 8.31 8.40 79.60 79.55 79.55 78.07 75.44 75.28 71.62 64.44 65.32 66.38 65.52 57.40 58.39 62.05 62.39 60.97 55.83 46.85 43.11 35.54 43.21 46.69 46.81 46.58 47.57 5.8 5.4 9.9 14.2 10.3 7.9 9.8 3.1 7.8 10.5 19.6 15.4 -5.6 16.0 21.3 28.6 13.0 -8.3 24.0 -24.5 -7.1 67.7 10.0 15.7 45.7 643.6 685.4 738.3 802.5 848.6 926.0 998.9 1067.8 1171.8 1284.7 1429.3 1560.2 1746.9 1931.5 2142.6 2395.8 2662.6 2940.8 3303.7 3506.1 3761.8 4074.1 4321.5 4544.8 4818.5 0.90 0.79 1.34 1.77 1.21 0.85 0.98 0.29 0.67 0.82 1.37 0.99 0.32 0.83 0.99 1.19 0.49 0.28 0.73 0.70 0.19 1.68 0.23 0.34 0.96 N 10 Index accounting failure of 123 limitations of 11 Africa 90, 124 aggregate income, percentage shares received 36 agriculture decline of labour force in 19 23, 82, 113 government intervention in 82 Air Quality Act (1990) 81 airline deregulation 81 anti-trust laws 79 armed forces 18-21, 23, 102, 116 arms race 99, 117 Asia 87,90 Australia and New Zealand 87-9 automobiles 8, 43, 48, 56 baby boom 14, 16, 112 balance sheet of household sector 53, 55 of non-financial corporate business 53 balanced budgets 43, 74 banking system, collapse of 103 bathtub theorem 10 big bang 114 births and deaths, US 15 bloated bondholders 103 bonds corporate and tax exempt 54 unwillingness to hold 76, 100 yields 62-5 Boulding, K grandfather 36 A Reconstruction of Economics 110 Brahe, Tycho x budget deficits 43, 73, 83, 98, 117 Burns, Robert 114 business inventories 54, 65, 69, 106-9 Canada 87-90, 94 capital structures 25, 53-69 capitalists, active v inactive 33, 101 cartels, instability of 90 catastrophe 98, 116 celestial mechanics x, 111 central banks 100 centrally planned economies 124 China 86 Churchill, Winston 101 Civil Rights Bill (April 1968) 81 civilian government 21, 31, 73 civilian labour force 16-18 clothing prices, indexed, 1967 = 100 50 Cold War 43, 99, 117 collective bargaining 34, 104 commercial banks 58 Committee on Monetary and Economic Reform (COMER) 127n commodity prices, indexed, 1967 = 100 50 common stock prices 51 compensation to employees 33, 102 construction, sector employment 19, 21, 23, 102 consumer credit 54-6 consumer price index 44, 48-52 container revolution 90 corporate equity 54 corporate income taxes 73 corporate profits 33, 102, 105-7 Council of Economic Advisors 96, 115 currency 45-48, 54, 103 per capita 46, 55 Daly, Herman 126n debt financing 100 decisiveness 118 deficits 73-6 deflation 33, 40, 43, 82, 101-4 demand deposits 45, 48, 103 depression mental v economic 97 post-Second World War 32 deterrence, benefits of 78 dinosaurs 114, 116 DNA Dow Jones industrial average 51 duelling 114 durables and non-durables, indexed, 1967 = 100 50 earthquakes 115 210 Index Eastern Europe 87 echo effect, as affecting behaviour 78 economic patterns, as evidence rather than truth 12 economic theory, fallacies of conventional xi economic value, as elusive concept economic welfare, difficulty of measuring economists, two major functions of economy characteristic patterns in invisible aspects of pathologies of 96, 98 structure of 1-13, 19, 119 education and training, federal expenditure for 72 education expenditure, decline of 77 employer, as philanthropist 32, 102, 104 employment, by sector 23 environmental protection movement 81 equilibria, as temporary 98 Europe 87-91 evidence v truth 124 exchange, as event exhaustible resources, economising 122 exhaustion of change 113 exports and imports 6, 29 indexed, 1929 and 1982 = 100 42 world 84-92 farm proprietors' income 33, 126n federal civilian government 31 federal civilian purchases 70 Federal Farm Board 82 federal government 19, 102 as proportion of labour force 21 deficit or surplus 44 myth of ever increasing 71 quantitative insignificance of xi, 31 sector employment 23, 102 federal purchases 29, 71 federal receipts, by source 73 Federal Reserve Bank discount rate 63, 76, 100 Federal Reserve System 64, 78, 82, 96 female employment, rise in 17-19, 25, 28, 34, 113, 120 female-headed households 38,78 finance, insurance and real estate 19, 23 financial capital, defined 62 financial sector, rise of 22 211 First World War, as affecting US population 14, 126n Fisher identity (MV = PT) 10, 43 flashlight photograph flood, 100-year 115 food and clothing prices 49 foreign exchange rates 91, 93 foreign investment 30, 53, 84 Friedman, Milton 82, 125 future, the 111-25 fuzzy set, economy as Gandhi, M K 122 gender revolution 19 General Agreement on Tariffs and Trade (GATT) 80, 90 German mark 92 Germany 98, 116 gold standard 91, 100 abandonment of 80 golden age of enrichment 28, 119 Gorbachev, Mikhail 116 government budget, surplus and deficit 43, 74-6 expenditure 70 importance overrated 83 major functions of 78 purchase of goods and services 