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Exam Questions Harvard

Harvard. Exams for consolidated undergrad and graduate public finance. Butters and Soloway, 1955

The public finance syllabus for 1954-55 as taught by J. Keith Butters and Arnold M. Soloway has been transcribed and posted earlier. With this post we now have the January (mid-year) and May (end-year) exams for this course.

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1954-1955
HARVARD UNIVERSITY
ECONOMICS 151 AND 251
Mid-Year Examination. January, 1955

Answer Question 1: recommended time one hour and fifteen minutes.

  1. Assume that within the next year or so the current business expansion continues to the point where unemployment is reduced to a very low level and inflationary price rises are beginning to be evident. Assume that this expansion is caused by an intensification of factors now present in the economy such as: (a) a high level of consumer spending; (b) large business expenditures on plant and equipment and in the construction market generally; (c) a resumption of fairly rapid inventory accumulations. Assume that the international situation remains approximately unchanged and that for the fiscal year ending June 30, 1956 the administrative budget of the federal government is expected to be approximately in balance at a level of about $65 billion.
    1. Query: Under these circumstances compare the relative effectiveness and merits as anti-inflationary fiscal measures of (a) a government surplus produced by a reduction in the level of government expenditures on real goods and services; (b) an equivalent surplus caused by an increase in tax rates; and (c) a balanced reduction in expenditures and receipts. In answering this question specify any assumptions which you care to make or need to make.
    2. Query: Under these circumstances indicate the extent to which you would prefer to rely (a) on fiscal policy techniques (such as any of the above) as compared with (b) measures of monetary policy and debt management. What are the reasons for your preferences? To the extent that you prefer to rely partly or wholly on measures of monetary policy and debt management, indicate the specific techniques which you would recommend and their presumed effects.

Answer Question 2: recommended time forty-five minutes.

  1. “The procedures by which the federal budget of the United States government is formulated and enacted tend to produce undesirable distortions in the amount and distribution of federal expenditures and receipts.” Discuss this statement. In your discussion indicate the specific features of the budgetary process which produce such distortions and the theoretical principles in terms of which the proper distribution and amount of federal expenditures and receipts should be appraised.

Answer either Question 3 or 4: recommended time one-half hour.

  1. Describe the federal old-age and survivors’ insurance program now in effect in the United States. Indicate the main trends in the historical evolution of this program since its original enactment in 1935. What gaps or defects from either an economic or an equity standpoint do you see in the program as it now exists?
  2. Discuss the main historical shifts which have taken place in the revenue and expenditure patterns of state and local units of government as compared with those of the federal government of the United States during the period 1925-1950. What problems have been created by these shifts and what courses of action are indicated as a means of overcoming these problems?

Answer Question 5: recommended time one-half hour.

  1. Under the present federal taxing process, how is the general public interest protected from overextensions of favors to special interest groups? Is the present protection sufficient? What modifications, if any, would you suggest in the present procedures? (Answer this question specifically in terms of the reading period assignment.)

 

Source: Harvard University Archives. Harvard University. Final examinations, 1853-2001 (HUC 7000.28). Bound Volume 107, Final Exams—Social Sciences—Jan. 1955, Papers Printed for Final Examinations: History, History of Religions, … , Economics, … , Naval Science, Air Science. January, 1955.

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1954-1955
HARVARD UNIVERSITY
ECONOMICS 151 AND 251
Final Examination. May, 1955

Answer Question 1: recommended time one and one-half hours.

  1. “Justice in taxation and a high rate of economic growth are two frequently stated aims of government policy.” Discuss the present personal and corporate income taxes in the light of these goals. In your discussion be specific as to the relevant issues such as (for example): concepts of justice; definitions of taxable income; the problem of capital gains; etc.

Answer three of Questions 2 through 5: recommended time one-half hour for each question answered.

  1. Sales and excise taxes should not be used in our federal tax structure because they are regressive, deflationary, and price-distorting. Discuss.
  2. When economists study a particular tax they use such terms as “shifting,” “incidence,” and “effects.” Define these terms and discuss them in connection with
    1. a tax on net profits
    2. a tax on the rent of land.
  3. Describe the present method of taxing transfers, either by gift or at death. Discuss the weaknesses of the present law and possible methods of correcting them.
  4. Discuss critically the major differences between Tucker and Musgrave in their analyses of the tax burden.

 

Source: Harvard University Archives. Harvard University. Final examinations, 1853-2001 (HUC 7000.28). Bound Volume 110, Final Exams—Social Sciences—June. 1955, Papers Printed for Final Examinations: History, History of Religions, … , Economics, … , Naval Science, Air Science. June, 1955.

Image Source:  Harvard Business School, The Annual Report 1954.

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Business School Economists Harvard

Harvard. Economics Ph.D. alumnus. John Keith Butters, 1941

 

The previous post provided the syllabi for the Harvard economics department public finance course (actually consolidated into a single document for the undergraduate and graduate versions of the course) taught by J. Keith Butters and Arnold M. Soloway in 1954-55.

Since both instructors received their doctorates in economics from Harvard, I have included this post that provides some biographical information about J. Keith Butters. The next post will do the same for Arnold M. Soloway.

I begin with the vital dates: John Keith Butters was born August 28, 1915 in Chicago and he died December 11, 2005 in Lexington, Massachusetts.

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Harvard Economics Ph.D. (1941)

John Keith Butters, A.B. (Univ. of Chicago) 1937, A.M. (Harvard Univ.) 1939. Subject, Economics. Special Field, Public Finance. Thesis, “Federal Taxation of Corporate Profits.” Instructor in Economics and Tutor in the Department of Economics.

Source: Harvard University. Report of the President of Harvard College 1940-1941, p. 174.

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Effect of Federal Taxes on Growing Enterprises
by J. Keith Butters and John Lintner
(1945)

Principal Conclusions

In highly condensed form the principal findings of the study may be summarized as follows:

  1. In the development-of-the-idea stage of a new enterprise taxes are seldom of dominant importance.
  2. As a business develops beyond the “idea” stage to the point at which production appears feasible, tax considerations become progressively more important.
  3. At this stage, and beyond, high corporate taxes are typically much more repressive in their effects than are high personal taxes at least so long as capital gains continue to receive very favorable treatment.
  4. High corporate taxes restrict the growth of small companies:
    1. By greatly reducing the attractiveness of risky expansions to the managements of small companies;
    2. By curtailing the amount of capital available from retained earnings to finance such expansions; and
    3. By making the acquisition of outside capital on satisfactory terms much more difficult.
  5. In each of these respects the restrictive effect of high personal taxes appears to be much less severe:
    1. The effect of personal taxes on management incentives is much less direct;
    2. Except for unincorporated enterprises personal taxes do not reduce retained earnings; and
    3. On balance, high personal taxes may not even divert outside capital away from highly venturesome enterprises.
  6. Retained earnings are an especially critical source of funds for the expansion of small enterprises:
    1. The owners of small companies frequently place great importance on the maintenance of a strong control position and of their personal freedom of action. To the extent that they do so, they will be reluctant to undertake expansions which must be financed by outside capital.
    2. Many small companies even companies with promising growth prospects find it extremely difficult or impossible to raise outside capital on reasonably favorable terms.
    3. Hence, for both of these reasons, many expansions by small companies will, in fact, be undertaken only if funds are available from retained earnings to finance them.
  7. In almost every respect high taxes are less repressive on large, established corporations than on small, growing firms.
    1. High taxes reduce the profit expectancy of new expansions by large companies much less severely than they restrict similar expansions undertaken by small, independent companies.
    2. Large, established companies have substantial amounts of funds coming available from their noncash expenses in addition to whatever earnings they may be able to retain after taxes. These funds may be used to finance the introduction of new products and technical innovations.
    3. Finally, large, established companies generally can acquire new capital on much more favorable terms than can small companies. In addition to their ability to float common stock with relative ease, they can usually issue preferred stocks or bonds alternatives available to small companies only on a limited scale, on more expensive terms, and usually at great risk to the common stockholders.
  8. Thus, unless special adjustments are made to relieve the burden of a flat-rate corporate tax on small companies, such a tax would tend to promote an increased degree of industrial concentration in addition to restricting the growth of small, independent companies.
  9. It would be possible substantially to relieve the tax burden on most small, growing companies without greatly diminishing Federal revenues. This study clearly emphasizes the need for such relief. But it makes no attempt to examine the many problems which would arise in formulating the precise character of this relief.
  10. The financial problems confronting small firms are particularly acute in times of depression and market pessimism at such times it is practically impossible for most small companies to acquire new equity capital on acceptable terms. Indeed, perhaps the surest way to improve the position of small firms would be to follow an economic policy that would promote a high level of economic activity. The indirect effects of general prosperity would be far more powerful than any specific measures which could be taken to break down the barriers between small companies and the capital market.
  11. As a final point, existing imperfections in the capital market and the general unwillingness of individual savers to assume the risks of ownership emphasize the possibility that venture capital may be scarce at a time when there is general oversavings in the economy. Failure to recognize that oversavings and shortages of venture capital are not mutually incompatible has led to many statements of doubtful validity by both proponents and opponents of the oversavings thesis.

Source: Study Effect of Federal Taxes on Growing Enterprises. Study published by the Division of Research at the Graduate School of Business Administration, Harvard University in 1945, pp. 2-4.

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In Memoriam

HBS professor J. Keith Butters, an authority on finance and taxation, died in Lexington, Massachusetts, in December [2005]. He was 90.

The Thomas D. Casserly Jr. Professor of Business Administration, Emeritus, Butters retired from the HBS faculty in 1986 after 43 years of service, during which he chaired the Finance Unit (from 1969 to 1973) and taught in both the MBA and the Executive Education programs. He also played an influential role as the Business School’s representative to a number of University committees that affected faculty across all of Harvard.

Source:   Harvard Business School/Alumni/Stories, March 1, 2006.

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Boston Globe Obituary

J. Keith Butters

Of Lexington, died Dec. 12, 2005, at age 90. Husband of the late Helena Renaud Butters. He is survived by his brother William of Arlington Heights, IL; 3 children, Liz Butters of Denver, CO, Gerard R. Butters and his wife Ettie of Bethesda, MD, Nancy Butters and her husband Ron Pies of Lexington, MA; two grandchildren and two great grandchildren. A tenured Professor at The Harvard Business School, he received Harvard’s “Distinguished Service Award” in 1989 in recognition of his extraordinary service to the University’s educational mission.

Source: Legacy.com obituary from the Boston Globe.

Image Source:  Harvard Business School, The Annual Report 1954.

 

Categories
Fields Harvard Suggested Reading Syllabus

Harvard. Consolidated undergraduate and graduate public finance syllabus. Butters and Soloway, 1954-55

 

Providing a ten page transcription of a course syllabus is a daunting task. It does have the useful side-effect of forcing me to read the syllabus closely and I still labor under the hope that something of potential future significance will lodge itself somewhere in my subconscious, ready to go if ever summoned. Of course having a digitized transcript allows us to easily search the growing sample of course syllabi already transcribed at Economics in the Rear-view Mirror. 

Harvard economics Ph.D.’s on the economics department faculty in the mid-1950’s, J. Keith Butters and Arnold M. Soloway, are listed on the public finance syllabus below that was distributed as a consolidated reading list for the undergraduate and graduate versions of the course taught in 1954-1955. I am not sure what to make of the fact that only Butters’ name appears in the enrollment report included with the annual report of the President of Harvard College.

P.S. The mid-year (January) and end-year (May) final exams have been transcribed and posted in a later post.

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Course Enrollments

[Economics] 151. Public Finance. Associate Professor Butters. Full course.

(W) Total 30: 15 Seniors, 9 Juniors, 1 Sophomore, 4 Other Graduates, 1 Other
(S) Total 27: 14 Seniors, 11 Juniors, 1 Sophomore, 1 Other Graduate

[Economics] 251 Public Finance. Associate Professor Butters. Full course.

(F) Total 19: 7 Graduates, 8 Other Graduates, 1 Radcliffe, 3 Special
(S) Total 16: 6 Graduates, 7 Other Graduates, 1 Radcliffe, 2 Special

Source: Harvard University. Report of the President of Harvard College 1954-1955, pp. 90, 93.

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Economics 151 and 251
PUBLIC FINANCE
Fall Term, 1954-1955

Professors Butters and Soloway

NOTE: Readings under the heading “Required” are required for Economics 151. Students in Economics 251 are required to read the asterisked assignments and to be generally familiar with the substance of the material covered in the other required assignments for Economics 151.

The following general studies and texts are suggested for reference throughout the course. Specific assignments on various topics are made from some of these sources.

General Texts and Treatises on Public Finance:

Blough, Roy, The Federal Taxing Process

Brownlee, O. H. and Allen, E. D., Economics of Public Finance, (Second Edition)

Due, John F., Government Finance

Groves, H. M., Financing Government (Third Edition) [Fifth edition]

Groves, H. M., Viewpoints on Public Finance

Hicks, U. K., Public Finance

Pigou, A. C., A Study in Public Finance

Poole, K. E., (Editor), Fiscal Policies and the American Economy

Schultz, W. J. and Harriss, C. L., American Public Finance [Third edition, before Harriss]

Somers, H. M., Public Finance and National Income

 

Serial Publications and Periodicals:

Annual Reports of the Secretary of the Treasury

Budget Messages of the President

Economic Reports of the President and Economic Reviews of the Council of Economic Advisers

Proceedings of the National Tax Association

National Tax Journal

Taxes, The Tax Magazine (Published by Commerce Clearing House, Inc.)

The loose-leaf tax services published by Commerce Clearing House, Inc. and Prentice-Hall, available in the Law Library

 

September 28: Nature and Scope of Government Finance

Required

*Brownlee and Allen, Economics of Public Finance, Second Edition, pp. 3-22

*Colm, Gerhard, “Why Public Finance,” National Tax Journal, Sept. 1948, pp. 193-206

*Due, Government Finance, Ch. 1, pp. 1-16

Suggested

*Hicks, Public Finance, Ch. 1, pp. 1-16

Groves, Financing Government, Ch. 1, pp. 1-8

 

September 30 – October 2: Concepts of Justice

Required

*Due, Government Finance, Ch. 7, pp. 114-133

*Simons, Henry, Personal Income Taxation, Ch. 1, pp. 1-40

*Blough, The Federal Taxing Process, Ch. 15, pp. 382-408

Suggested

Pigou, A. C., “Some Aspects of Welfare Economics,” American Economic Review, June 1951, pp. 287-302

*Pigou, A Study in Public Finance, Part II, Chs. 1-7, pp. 40-93

*Robbins, L., “Interpersonal Comparisons of Utility,” Economic Journal, December 1938, pp. 635-641

*Wright, D. Mc., “Income Redistribution Reconsidered,” Income, Employment and Public Policy, edited by Metzler, L. Pp. 159-176

Blum, W. J., and Kalven, Harry, The Uneasy Case for Progressive Taxation

Shehab, F., Progressive Taxation: A Study in the Development of the Progressive Principal in the British Income Tax

 

October 5 – October 16: The Budget

Required

Groves, Financing Government (Third Edition), pp. 509-527

Schultz and Harriss, American Public Finance, pp. 131-151

*Smithies, Arthur, The Determination and Control of Federal Expenditures (mimeographed volume), Chs. I-VI (128 pages)

*Smith, Harold D., The Management of Your Government, Chs. 5-7, pp. 54-102

*March, Michael, “A Comment on Budgetary Improvement in the National Government,” National Tax Journal, June 1952, pp. 155-173. Also, “Reply to Mr. March” by Herman Loeffler, same issue, pp. 174-175

*The Budget of the United States Government for the Fiscal Year Ending June 30, 1955, pp. M5-M104 and A3-A16. (This assignment can be scanned rather than studied carefully as to matters of detail.)

*National Income, 1951 (A Supplement to the Survey of Current Business) pp. 10-18, 21-34, 42-43, 46-49

*Tax and Expenditure Policy for 1950, Committee for Economic Development, pp. 35-41

Suggested

Hicks, J. R., The Problem of Budget Reform

Hansen, A. H., Fiscal Policy and Business Cycles, Ch. 10, pp. 186-222

Key, V. O., “The Lack of a Budgetary Theory,” American Political Science Review, Volume 34 (December 1940), pp. 1137-1144

U.S. Commission on Organization of the Executive Branch of the Government, Budget and Accounting, Parts I and II, pp. 7-31, 77-84

U.S. Commission on Organization of the Executive Branch of the Government, Task Force Report on Fiscal, Budgeting, and Accounting Activities (Appendix F), pp. 37-38

Loeffler, Herman C., “Alice in Budget-Land,” National Tax Journal, March 1951, pp. 54-64

Fieldler, Clinton, “Reform of the Legislative Budget,” National Tax Journal, March 1951, pp. 65-76

Burkhead, Jesse, “The Outlook for Federal Budget-Making,” National Tax Journal, December 1949, pp. 289-299

*Smithies, A., The Determination and Control of Expenditures, Chs. VII-XII and Ch. XVIII (Mimeographed)

Dirks, F. C., “Recent Progress in the Federal Budget,” National Tax Journal, June 1954, pp. 141-154

 

October 19 – November 6: Expenditures

Required

*Due, Government Finance, Chs. 2-6, pp. 17-113

*Musgrave, R. A. and Culbertson, J. M., “The Growth of Public Expenditures in the United States, 1890-1948,” National Tax Journal, June 1953, pp. 97-115

*”State and Local Government Receipt and Expenditure Programs,” Survey of Current Business, January 1953, pp. 11-16

*Douglas, P. H., Economy in the National Government, Chs. I-VIII, pp. 3-204

*Buchanan, J. S., “The Pricing of Highway Services,” National Tax Journal, June 1952, pp. 97-106

Studenski, “Federal Grants-in-Aid,” National Tax Journal, September 1949, pp. 193-214

*Newcomer, Mabel, “State and Local Financing in Relation to Economic Fluctuations,” National Tax Journal, June 1954, pp. 97-109

*Maxwell, J. A., “The Equalizing Effects of Federal Grants,” Journal of Finance, May 1954, pp. 209-215

*Stark, John R., “Equities in the Financing of Federal Old and Survivors Insurance,” National Tax Journal, September 1953, pp. 286-292

Suggested

*Maxwell, J. A., Federal Grants and the Business Cycle, Chs. I-IV, pp. 1-99

*Clark, C., “Public Finance and Changes in the Value of Money,” Economic Journal, December 1945, pp. 371-389

*Pechman, J. A., and Mayer, Thomas, “Mr. Colin Clark on the Limits of Taxation,” Review of Economics and Statistics, August 1952, pp. 232-242; and Smith, D. T., “Note on Inflationary Consequences of High Taxation,” Ibid., Pp. 243, 247

*Goode, Richard, “And Economic Limit on Taxes: Some Recent Discussions,” National Tax Journal, September 1952, pp. 227-233

*Pigou, A. C., A Study in Public Finance, Chs. I-V, pp. 1-34

Machlup, F., “The Division of Labor between Government and Private Enterprise,” American Economic Review, 1943 Supplement, pp. 87-104

Hansen, A. H., and Perloff, H. S., State and Local Finance in the National Economy, Chs. 2 and 8

Hicks, J. R. and Hart, A. G., The Social Framework of the American Economy, Ch. XIII, pp. 174-185

Bowen, H. R., Toward Social Economy, Ch. 18

Backman, Jules and Kurnov, Ernest, “Pricing of Government Services,” National Tax Journal, June 1954, pp. 121-140

 

November 9 – November 30: Fiscal Policy

Required

*Smithies, Arthur, “Federal Budgeting and Physical Policy,” in A Survey of Contemporary Economics (edited by Howard S. Ellis), Ch. 5, pp. 174-209

Hansen, A. H., Business Cycles and National Income, Ch. 12, pp. 195-207

(Note: Read one or two of the following four sources)