102; indexed, 1929 = 100 42; indexed, 1982 = 100 42 role of 71-83 transfers, dramatic increase in 71 Gramm-Rudman Act 43 Great Depression xi, 16 as improbable event 115 as positive-feedback system 110, 117 business inventories, decline in 69, 107 compensation to employees 34 exports and imports, collapse of 91}-2 government purchases 71 gross private domestic investment, decline in 30, 69, 102 indicators, fall of 27 interest rates, rise in 98 101 net private domestic investment, effects on 58 personal consumption expenditure 31 profits, collapse of 51, 63, 102, 105, 110 unemployment 20, 30, 101-3 great disarmament (1945-7) xi, 20, 30, 59, 70, 72, 119 greenhouse effect 122 212 Index gross capacity product (GCP) continued growth of 120 defined 26 effect of presidential transitions on 30, 32,70 indexed, 1982 = 100 41 major components of 29, 102 gross national product (GNP) as percentage of GCP 69 as percentage of gross world product 85 criticisms of 7, 11, 25-7, 126n indexed, 1929 = 100 42 indexed, 1982 = 100 41, 47, 52 gross private domestic investment 20, 29, 69, 102, 117 gross weekly earnings, average 35 Gulf War (1991) 95, 117 habit, force of 32, 102 Hitler, Adolf 20, 101, 116 Holocaust 101 Hoover, Herbert 14, 82, 120 household balance sheet, lack of 109 capital 3, 25, 58, 60 consumption expenditure 25, 102 production, decline in 27 sector 53 housing prices, regional differences in 49 human artifacts human capital 14-23, 27, 62, 85 human health v economic health 97 human knowledge, uncertain future of 113, 120, 123 human population, dangers of classification identities 10 illegal activities 78 illegal drugs 47, 55, 79 images of economy 96 of future 111, 115 immigration 16, 79, 120 income distribution 35-9 obsession of economists with 53 redistribution 103 120 taxes, individual 73, 76 Index of Sustainable Economic Welfare (!SEW) 126n India 86 indirect business tax 26 inflation 40, 42 as changing distribution 103 control of 82 proximate causes of 98 reasons for popularity of 63 information, as surprising xi insurance 116, 123 sector, rise of 22 interest as burden 99, 101, 115, 124 as proportion of federal outlays 73 as proportion of national income 38, 63 as reward of passive capitalist 33, 101 rates: nominal v real 64; rise in 1980s 49, 82 v profit rates 63 International Monetary Fund (IMF) 80 international trade 6, 80, 84-90 per capita for 114 countries (1985) 86 Iraq 116, 121 Japan 86, 112, 116 Japanese yen 92 Johnson, Lyndon 38, 82 'K' theory 110 Kaldor, Nicholas 110 Kalecki 110 Kepler,Johann x Keynes, John Maynard 64, 110 'The Economic Consequences of Mr Churchill' 101 King, Martin Luther 81 Korean War 20, 30, 70, 72, 106, 109, 119 Kuznets, Simon x labour force, proportions of 16-24, 67, 101 movement, rise in xi, 104 unions, rise of 34, 81 Latin America 90 laws, object of 78 layer cake diagrams 126n Lenin 101, 113 life expectancy 27 insurance companies 58 limits to growth 113 liquid assets 44-47 categories of 45 Index loans, of household sector 54 Ml old, 103 per capita 47 Ml, M2, M3 and L 45 macrodistribution, theory of 110 male employment 18 manufacturing and trade inventories 66-8 decline in 21,101-3,120 sector employment 19, 23, 101-3 market equilibrium, theory of 62 Marshall Plan 29, 91 Marxism 118 collapse of 101 materials entropy 124 mathematics x, 9, 12 medical care increased cost of 27, 51, 72, 120 prices, indexed, 1967 = 100 51 Mexico 124 Middle East 43 migration as transfer of human capital 85 rates, as difficult to predict 112 minimum wage 79 mining, sector employment 19, 21, 23 monetarism 82 money 10-12 and prices 40-52 market mutual fund balances (MMMF) 45 measuring rod of 7, 11 quantity theory of, defined 43 wages, lowering of 103 monopoly, weakness of 93 mortgages 54-7 national account index, per capita 26 national boundaries, importance of 84 national defence 29, 70 as obsolete 116, 120 expenditure 106 National Environmental Policy Act 81 national income by type of income 32, 63 defined 26 percapita 103 proportion to interest 34,64, 119,125 proportion to labour 34, 104, 119 statistics x, 8, 25, 126n National Industrial Recovery Act 81 National Labor Relations Board 81 natural monopolies 79 213 near identity 10 net civilian product (NCP) 26-8 net interest 99 as increasing percentage of national income 33, 102 changes in federal expenditure on 72 net investment 121 net national product (NNP) 25 net private domestic investment 58, 102 net worth, of household sector 53-5 New Deal xi, 31, 34, 36, 70, 81, 104 non-farm business sector 35 non-farm proprietors' income 33, 126n non-labour force 18 non-residential investment 69 nuclear weapons 121, 124 Office of Technology Assessment 96 Ohm's Law 10 oil as diminishing resource 122 crisis (1973) 66, 90, 93-5 OPEC 51, 53, 87-90, 93 open systems output and income, total 25-39 parallels, as guide to future 114 pathologies, of economy 98 per capita currency 45, 47, 55 per capita GNP 85 per capita income 27, 112, 120 per capita national account index 26 per capita national income 103 per capita real net product, civilian labour force 28 per capita trade 85 period of production 66 personal consumption expenditure 20, 29-31, 70, 102 indexed, 1929 = 100 42 indexed, 1982 = 100 41 personal income 26 Petty, Sir William x PIG (profit-interest gap) ratio 105-7 planned economies 114 plans, as guide to future 113 Poland 98 pollution 2, 79 poor v rich countries 122 population 14-17 in labour force 17-22, 119 projections 112 US v world population 85 214 Index positive-feedback processes 97, 110, 117 poverty declining from 1947-69 38 increasing since mid-1970s 38, 82, 99, 115 precipice, as guide to future 116 preparations, as guide to future 118 presidential transitions, impact on economy 30, 32, 70 price and wage controls 79, 95 indexes 8, 40, 47-52 levels, cycles in 98, 117 prison population, increasing 78 probabilities, as guide to future 115 producers' durable equipment 69 profit, as reward of active capitalist 33 profit-interest gap xi, 104 profit taxes 54 profits as negative during Great Depression 32 117 relation to gross private domestic investment 110 prohibition, repeal of 82 projections, as guide to the future 110 property taxes 76 public welfare 77 punctuated equilibrium, theory of 116 quasi-governmental institutions 78 Reagan, Ronald 81, 83, 99 Reagan rearmament 70, 72 real capital 60-2 real compensation per hour 34 real estate sector, rise of 22 real money 45 real net private domestic investment 60 real per capita national income 27 real wages 23, 119 regions of time xi, 119 relative prices 62, 122 rent 5, 33 indexed, 1967 = 100 49 residential and non-residential structures 54 residential investment 69 residential purchases, indexed, 1967 = 100 49 Robinson-Patman Act of 1936 79 Roosevelt, Franklin 79 savings and loan crisis 81, 127 savings and loan institutions, difficulties of 58 savings bonds 45 savings deposits 45 scatter diagram geographical 85 time 12, 63, 105, 127n, 129 Schumpeter, Joseph 14 Second World War xi, 14, 20-2, 29-31 43,59,69-74,98,121 as disturbance in process of economic enrichment 27 financed at low rates of interest 33 64,74 services, sector employment 19-23 Shakespeare's seven ages of man 114 silver age of enrichment 28, 119 Simon, Julian 123, 125 slavery 114 Smith, Adam 118 Smoot-Hawley Tariff of 1930 80 social security taxes 20, 73 solar energy 122 Soviet Union 86, 99, 121 spontaneous recovery (1933-7) 20, 27, 32, 59, 119 Standard and Poor's composite index 51 state and local government 29-31, 76,102 state government, sector employment 19, 21,23 stationary state 121 statistics, weakness of conventional 12 stock market: collapse of 1929 109, 115 117; collapse of 1987 82, 109, 115 prices 47, 51, 62 supply-side economics, theory of 99 sustainability 124 taboos 116 Taft-Hartley Act (1937) 81 tariff indexes 80 tariffs 90 television sets 8, 48 testing, of images 97 Third World 123 threat, as ineffectiv.: form of power 122 time series, beginnings of x Toynbee, Arnold 116 Index trade debt 53 per capita for 114 countries (2985) 86 transportation and public utilities 19, 21,23 transportation prices, indexed, 1967 = 100 51 travellers' cheques 45,48 true riches 27 truisms 10 ultimate resource 123, 125 unemployment 30, 78 as sector 19, 22 Great Depression 20, 30, 101, 103 possible causes of 104 relation to gross private domestic investment 110 unemployment rate 26, 29, 105 215 United States Security Act (1933) 81 unrealised product 29 Vietnam War 20, 70, 72, 106, 109, 119 wage rates 85 wages 4, 23, 34, 119 failure to rise since 1970 82 Wagner Act 34, 81, 104 war as breakdown of deterrence 116 as good for business, myth of 32 industry 20, 36 on Poverty 38, 82 suffering 99 wholesale and retail trade 19, 21-3, 102 workmen's compensation laws 79 world economy 6, 84-95, 121 Resources Institute 126n ... we can place a monetary (dollar) value and which would appear on balance sheets or The Structure of a Modem Economy other accounts On the other hand there are many things that not appear in accounts... on the nature of the contract The existence of exchange and the vast variety of exchangeables means that there are many invisible aspects of the economy which are nevertheless very important These... contributed a great deal to this volume There are some important aspects of the American economy that I have not been able to cover, partly because of the absence of data, especially in regard to capital