(1) Gordon, R. A., Business Fluctuations, Ch. 18, pp. 525-544

(2) Brownlee, O. H. and Allen, E. D., Economics of Public Finance, 2nd edition, Chs. VI-VIII, pp. 94-140

(3) Musgrave, R. A., “Fiscal Policy, Stability, and Full Employment,” Public Finance and Full Employment (Postwar Economic Studies No. 3, Board of Governors of Federal Reserve System), pp. 1-21

(4) Due, Government Finance, Chs. 25-26, and 28, pp. 470-505, and 524-550

*Hart, A. G., Money, Debt and Economic Activity, Second Edition, Chs. XXVII, XXVIII, and XXIX, pp. 448-495

*Hicks, U. K., Public Finance, Ch. XVII, pp. 316-336

*Committee for Economic Development, Taxes and the Budget: A Program For Prosperity in a Free Economy (November 1947), especially pp. 9-34

*Blough, Roy, “Political and Administrative Requisites for Achieving Economic Stability,” American Economic Review, May 1950, pp. 165-177

*Lerner, A. P., The Economics of Control, Ch. 24, pp. 302-322

*Pechman, Joseph A., “Yield of the Individual Income Tax During a Recession,” National Tax Journal, March 1954, pp. 1-16

Suggested

*Wallich, H. C., “Income Generating Effects of a Balanced Budget,” Quarterly Journal of Economics, November 1944, pp. 78-91

*Musgrave, R. A., and Painter, M. S., “The Impact of Alternative Tax Structures on Personal Consumption and Saving,” Quarterly Journal of Economics, August 1948, pp. 475-499

*Margolis, Julius, “Public Works and Economic Stability,Journal of Political Economy, August 1949, pp. 277-292

Beveridge, W. H., Full Employment in a Free Society

Hansen, A. H., Fiscal Policy and Business Cycles

Terborgh, George, The Bogie of Economic Maturity

Hansen, A. H., “Some Notes on Terborgh’s ‘The Bogie of Economic Maturity,’” Review of Economics and Statistics, February 1946, and Terborgh’s reply R. E. S., August 1946

*”The Problem of Economic Instability,” A committee report, American Economic Review, September 1950, pp. 505-538 (sections pertaining to fiscal policy)

Bach, G. L., “Monetary-Fiscal Policy, Debt Policy, and the Price Level,” American Economic Review, May 1947, pp. 228-242

Bronfenbrenner, M., “Postwar Political Economy: The President’s Reports,” Journal of Political Economy, October 1948, pp. 373-391

*Clark, J. M., “An Appraisal of the Workability of Compensatory Devices,” American Economic Review, Proceedings, March 1939, reprinted in Readings in Business Cycle Theory, pp. 291-310

“Problems of Timing and Administering Fiscal Policy in Prosperity and Depression,” papers by E. E. Hagen and A. G. Hart; discussion by J. K. Galbraith, B. H. Higgins, W. S. Soytinski, and O. H. Brownlee, American Economic Review, May 1948, pp. 417-451

*Musgrave, R. A. and Miller, M. H., “Built-in Flexibility,” American Economic Review, March 1948, pp. 122-128

Musgrave, R. A., “Alternative Budget Policies for Pole Full Employment,” American Economic Review, June 1945, pp. 387-400

Clark, J. M., Economics of Planning Public Works

Lubell, “Efforts of Redistribution of Income on Consumers’ Expenditures,” American Economic Review, March 1947, pp. 157-170; Correction, December 1947, p. 930; Comment by J. M. Clark, p. 931

Burkhead, Jesse, “The Balanced Budget,” Quarterly Journal of Economics, May 1954, Pp. 191-216

 

December 2 – December 18: Government Debt and Debt Management

Required

Due, Government Finance, Chs. 24 and 27, pp. 445-469 and 506-523

Schultz and Harriss, American Public Finance, Chs. XXV-XXVII, pp. 615-704

*Lerner, A. P., “The Burden of the National Debt” in Income, Employment and Public Policy (Metzler, L., et al.), Pp. 255-275

*”How to Manage the Debt,” Symposium in Review of Economics and Statistics, February 1949, pp. 15-32

*Murphy, H. C., The National Debt in War and Transition, Chs. 18-19, pp. 249-288

*Thomas, Woodlief, “Lessons of War Finance,” American Economic Review, September 1951, pp. 618-631

*Abbott, C. C., The Federal Debt (Twentieth Century Fund, 1952), Ch. 6, pp. 89-112

Suggested

Abbott, op. cit., pp. 1-196

*Roosa, R. V., “Interest Rates in the Central Bank,” in Money, Trade and Economic Growth (In Honor of John Henry Williams), pp. 270-295

*Simons, H. C., “On Debt Policy,” Journal of Political Economy, December 1944, pp. 356-361, and “Debt Policy and Banking Policy,” Review of Economics and Statistics, May 1946, pp. 85-89; both reprinted in Economic Policy for a Free Society, pp. 220-239

*Musgrave, R. A., “Credit Controls, Interest Rates and Management of Public Debt,” in Income, Employment and Public Policy (Metzler, L., At all.), Pp. 221-254

Harris, S. E., The National Debt and the New Economics

Committee on Debt Policy, Our National Debt

Seltzer, L. H., “Is a Rise in Interest Rates Desirable or Inevitable?” American Economic Review, December 1945, pp. 831-850

Roosa, R. V., “Integrating Debt Management and Open Market Operations,” American Economic Review, Supplement, May 1952, pp. 214-235

Wallich, H. C., “Debt Management as an Instrument of Economic Policy,” American Economic Review, June 1946, pp. 292-310

Bach, G. L., “Monetary-Fiscal Policy Reconsidered,” Journal of Political Economy, October 1949, pp. 383-394

Tobin, James, “Monetary Policy and the Management of the Public Debt: The Patman Inquiry,” Review of Economics and Statistics, May 1953, pp. 118-127

Burgess, W. Randolph, “Federal Reserve and Treasury Relations,” Journal of Finance, March 1954, pp. 1-11

 

*  *  *  *  *  *  *  *  *  *  *

Economics 151 and 251
PUBLIC FINANCE
Spring Term, 1954-1955

Professors Butters and Soloway

Note: Readings under the heading “Required” are required for Economics 151. Students in Economics 251 are required to read the asterisked assignments and to be generally familiar with the substance of the material covered in the other required assignments for Economics 151. References in Shultz and Harriss, American Public Finance, refer to the new 6thedition.

 

February 3-10: General Introduction to Taxation in the United States.

Required:

Shultz, W. J., and Harriss, C. L., American Public Finance, Chapters 7, 9, 10, 11.

Groves, Harold, Viewpoints on Public Finance, Chapter 1.

Lerner, A. P., Economics of Control, Chapter 24 (review).

Suggested:

*Bullock, C. J., Readings in Public Finance, Chapters VIII-IX.

Paul, Randolph E., Taxation in the United States (1954).

Ratner, Sydney, American Taxation, Its History as a Social Force in Democracy (1942).

Dewey, Davis R., Financial History of the United States.

 

February 10-17: Personal Income Taxation.

Required:

Shultz, W. J., and Harriss, C. L., American Public Finance, Chapters 12, 13.

*Simons, H. C., Personal Income Taxation, Chapter I (reread), Chapters II, III (passim), IV-VI, VIII, X.

Groves, H. M., Financing Government, 3rdedition, Chapter 9.

Your Federal Income Tax, Bureau of Internal Revenue.

Suggested:

*National Tax Journal, March 1955, articles by Professor Shoup, Brown, and Pechman.

*Vickrey, W. S., Agenda for Progressive Taxation, Chapters 1, 2, 4, 6 (passim), 12, 13, 14.

Fisher, I., and Fisher, H. W., Constructive Income Taxation, A Proposal for Reform, Chapters 1, 5, 7, 8, 9, and 21.

Holt, C. G., “Averaging of Income for Tax Purposes: Equity and Fiscal-Policy Considerations,” National Tax Journal, December 1949.

*Musgrave, R. A., and Tun, Thin, “Income Tax Progression, 1929-48”, Journal of Political Economy, December 1948, pp. 498-514.

Farioletti, Marius, “The 1948 Audit Control Program for Federal Income Tax Returns”, National Tax Journal, June 1949, pp. 142-150.

Farioletti, Marius, “Some Results from the First Year’s Audit Control Program of the Bureau of Internal Revenue”, National Tax Journal, March 1952, pp. 65-78.

Blakey, R. G., and Blakely, G. C., The Federal Income Tax.

Magill, Roswell, Taxable Income.

Prentice-Hall, Federal Tax Course – 1954, Chapters 1-3.

 

February 19-24: Capital Gains Taxation.

Required:

*Seltzer, L. H., The Nature and Tax Treatment of Capital Gains and Losses, Chapters 1, 2, 4, 9, 11.

Groves, H. M., Financing Government, 3rd edition, pp. 172-177.

*Simons, H. C., Personal Income Taxation, Chapter VII.

Suggested:

*Vickrey, W. S., Agenda for Progressive Taxation, Chapter 5.

Capital Gains Taxation (A Tax Institute Symposium) (passim).

Federal Income Tax Treatment of Capital Gains and Losses (A Treasury Tax Study), 1951.

Groves, H. M., Viewpoints on Public Finance, pp. 151-158.

Prentice-Hall, Federal Tax Course – 1954, Chapters 4-6.

 

February 26-March 5: Corporation Income Tax.

Required:

Shultz, W. J., and Harriss, C. L., American Public Finance, pp. 311-320.

*Goode, Richard, The Corporation Income Tax, Chapters 1-9, 11, 18.

*Thompson, L. E., and Butters, J. K., “Effects of Taxation on the Investment Policies and Capacities of Individuals”, Journal of Finance, May 1953, Pp. 137-151.

*Smith, D. T., “Taxation and Executives”, Proceedings of the National Tax Association, 1951, pp. 232-250.

*Brown, E. C., “Business-Income Taxation and Investment Incentives”, Income, Employment, and Public Policy (Essays in Honor of Alvin H. Hansen), pp. 300-316.

Butters, J. K., and Lintner, J., Effect of Federal Taxes on Growing Enterprises, Chapters I-VII, VII and IX passim.

Suggested:

Prentice-Hall, Federal Tax Course – 1954, Chapters 21-23.

Smith, D. T., and Butters, J. K., Taxable and Business Income, Forward, Introduction, and Chapter 1.

*Slitor, Richard E., “The Corporate Income Tax: A Re-evaluation”, National Tax Journal, December 1952, pp. 289-309.

*Domar, E. D., and Musgrave, R. A., “Proportional Income Taxation and Risk-Taking”, Quarterly Journal of Economics, May 1944, pp. 388-422.

Butters, J. K., Effects of Taxation on Inventory Accounting and Policies, Chapters I, IV, V.

Butters, J. K., Thompson, L. E., and Bollinger, L. L., Effects of Taxation on Investments by Individuals, Chapters I-VI.

Smith, D. T., Effects of Taxation on Corporate Financial Policy, Chapters I, VI-IX.

*Smith, D. T., “Corporate Taxation and Common Stock Financing”, National Tax Journal, September 1953, pp. 209-225.

Brown, E. See., Effects of Taxation on Depreciation Adjustments for Price Changes, Chapters I-IV.

*Eldridge, D. H., “Tax Incentives for Mineral Enterprise”, Journal of Political Economy, June 1950, pp. 222-240.

Economic Effects of Section 102 (Tax Institute Symposium, 1951).

 

March 8-10: Integration of Personal and Corporate Income Taxation.

Required:

*Goode, Richard, The Corporation Income Tax, Chapter X.

*Simons, H. C., Personal Income Taxation, Chapter IX.

Suggested:

*The Postwar Corporation Tax Structure, U.S. Treasury Study.

How Should Corporations be Taxed?, A Tax Institute Symposium.

“Final Report of the Committee on the Federal Corporation Income Tax”, Proceedings of the National Tax Association, 1950, pp. 54-76.

Lent, G. E., The Impact of the Undistributed Profits Tax, 1936-1937.

 

March 12-15: Excess Profits Taxation.

Required:

*Hart, A. G., and Brown, E. C., Financing Defense, Chapter 7.

*Blough, Roy, “Measurement Problems of the Excess Profits Tax”, National Tax Journal, December 1948, pp. 353-365.

*”Symposium on the Excess Profits Tax”, National Tax Journal, September 1951, pp. 219-36.

Tax Institute, Excess Profits Tax, Parts 1 and 3, and pp. 119-141.

Suggested:

Oakes, E. E., “Excess Profits Tax Amendments”, National Tax Journal, March 1952, pp. 53-64.

Hicks, J. R., Hicks, U. K., and Rostas, L., The Taxation of War Wealth, Chapters 1, 4-7.

 

March 14-19: Estate and Gift Taxation.

Required:

Schultz, W. J., and Harriss, C. L., American Public Finance, Chapter 20.

*Groves, H. M., Viewpoints on Public Finance, Nos. 44, 46, 47, and 48 (all in Chapter 5).

*Butters, J. K., Lintner, J., and Cary, W. L., Effects of Taxation on Corporate Mergers, Chapters I-III and V.

Bloch, Henry S., “Economic Objectives of Gratuitous Transfer Taxation”, National Tax Journal, June 1951, pp. 139-147.

Suggested:

*Surrey, Stanley S., et al., “A Critique of Federal Estate and Gift Taxation”, California Law Review, March 1950. (Introduction by Stanley Surrey, Pp. 1-27, required for graduate students; remainder optional.)

*Federal Estate and Gift Taxes– A Proposal for Integration and for Correlation with the Income Tax. (A joint study by an advisory committee to the Treasury Department and the Office of the Tax Legislative Council, 1947) (Sections I and II and remainder, passim. Required for graduate students).

Keith, E. Gordon, “How Should Wealth Transfers Be Taxed?”, American Economic Review, May 1950, pp. 379-390.

Wedgewood, Josiah, The Economics of Inheritance, especially Chapters 9-11.

 

March 22-31: Taxes on Consumption.

Required:

Schultz, W. J., and Harriss, C. L., American Public Finance, Chapters 8, 16.

*Groves, H. M., Viewpoints on Public Finance, Nos. 58, 59, 60, 64.

Soloway, A. M., “The Purchase Tax and Fiscal Policy”, National Tax Journal, December 1951.

Suggested:

Due, John F., “American and Canadian Experience with the Sales Tax”, The Journal of Finance, September 1952.

*Due, John F., “Toward A General Theory of Sales Tax Incidents”, The Quarterly Journal of Economics, May 1953.

Pao Lun Cheng, “A Note on the Progressive Consumption Tax”, The Journal of Finance, September 1953.

Soloway, Arnold M., “Economic Aspects of the British Purchase Tax”, Journal of Finance, May 1954.

*Hicks, U. K., Public Finance, Chapters IX and X.

Hart and Brown, Financing Defense, Chapter 4.

 

April 12-23: Intergovernmental Tax Problems.

Required:

Shultz, W. J., and Harriss, C. L., American Public Finance, Chapters 23, 24, 18, 19.

*Groves, H. M., Postwar Taxation and Economic Progress, Chapter 12.

*State-Local Relations, The Council of State Governments, Report of the Committee on State-Local Relations, 1946, Parts 3 and 4; Parts 1, 2, 5, and 6 passim.

*Federal State Local Tax Correlation; Symposium of the Tax Institute, 1953. Chapters I, II, III, VII, VIII, XVIII.

Suggested:

Groves, H. M., Postwar Taxation and Economic Progress, Chapter 12.

Groves, H. M., Viewpoints on Public Finance, Chapter 2.

*George, Henry, Progress and Poverty.

Hansen and Perloff, State and Local Finance in the National Economy.

*National Tax Journal, December 1951, pp. 341-371.

 

April 26-May 5: Burden of Taxation.

Required:

*Musgrave, R. A., et al., “Distribution of Tax Payments by Income Groups”, National Tax Journal, March 1951, pp. 1-53.

*Tucker, Rufus S., “Distribution of Tax Burdens in 1948”, National Tax Journal, September 1951, pp. 269-283.

*Allen, E. D., and Brownlee, O. H., Economics of Public Finance, Chapter X.

*Tucker, R. S., “Distribution of Government Burdens and Benefits”, American Economic Review, May 1953, pp. 519-534.

Suggested:

*”Further Consideration of the Distribution of the Tax Burden”, National Tax Journal, March 1952, pp. 1-39.

Poole, K. E., Fiscal Policies and the American Economy (Chapter VIII, “The Fiscal System, The Distribution of Income, and Public Welfare” by John H. Adler), pp. 359-409.

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 6, Folder “Economics, 1954-1955”.

Image Source: J. Keith Butters from Webpage of the Harvard Business School Baker Library Historical Collection “Edwin H. Land & the Polaroid Corporation: The Formative Years”.

Categories
Economists Harvard

Harvard. From Self-Report on Behavioral Sciences to Ford Foundation. Economics, 1953.

In 1953 five universities—Chicago, Harvard, Michigan, North Carolina and Stanford—were granted funds by the Ford Foundation to review the behavioral sciences in their institutions. The Committee that wrote Harvard’s Report was chaired by economist Edward S. Mason, then Dean of the Graduate School of Public Administration. Harvard’s Report sought “to evaluate strengths and weaknesses in the fields of the behavioral sciences at this university, to appraise needs, and to look forward to the future.”

Behavioral sciences was defined for the study to include “the fields of anthropology, economics, government, history, psychology, and sociology, with their applications in business, education, law, medicine, public health, and elsewhere.”

The following excerpt dealing with economics and its applications comes from Part II of the Report — Research and Scholarly Activity: Recent or Current, A. The Topical Classification.

This report presents a most convenient self-representation of Harvard Economics at mid-twentieth century. 

______________________________________

[p. 127]

V. Economic Institutions and Behavior

As in the other sections of this inventory, we have sought to view the study of economic institutions and behavior at Harvard in a fashion which reaches over disciplinary and organizational lines. The professional economists in the Department of Economics, the Graduate School of Public Administration, the Business School, and the Russian Research Center of course carry by far the largest part of economic studies at Harvard. In general we follow the economists’ divisions of subject matter but attempt to take notice of pertinent work in other fields. A substantial and important part of Harvard’s economic studies are conducted in the Business School and in relations with the Law School. While some of these studies gain attention here we would remind the reader that our primary focus is on the Faculty of Arts and Sciences, and the reports on the professional schools in Part VI should be consulted as supplements to the account given here.

Special resources for the study of economics exist at Harvard and deserve to be recalled. In addition to the collections in the Widener Library, the Baker Library at the Harvard Business School and the library of the Graduate School of Public Administration provide exceptional facilities. Two journals, the Quarterly Journal of Economics and the Review of Economics and Statistics, are edited and published through the Department of Economics. The seminars of the Graduate School of Public Administration are equipped with special funds and facilities for research activities. All of them direct and encourage the research of graduate students, and some have close connections with major research products.

One further general point calls for comment. The infusion of policy concerns into the work of Harvard’s economists is very strong. In classifying theses we originally sought to discriminate studies directed toward public policy, and we contemplated a separate topical discussion. It was, however, soon pointed out to us by economists that the pervasiveness of policy concerns made this unwise, and our final topical heading (v. 16) treats more of special applications than policy questions in general. This strength of policy orientation has brought sharp criticisms and cautions from some of our informants but it is generally accepted as an inevitable and desirable pattern in contemporary economic studies.

 

I. Economic Theory

Economic theory is certainly one of the proudest possessions of the behavioralsciences. Within Harvard as elsewhere it penetrates professional studies so extensively that separation of the discussion of theory from the discussion of special fields threatens to be artificial and arbitrary. In a sense our discussion of economic theory thus be [p. 128] comes a general introduction to much of what follows under later headings.

Economics at Harvard has always had a firm attachment to the main traditions of economic theory. The assaults of institutionalists and other critics of abstract theory have been felt less at Harvard than at some other major American universities — a fact which was pointed to with satisfaction by some of our informants in this survey. Instruction in the received body of economic theory has been of central importance in the curriculum, and the faculty has been prominent in the theoretical advances of the past generation. One of our professional informants traced the recent history of theory at Harvard in close relationship to the major trends in the field. He thought that the major developments between the end of the Twenties and World War II were the theory of monopolistic competition and the Keynesian “revolution” and that Harvard had been prominent in both. In the first of these, Professor Edward H. Chamberlin made the major American contribution in his Theory of Monopolistic Competition (now in its sixth edition, 1948). Professor Chamberlin has continued to devote his energies to the development of this theory, his latest efforts (as editor and author) appearing in Monopoly and Competition and Their Regulation (1954). The American phase of the Keynesian revolution is associated with the name of Professor Alvin H. Hansen and others of the Harvard staff, who were important disseminators and critics of the theory. Professor Hansen has recently published A Guide to Keynes, and another of Harvard’s Keynesians, Professor Seymour E. Harris, has a study of the life and influence of Keynes on the press.

Both of these developments in economic theory continue to have major importance at Harvard, both as general theory and in more particular contexts noted later.

The more recent development of economic theory is, like all contemporary movements, difficult to envisage clearly. It is particularly complicated by the strong upsurgence of mathematical economics, and the growing intimacy of relations among theory, econometrics, and statistics. One of the principal issues in the development of economics at Harvard centers around this shift in the character of the field. Some of the younger men we interviewed in this survey felt that Harvard was lagging in the kind of mathematical theory which is being vigorously developed at Chicago, Stanford, and to a lesser extent at some other institutions. One man expressed a strong concern that the training he had received at Harvard might be “out of date.” More senior economists expressed varied views on this issue. It is felt by several men that in Professor Wassily W. Leontief’s input-output analysis, Harvard has been the scene of one of the most important [p. 129] newer developments in economic theory. This work, with its intimate combination of empirical procedure and theory, is thought to typify the more recent patterns of economic analysis and to offer one of the major prospects for future development. Mathematical economics has also not gone without representation in the curriculum, as we note below (v. 14), in a more direct and extended discussion of the subject.

Harvard economists point with satisfaction to the penetration of theory into all the special domains of their field, and tend to rank the prestige of specializations in terms of the theoretical development they display. Pure theory has a prestige in economics which has no close parallel in any of the other fields we have studied. The feeling that it needs to be brought into close conjunction with empirical data is, nevertheless, strong, and we report the vigorous comments of one of our informants on the point:

“I think economics is the most advanced of the social sciences in some respects and the most backward in others. I would say that the critical thing for the development of any social science is effective integration between empirical data and the theoretical system of the social science. 1 would say that economics has achieved a unified body of analytical thought which the other social sciences have not yet reached. An important aspect of this theory is that it is genuinely not a theory of individuals, but a theory of the way a whole society operates. I think that the theory of general equilibrium, despite all the difficulties with it, is the crowning achievement of economics. All that Marshallian analysis amounts to is a little step beyond what the entrepreneur knows; it amounts to a kind of theory of rational behavior that might tell people how they ought to behave, but it doesn’t really tell people things that they haven’t known before. The general equilibrium theory does this, so that we’ve got a valuable theoretical tool. And now we’re getting to the stage where we’re filling our boxes with data. For a long time the statistical work really wasn’t very good. Instead of linking observations with theory, statisticians got interested in how you made observations. Now, I think, we’re getting farther. We’re beyond the stage of illustration; we’re to the pilot plant stage definitely, and perhaps even to large scale operations in some things. I think that the important things that lie before us are not so much in the kind of integration that crosses fields, perhaps, as in the correlation of theory and data within given problems — perhaps in given fields. I think that this sort of work has to be done by individuals too, or people working on both ends of the problem. You can’t have the kind of division of labor where the National Bureau takes care of the data and the Cowles Commission takes care of the theory; these things have to be worked out together.”

Given the prestige of theory, it would be offensive as well as inaccurate to permit the impression that only work mentioned under this heading qualifies as theory. Despairing of abstracting theoretical efforts from their special contexts, we have sought to note many of them in the discussion of special fields below. An alternative organization which considered all of the work of each staff member successively might have displayed the interpretation of theory and empirical investigation better than the organization here used. Reasons for the difficulty in drawing lines between special fields would also have [p. 130] appeared with special clarity. There are, however, compensating advantages in the procedure we have followed which recommended it as the best solution we could find to a difficult problem.

 

2. Economic Institutions and Systems

A broad concern with economic institutions and systems characterizes many types of behavioral scientists. The historian of the ancient world, of medieval Europe, or Tokugawa, Japan, must depict a set of economic institutions. The sociologist seeking a comprehensive view of a total society — and this is not an uncommon activity of Harvard’s sociologists, as we have seen in iv.6 — must describe and analyze economic institutions in a wider setting. The anthropologist doing a rounded ethnography or seeking a comparative understanding of primitive economics must delineate the institutional framework within which economic processes occur. These varied activities often proceed from no very explicit conceptual base or eschew an aim toward general analysis and theory. The work of historians and ethnologists typically has this a-theoretical character. A substantial amount of more generalizing or conceptual work can nevertheless be detected among behavioral scientists other than economists at Harvard.

Among the anthropologists at Harvard, Professors Douglas L. Oliver and John Pelzel have perhaps the most active concern with primitive economics; Professor Pelzel offers a graduate seminar in the field and has engaged in researches already noted (iv.6). The Values Project (ii.2) has included a study of Navaho Acquisitive Values, by Richard Hobson, to be published in the Peabody Museum Papers, vol. XLII, no. 3.

Professor Talcott Parsons in the Social Relations Department has had a special interest in economic questions throughout his career. His recent series of Marshall lectures (iv.l) are the latest fruits of this interest, which has had many facets but has laid special stress on the institutional structure typically assumed by economic theory. Dr. Francis X. Sutton, of the Department of Social Relations, has joined with Professor James S. Duesenberry, of the Department of Economics, in a course on the sociological analysis of economic behavior, which has laid particular stress on institutionalized patterns.

While a special “institutionalist” bias is avoided by Harvard’s economists, there is a substantial body of work which attends to the institutional characteristics of different economic systems. Instruction in the economics of socialism has had an established position in the curriculum. The late Professor Joseph Schumpeter’s Capitalism, Socialism, and Democracy reflected his long association with this instruction, which is now continued by Dr. O. H. Taylor. The economic institutions of various countries of the contemporary world win attention in the work on economic development (v.9). [p. 131] The economy of Soviet Russia is the subject of extensive study. A major project of the Russian Research Center, under the direction of Professor Alexander Gerschenkron, includes the extensive variety of studies indicated in the following list:

J. S. Berliner, The Theory and Operation of the Soviet Firm
[Bibliography of economic articles in Soviet periodicals]
R. Campbell, Soviet Accounting Methods and their Influence on Pricing
R. Holtzman, A Study of Soviet Taxation
M. G. Clark, Economics of Soviet Steel
N. T. Dodge, The Soviet Tractor Industry and Mechanization
A. Erlich, Soviet Industrialization Controversy, 1925-1928
G. Grossman, Capital-Intensity: A Problem in Soviet Planning
D. R. Hodgman, Soviet Industrial Production, 1928-1951
H. Hunter, Soviet Transportation Policy
C. A. Recht, Urbanization and the Soviet Housing Shortage
F. Seton, The Structure of Soviet Economy, 1934

In another section of the Russian Research Center, a study of the budgets of Soviet urban families in 1940 is in progress. Professor Gerschenkron has also been engaged in other studies of the Russian economy under the auspices of the Rand Corporation. The construction of a machinery production index, investigations of the iron and steel, coal, and petroleum industries, and a study of power, have recently been brought to completion and a study of ruble-dollar prices for Soviet machinery is under way.

A number of studies of the American economy, which depart from the strictly technical framework of economic theory and emphasize broader political and social elements, probably deserve to be considered in this connection. Professor John K. Galbraith’s recent book, American Capitalism: The Concept of Countervailing Power (1952), presents a general account of the working of the American economy with particular emphasis on the role of monopolistic elements on both sides of many markets which act to limit the disadvantages to the economy which would result from such imperfections operating on either side alone. He is currently engaged in further development of this analysis. Professor Sumner H. Slichter has also devoted himself to a general account of the economic system of the United States, The American Economy (1953), and is presently engaged in a consideration of the long-run prospects for American capitalism.

The diffuse nature of considerations which can be brought to bear on economic institutions and systems suggest this context for our remarks on the relation between economics and other disciplines at Harvard. The physical juxtaposition of economists and political scientists in the Littauer building of the Graduate School of Public Administration is viewed with satisfaction by men from both fields. Great intimacy of working relations between the fields seems not, however, to be common practice. While a joint degree in Political Economy and [p. 132] Government is offered and we encountered two men who spoke warmly of political economy as a worthy discipline, a serious effort at merging of fields (comparable say, to that which has been attempted in the Department of Social Relations) has not been made. The highly technical character of economics and the consequent demands it makes on graduate students and younger men in the field were pointed out to us as deterrents to interdisciplinary work. An “atmosphere” discouraging such ventures was alleged by one of our informants:

“I saw something of the so-called field of political economy at X University and certainly didn’t think much of it. I don’t know of anything in particular of that sort that is going on around here. I used to be interested in this kind of thing myself; I was interested in sociology and economics, but when I got into my work, I found that there was a real requirement of specialization. This was something that was gently indicated to me by the professors and people in the Department. I don’t know that anybody actually ever told me I had better watch out for combined fields, but the opinion that you had to was unanimous among graduate students. If a man started to work in some other field, Professor X always tried to get him transferred to that other department.”

Ties between the Social Relations area and economics have been noted above in a joint course, but they have not been extensive and we encountered only very mild sentiment that they should be strengthened.

 

3. Consumption and Distribution (including Marketing)

A logical and secure place for consumption and distribution as a distinct subject in the curriculum of economic studies is perhaps not easy to establish. Given a theoretical cast the subject merges into the general framework of economic analysis; given a more empirical cast it tends toward the concrete, practical problems which make up courses in marketing and bring it under a professional school rather than the Arts and Sciences curricula. Nevertheless, consumption and distribution has a place of de facto importance in the instruction and research of the economics staff. The problems of agricultural economics have stimulated much attention to the subject by Professor John D. Black and others associated with him. In this general area, Dr. Ayers Brinser is currently bringing to conclusion a two-year study of the consumption of meat, which was sponsored by the U. S. Department of Agriculture. The study sought to determine the varying patterns of meat purchases among a sample of consumers from different economic classes.

A collaborative report on the economy of Puerto Rico by a group of Harvard economists headed by Professor Galbraith is now ready for the press. This report emphasizes the marketing aspects of the economic growth problem. Drawing on his experience in field studies in Puerto Rico, Assistant Professor Richard H. Holton is studying the role of commodity distribution in pre-industrial societies. A study of Saving among Upper-Income Families in Puerto Rico by Dr. Eleanor E. Maccoby of the Department of Social Relations (in collaboration with [p. 133] Frances Fielder) appeared in the past year. An extensive interviewing program provided the data for this study, which was sponsored by the Social Science Research Center of the University of Puerto Rico. Professor Duesenberry has continued work on the theory of consumption presented in his Income, Saving, and the Theory of Consumer Behavior (1949).

 

4. Public Finance, Fiscal Policy, and Taxation (cf. also Law and Business School reports in VI)

The strong interests in public finance, fiscal policy, and taxation, which have characterized economics in the recent past have been amply represented at Harvard. Professor Hansen’s pioneering role in the development and implementation of fiscal policy is well known and his work continues at the present time. His recent appearances before Congressional committees on the proposed tax program and the President’s Economic Report point to his continuing interest in national policies. Professor Arthur Smithies has recently completed a book on the federal budgeting process and other aspects of fiscal policy and public finance. The study is an attempt to bring theoretical analysis to bear on the decisions involved in governmental spending, and public investment.

A substantial part of Harvard’s work on taxation is located in the Law School and the Business School and is noted in the reports on these schools. Professor Stanley S. Surrey of the Law School, Professor Smithies, and Professor John Keith Butters of the Business School come together for a Seminar on Taxation offered jointly by the Department of Economics and the Graduate School of Public Administration. Professor Butters, who has been collaborating in a large-scale Merrill Foundation study of the effects of taxation on investment and incentives, at the Business School, also offers instruction in public finance under the Department of Economics (with Assistant Professor Lawrence E. Thompson of the Business School faculty).

A work like Professor Harris’ report on the New England economy includes much material on comparable problems. Assistant Professor Arnold M. Soloway is presently engaged in the study of indirect or consumption taxes for the city of Boston, and has a general interest in the financial problems of state and local government. The finance of state and local governments has, however, been less extensively studied at Harvard than has public finance at the national level. Recent planning in the Graduate School of Public Administration aims toward extending such work in the context of a general program on state and local government.

Dr. Theodore S. Baer of the Department of Government has recently turned his interests to taxation and public finance and has devoted the past year to these studies under a Ford Foundation fellowship. An examination of our classification of theses reveals that economists have [p. 134] not monopolized the study of these fields. Theses on the grain tribute system of the Manchus in China, Spanish royal finances in the sixteenth century, and the development of direct taxation in nineteenth-century England remind us that historians occasionally venture into these fields. Political scientists have also studied the financial problems of local governments in four recent theses.

Despite the apparent abundance of activity, members of the Depart ment of Economics have pointed out to us that no economist on the present staff is primarily devoted to research and instruction in public finance. Arrangements for instruction have depended on ties with the Business School in the persons of Professors Dan Throop Smith and John Keith Butters.

 

5. Money and Banking

The traditional field of money and banking has undergone marked changes in recent years. A decrease in attention to the institutional detail of banking operations and a heightened concern with the general analysis of money and income has blurred the lines between this field and others. Harvard’s practice in retaining the traditional label was pointed out to us as a conservative one, but the work of the staff follows modern tendencies and spreads over traditional divisions. Professors Alvin H. Hansen, John H. Williams and Seymour E. Harris have been principal figures in Harvard’s work in this area. In long association with the Federal Reserve System, Professor Williams has applied economic doctrine to the guidance of policy, and has contributed extensively to the discussion of monetary problems. His recent publications include Postwar Monetary Plans and Other Essays, and the noted Stamp Memorial Lecture for 1952. His recent work has been particularly concerned with international monetary problems and is noted below under v.ll. Professor Harris does no current teaching in the field but has made many contributions to the literature.

Among the junior staff, Dr. Ira O. Scott is preparing for publication his study of postwar monetary policy, which includes a theory of assets.

 

6. Business Fluctuations

The difficulty of establishing clear divisions among the special fields of economics shows itself strongly with respect to business fluctuations. So much of economic theory and its applications in fields such as international trade, or money and banking, has been concerned with business fluctuations that the subject is altogether lacking in clear boundaries. We confine ourselves here to reporting work in which the concern with business fluctuations seems especially prominent. Professor Hansen has devoted much of his career to the subject and his recent contributions include a volume on Business Cycles and National Income (1952). Professor Haberler’s earlier study made a large contribu [p. 135] tion to this subject, which remains one of his principal interests. Professor Duesenberry is working on a study which attempts to integrate the business cycle with the mechanism of economic growth in a coherent theory. Professor Slichter’s numerous publications contain much analysis of fluctuations in business conditions.

 

7. Industrial Organization

We use the label “industrial organization” here in a somewhat broader sense than is common at Harvard. At least three sorts of work can be detected in the University at present which have to do with the organization of industry. The first of these is the work in industrial sociology carried out in the Department of Social Relations, the Business School, and among the labor economists. The second sort of work is represented in the technical studies of management problems which bulk large in the output of the Division of Research of the Harvard Business School. Thirdly, there are the studies of particular industries, problems of monopoly and competition, etc., which have won a coherent status among Harvard’s economists as the special field of “industrial organization.” We divide each of these ranges of work separately.

a. Industrial Sociology. Sociological journals now burgeon with studies of the internal structure of business organization, many of which continue a tradition established some twenty years ago at the Harvard Business School in the work of Professors Elton Mayo and Fritz J. Roethlisberger. The present work at the Business School is discussed in the section of our report on that school, and we here confine ourselves to the rather limited work within the Faculty of Arts and Sciences. Professor George C. Homans of the Department of Social Relations has continued an interest of long standing in the field. His recent activities have included a study of the social organization of a large office in a public utility company, and an effort to bring the study of work groups into a general analysis of small group structure (iv.2). Recent theses from the Department of Social Relations include the published studies by Elliott Jaques, The Changing Culture of a Factory, and Theodore V. Purcell, S.J., The Worker Speaks his Mind on Company and Union. Some of the work by labor economists might merit classification here but is treated under another heading (v.8).

b. Technical Studies of Management Problems. By far the most important locus of studies of this character is to be found in the Business School. (See Part VI of this report.) We note, however, that economists’ work on industrial organization and in input-output analysis sometimes leads into highly technical studies of the nature of particular industries. A few theses seemed to us to reflect this tendency and the importance of technical data for input-output analyses and other “non- aggregative” studies was stressed by our informants. [p. 136]

c. Industry Studies, etc. The lists of recent theses in economics show a large number (some 38 in the five-year period, 1948-1953) devoted to pricing, competition, and other economic matters in particular industries. A majority of these industry studies derive from an extensive program of studies in what has come to be known as the field of “industrial organization.” The development of this field was described as follows in one of our interviews:

“Well. I should perhaps first begin by saying that this is very much of an American field, as it’s actually studied. Of course, there’s a background in the classical writers. Marshall’s book on Industry and Trade was really a pioneer work in this field, and along about 1916 there was Dennis Robertson’s book on the control of industry. It’s only been rather recently that this field has gotten consolidated, that it’s gotten a recognizable structure. There was, of course, a lot of work on the industries that we now attend to. There was, for example, a great deal of work on the railroads. There were a lot of people who were railroad economists, but they really didn’t have any solid theoretical grounding in their work. Really, the first good article on railroad pricing policies was Don Wallace’s article in which he got involved in a controversy with I’igou. The trouble with these railroad economists was that they were not analytically well-trained people. And there was a great deal of work in public utility economics. All of this, however, had nothing much to go on but the classical pure competition model. It was really the theory of monopolistic competition that brought a new interest and gave a new focus to the field. Essentially, this has provided the conceptual framework for the industry studies, and it set up a whole new line of problems in general terms that people could get their teeth into. I would say that now over the last couple of decades the field has gotten very well established. J. M. Clark holds one of the leading positions in this field, and there are also Professor Edward S. Mason and a number of his students. There were other people, and other lines of work that went into this development, that I perhaps ought to mention. There was all the old stuff on trusts and monopolies, people like W. Z. Ripley and Elliott Jones, and so forth, but it was really only after the monopolistic competition theory appeared and the subject got tied to theoretical interests of a general sort that the subject developed. There were industry studies in the Marshallian tradition, but the important work seems to have been done in the last couple of decades.”

As our informant indicates, instruction and research in this field at Harvard has been guided by Professor Mason, with the collaboration of Professor Carl Kaysen, Assistant Professor James W. McKie and others. A graduate seminar and a major project serve as foci for the research effort. The seminar serves to guide graduate students undertaking the industry studies which provide basic materials for more general studies in the field. The Merrill Foundation for the Advancement of Financial Knowledge has sponsored the major research project now under way with the collaboration of several economists and lawyers from Harvard and other institutions. The ultimate aim of this five-year study is the development of workable policy in the fields of monopoly and competition. In addition to industry studies, a series of so-called “functional” studies have been planned on such subjects as patents, industrial research, advertising, the areas exempted under the existing antitrust legislation, and procedural problems under the present [p. 137] law. Several members of Harvard Law faculty (Professors David F. Cavers, Robert R. Bowie, and Kingman Brewster; Assistant Professors Albert M. Sacks and Donald T. Trautman), the Business School faculty (Professors John V. Lintner and Bertrand Fox), and economists from other institutions have been members of the group. Extended seminar discussions have been devoted to working out a conceptual scheme for the guidance of the project and the general volume which is planned to embody its conclusions.

In addition to his work on this project, Professor Kaysen is working on a book the intent of which is the derivation of typical patterns of reaction in oligopolistic market structures and the application of probability techniques to the determinate of price and output under such conditions. He has also recently completed work as a “law clerk” for Federal Judge Charles E. Wyzanski in the antitrust prosecution of the United Shoe Machinery Company. Assistant Professor McKie has been engaged as a member of the Merrill project and is also working on two additional projects, one on oil exploration and the other on oil conservation (this latter in collaboration with Professor Kaysen). A longer term project is a study of existing industry studies in an attempt to determine relationships between structure and functioning in these industries.

 

8. Labor and Collective Bargaining

A vigorous program of research and instruction in the field of labor economics has been maintained by Professors Sumner H. Slichter and John T. Dunlop. The Baker Library of the Harvard Business School and the Industrial Relations Library at the Graduate School of Public Administration have resources of exceptional magnitude for work in the field. A Trade Union Program was started in 1942 at the suggestion of leaders of the labor movement. The Program is directed by an Executive Committee from the Faculties of Arts and Science and of Business Administration and has the purpose of training union representatives for executive responsibility in the labor movement. The Jacob Wertheim Research Fellowship for the Betterment of Industrial Relations provides funds for a series of publications in the field, and twelve volumes have thus far appeared under the imprint of the Harvard University Press.

Professor Slichter, as Lamont University Professor, has guided instruction and research on both sides of the Charles River, at the Business School, in the Department of Economics, and at the Graduate School of Public Administration.

Professor Dunlop’s current research activities include several projects. A critical appraisal of wage stabilization is being conducted jointly with Professor Archibald Cox of the Law School under a grant from the Sloan Foundation. A comparative analysis of the labor [p. 138] problem in economic development joins Harvard with other universities (California, Chicago, the Massachusetts Institute of Technology) in a project supported by the Ford Foundation. Professor Dunlop is directing work assigned to Harvard on France, Italy, and certain topical questions. In addition to these research projects, Professor Dunlop continues his primary interest in wage determination, and is completing a book on collective bargaining and public policy. In the near future he will begin a history of collective bargaining in the United States during the period of 1933-1953.

Dr. Martin Segal is currently working on two projects concerned with the study of intra-plant wage structures, and will soon begin a study of the internal wage structure of three industries located largely in New England. An investigation of the managerial decisions on the introduction of changes in unionized plants is also planned.

 

9. Economic Development

Economic studies inevitably reflect the major problems of the contemporary scene. As one of our informants pointed out to us, the great focus of economists’ efforts in the late Thirties was on the fiscal policy problems relating to the Keynesian doctrines and the Great Depression. At present, the dominant focus of interest seems to be on economic development, reflecting a broadened view of the world and a worried preoccupation with formerly exotic areas. Despite widespread dissatisfaction with the state of theoretical approaches to developmental problems, economists now seem to shape work in several special fields about these problems. Thus it is now rather arbitrary to divide the study of economic development from studies in agricultural economics (v.10) or international economic problems (v.11). These fields, which bore a quite different complexion a decade or so ago, have now become thoroughly infused with developmental problems.

The diffuse spread of work in economic development means that it is exceptionally difficult to draw the lines about those researches which merit note here. We note at least one general study; Assistant Professor Robert E. Baldwin is collaborating on a book dealing specifically with the mechanism of economic growth and drawing heavily on classical and neo-classical economics. Professor Dunlop’s participation in a comparative study of the labor problem in economic development has been mentioned above (v.8). A major Ford-sponsored project on the economic development of Pakistan is being directed by Professor Mason, Dean of the Graduate School of Public Administration. This is an action rather than a research program, but it depends upon research studies, and several members of the Harvard faculty, including Professor Leontief, will act as consultants. Dr. Douglas Paauw has specialized in the development problems of the Far East and is engaged in research and instruction on that area. The study of economic growth [p. 139] problems in Puerto Rico by Professor Galbraith, Assistant Professor Holton and others has been noted above (v.2). Professor Galbraith offers a seminar in the field and is currently working on a “theory of poverty” with important implications for underdeveloped areas. Professor Holton is studying the nature of the entrepreneurial activity in underdeveloped areas, an interest which also finds representation in the studies of the Research Center in Entrepreneurial History (cf. v. 12 below). Professor Duesenberry’s current research (v.6) bears heavily on the problem of differential development of economies, and Professor Gerschenkron’s studies in the industrialization of Europe (v. 12) are largely concerned with economic development. On the domestic scene, Professor Harris has recently directed a study of the problems of New England in general, and of the textile industry in particular. His book on The Economics of New England was published in 1952, and a report on the New England textile industry by a committee appointed by the Conference of New England Governors appeared in 1953. Professor Mason’s continued interest in resource supplies and in international oil problems involves him in a concern with underdeveloped areas.

The immediate future seems to promise a vigorous continuation of this varied work on development problems. The demand for such studies from the world at large and from the student body at Harvard is strong. Our list includes 20 theses on economic development in 1948—1953, and there are numerous others in progress at the moment. The interest of the foreign students who make up an increasingly important fraction of the student body in the Graduate School of Public Administration is strongly focused on developmental problems, since a high percentage of these students come from areas like Asia and Latin America where these problems have a compelling importance. The intellectual resources which economics and related fields can bring to these problems seem not to be altogether satisfactory. One economist put the problem sharply by asserting that all the established general propositions in the field could be written on a postcard. The area programs (cf. areal classification below) and Harvard’s extensive staff of scholars with competences in special areas provide extensive resources, but the lack of a general theoretical approach is keenly felt. The need for interdisciplinary attack on these problems is generally felt, and is exemplified in the area programs. A critic of this approach felt, however, that interdisciplinary study of particular areas tended to discourage the kind of general analysis he hoped might be developed and applied to an extensive array of cases. Other economists were not anxious to see economic development treated as a special field and suggested that the present dispersion of activity among economic historians, agricultural economists, and others, was appropriate to the current state of knowledge. [p. 140]

 

10. Agricultural Economics

 A remarkable total of 43 theses in agricultural economics accepted during the years 1948-1953 points to the prominence of this field at Harvard and the strong program maintained for many years by Professor Black. The work of Professor Black, now emeritus but still very active, has brought students to Harvard from all over the country and reached a sector of national life which no other part of the University’s work has reached so successfully. Particularly through students in the Graduate School of Public Administration, a major influence has been exerted on the direction of agricultural policies.

Professor Black’s long interest in production economics, or the application of economic reasoning to farm problems, is being channeled currently into a five-year input-output study of 241 dairy farms in New England. The goal is a determination of the best allocation of resources on such farms. Dr. Brinser has been associated with Professor Black in this and other work discussed under v.3 above. The increasing association of agricultural economics with development problems has been noted in our general comments on economic development. The interests of Professor Galbraith in agricultural economics bear this stamp as do Professor Black’s current and projected studies in India and Pakistan.

 

11. International Economic Problems

The field of international economics has very intimate ties to other special fields within the corpus of economic studies. It has always reflected the major currents of economic analysis in general; at present it shows the impress of economic development interests. Professors Seymour E. Harris, Gottfried Haberler, and John H. Williams have interests of long standing in the field, and have regularly offered courses and graduate seminars in it. Professor Williams has recently completed service on the Randall Commission and participated in the writing of its report. He is also currently revising for publication a series of five lectures on international financial problems given at the Center of Latin American Monetary Studies in August, 1953. Professor Harris has a volume on the dollar problem which will soon be ready for the press. A regular flow of articles, reviews, etc., from Professor Haberler point to his continuing activity in the field. A diversity of points of view is to be found among these men, with Professor Haberler advocating a free multilateral trade position which is not shared by his colleagues.

 

12. Economic History

The study of economic history at Harvard spreads over the departmental lines suggested by its name, and finds a home in other sites as well. In the Department of Economics, Professor Gerschenkron offers [p. 141] courses in the field and is engaged in various researches. The industrialization of Western Europe, particularly in the nineteenth century, will be the subject of books of general interest for the study of economic development. It will view the countries of Western Europe as “underdeveloped areas” of their time and treat their economic growth with attention to such factors as the role of investment bankers, resource patterns, etc. Professor Gerschenkron’s Russian studies (v.2) also include an economic history which he is currently writing. Other work includes the supervision of a translation of Eli Heckscher’s Economic History of Sweden, scheduled for publication in the fall of 1954.

Professor Gerschenkron has also been one of the directors of the Research Center in Entrepreneurial History. This Center, established in 1948 with a large grant from the Rockefeller Foundation, has fostered numerous studies in its designated field. Biographical studies of entrepreneurs have been prominent in the work of the Center, but studies of a more general character, such as those on the origins and backgrounds of American businessmen by William Miller and co-workers, have been fostered. A volume of essays, Men in Business (1952) edited by William Miller, H. L. Passer’s The Electrical Manufacturers 1875- 1880 (1953), and a study of Railway Leaders: 1845-1890 (1953) by Professor Thomas Cochran (University of Pennsylvania) have been published in a special series from this Center. From its inception, the Center has been an interuniversity project, although it has been closely associated with Harvard in its location and through Professor Arthur H. Cole (Harvard Business School), its director, others of its executive Committee, and the research staff. Through fellowships to graduate students, conferences, and the publication of a journal, Explorations in Entrepreneurial History, it has done much to stimulate work in the field.

A broad interest in social and economic history characterizes several members of the history staff. In the medieval field, Assistant Professor Bryce D. Lyon is preparing a study of the money fief in Western Europe, and offers a general course on social and economic history in the period. In later periods of European history, Professors Wilbur K. Jordan, David E. Owen, Michael Karpovich, and others have had an extensive concern with economic history. In the American field, Professors Frederick Merk and Arthur M. Schlesinger, Sr., have fostered economic history, both in their own studies and in theses of their students.

The work of the Business School in business history should be recalled in this connection, and the reader is referred to the Business School report for an account of it.

Although we have enumerated some 18 theses in economic history of the period 1948-1953, and several staff members pointed with satisfaction to present instruction or past achievements, there was concern [p. 142] expressed about the shortage of capable scholars in this field. A weakness in economic history in the United States, as compared with England or Germany, was alleged by economists. Professor Gerschenkron has recently brought about a notable upturn in activity, but the numbers of economists doing history theses have been relatively few at Harvard as at other American universities. Harvard historians were divided in their assessment of the field; there were some who thought that the record showed a commendable degree of interest and competence, but there were others who detected a general avoidance of economic history as dull and tedious work. The proper training of economic historians presents unresolved problems. Economists expressed the view that a sound background in theory and general economics was the indispensable base for studies in the field, and noted the difficulty of inducing men to add the labor of acquiring the necessary historical knowledge and linguistic equipment to the already formidable demands of graduate study in economics. Discussions in the Committee have led to some re-examination of the division of instructional labor between the Departments of History and Economics which may help solve the difficult problems of training.

 

13. Government and Business

Examination of course offerings and the lists of theses have led us to recognize studies of the relations of business and government under a special heading. In the arrangement of work characteristic at Harvard, however, the great bulk of work having to do with government regulation and related matters is encompassed in the field of industrial organization, and we have treated it as such (v.7.c above).

 

14. Statistics and Econometrics

The field of economics has long had a heavy dependence on statistical work, and the possibilities of mathematical expression of economic theory were realized in the nineteenth century. As long as statistics remained a fairly simple subject guiding the interpretation of empirical findings, and theory was contrived without precise attention to “operational” testing, a reasonably clear distinction between “economic statistics” and “mathematical economics” was possible. Recent decades have greatly complicated the picture. Technical developments in statistics have made the subject highly mathematical and brought it to convergence with other developments in mathematic economics. A new term, “econometrics,” which was fostered by the Econometric Society and its journal, Econometrica, now serves as a designation of much of the recent work, which might with equal propriety be called simply economic theory or statistics.

Harvard has responded to these developments and participated in them in varying measures. In Professor Leontief’s Harvard Economic [p. 143] Research Project, a major technique of econometric analysis, the input- output analysis, has had its principal locus of development. With intellectual roots in the general equilibrium analysis of Walras, the input-output technique is an attempt to give quantitative analyses of the behavior of total national economies without going over to the aggregative techniques of national income analysis (and thus sacrificing a picture of structural interrelations within the economy). Professor Leontief has been engaged in this work for more than two decades, beginning on a modest scale in the Thirties and expanding rapidly during the war in connection with several branches of the national government. Since the war, the Project has been maintained on a large scale with support from the government and the Rockefeller Foundation, employing about twenty people under the direction of Professor Leontief and his executive assistant, Mrs. Elizabeth Gilboy. Models for the American economy have been worked out which trace the interrelationships among as many as 500 different sectors. Such work is obviously expensive and requires a substantial organization such as Professor Leontief has maintained. Among many recent publications from the Project, we note the collaborative volume by Professor Leontief and others, Studies in the Structure of the American Economy (1953).

Instruction in this and other econometric techniques is offered in the Department of Economics by Professor Leontief and Assistant Professor John S. Chipman. Professor Chipman is carrying on two research programs, both concerned with capital and interest. The first is on the construction and application of dynamic models of the sort known as linear programming models, and involves attention to technological questions. The second is a study of liquidity preference.

Professor Guy H. Orcutt is the principal figure in the recent develop ment of other statistical and quantitative studies. His well-known work on the problem of auto-correlation in time series is continuing. He is preparing a book on statistical inference and a study of the demand for residential housing. The instruction on economic statistics is primarily in Professor Orcutt’s hands and as organizer and active participant in a Research Seminar on Quantitative Economics, he is actively working on problems concerned with the economic behavior of households and firms. Studies currently being conducted under the auspices of this seminar include:

E. Kuh — Statistical Investment Functions
J. Meyer — An Econometric Investigation of Postwar Investment in Manufacturing Industries
J. Tryon — Factors Influencing the Behavior of Business Inventories
F. Gillis — Sources and Uses of Funds: Selected Corporations: 1920-1950
B. Chinitz — The Demand for Cash Balances
H. Miller — An Empirical Study of the Demand for Refrigerators
V. Lippitt — Determinants of Demand for Consumer Durable Goods [p. 144]
H. Allison — Consumer Level Analysis of Demand for Meat, Fish, and Poultry
C. Zwick — The Demand for Meat

While there is respect for the work actually being carried out in these fields at Harvard, we encountered much discussion on the need for further development. It is generally conceded that Harvard is not so strong in mathematical economics and statistics as some other universities. The problem of statistics is one which transcends the Department of Economics and we devote a special section to it at the conclusion of this inventory. The general result of our survey of Harvard’s statistical resources may, however, be anticipated here; it is that they fall short of adequacy to the expanding needs of the behavioral sciences. Economists at Harvard feel this weakness in statistics and we repeatedly encountered the assertion that a man who wanted a first-rate training for technical work in the field would be better elsewhere. Others forms of mathematical work in economics show a similar weakness at Harvard as compared with some institutions.

As we suggested in our discussion of economic theory above, there is no clear unanimity on the need for Harvard to devote more of its resources to mathematical work. Especially among senior members of the Department of Economics, there is much disquietude at the luxuriant growth of this work. As one man put it sharply,

“I’d like to see a deflation of some of the mathematics that’s going on in economics. I think there’s a really serious threat here. This is the kind of work that attracts the ablest people, and they get so concentrated on mathematics that they scorn anything else … I think we ought to teach mathematical economics, but we ought to keep it in its proper place. I think there are real dangers of people getting involved with this kind of work and then making public policy proposals and forgetting the assumptions [in their abstract models]. . . . I’m disposed to fight this trend toward mathematics.”

Some members of the staff feel an uncomfortable lack of equipment in assessing mathematical work; one told of learning calculus when he was forty to “protect himself.” Others have the necessary training without being primarily mathematical economists. Among these latter there is a pronounced concern for balance. They regard much of the current mathematical work as of little consequence in the development of economics, and would deplore a heavy concentration of graduate training on mathematical technique. The importance of mathematical and statistical competence is nevertheless stressed and, on balance, it is probably accurate to say that sentiment tips toward further strengthening of Harvard training in these respects.

 

15. History of Thought

A generally poor state of American scholarship in the history of economic thought was pointed out by two economists we interviewed in this survey. The increasingly technical character of economics and [p. 145] its divorcement in America from the European traditions of broad, diffuse scholarship were suggested as possible explanations. The only active scholar currently on the staff is Dr. Taylor, who has offered courses which trace the history of economic thought in relation to the broad movements of intellectual history; he has published numerous essays in the field and is now engaged in preparing a volume of them for publication. There is a notable absence of younger men in the field — a situation in sharp contrast with the lively activity in intellectual history and the history of political thought. If Harvard has a recent record of strength in the field, hospitality to scholars trained abroad is in part responsible. The scholarly legacy of Professor Joseph Schumpeter included a monumental History of Economic Analysis (2 V., 1954) which appeared after his death. While not actively working in the field, Professors Haberler, Gerschenkron, and Leontief maintain serious interests in it.

 

16. Applications of Economic Analysis to Welfare Programs, Education, etc.

The pervasiveness of concerns with public policy in the work of Harvard’s economists has been pointed out above, and illustrated under various special fields. Problems of economic policy arise in many areas which are not as such the special concern of economists. Professor Harris has been particularly attentive to such problems and has devoted himself to a series of studies in the economics of social security, education, health, and other welfare programs. The economic problems posed by the social security programs are a familiar subject for economists and our theses list shows about one per year devoted to them. Less common is the kind of work represented in Professor Harris’ Market for College Graduates (1949), and his current work on the economics of cancer (for a University committee on cancer research). The need for more ample study of the support of public education was stressed in discussions during this survey, and we have heard the economics of medicine described as an “underdeveloped area” in economics.

 

Summary

An attempt to assess the strengths and weaknesses of economics at Harvard encounters the inevitable difficulty presented by the lack of commonly accepted standards of judgment. To some, the Department of Economics appears to give insufficient attention to mathematical economics and econometrics. To others, the heavy emphasis on theory is suspect. Still others may complain of the considerable extent and variety of attention given to applied fields. To these latter critics it should be pointed out that the Department is required not only to provide a professional training for economists, but to meet the needs [p. 146] of the Graduate School of Public Administration with its heavy emphasis on practice and policy. Perhaps the best general description of the economics offering is that it is relatively eclectic — not so much methodologically as in scope of attempted coverage — with all that this implies, both good and bad.

Despite this scope, there are inevitably important areas of economic inquiry that are neglected. The field of demography is one, and this field, which must necessarily overlap several departments, is, in fact, extensively treated by none. There is almost no systematic work in transportation and public utilities, fields which in many universities are-given a prominent place. The absence of mathematical statistics is a lack shared by many of the behavioral science departments, a lack sufficiently important to merit special treatment in this report. In an ideal department with unlimited resources, such deficiencies necessarily would excite adverse comment. Under existing circumstances, at Harvard, it is not so obvious that all such fields should be cultivated if their cultivation means the abandonment of current work. The emphasis preferred by the Department of Economics has always been on men rather than fields, and it is by no means clear that this emphasis is misplaced.

It seems fair to note that the Department has been criticized within the University, and to some extent outside, for emphasizing research at the expense of teaching, particularly of undergraduates. This criticism, however, seems less justified now than it was a few years ago and. in any case, it is within the competence of the Department to improve its teaching performance without in any material way lessening its emphasis on research.

Finally, there is some evidence that the Department of Economics is less inclined than most other behavioral science departments to explore the periphery of its field and to seek to establish bridges giving access to the other disciplines. The Committee suspects that this may be characteristic of Economics Departments in other universities. In some ways, of course, this confidence in its own “mystery” has been a source of strength to Economics. In dealing, however, with certain problems in which economists are becoming intensely interested, such as economic development and the various aspects of public policy, an isolationist attitude is not likely to prove fruitful.

 

Source: The behavioral sciences at Harvard; report by a faculty committee. June, 1954.

Image Source: Faculty picture of Edward S. Mason in Harvard Album, 1950.