The Control of the Economy

In an endeavour to formalise also applied economics the economists of the post-war decades have represented policy as a confrontation of objectives and instruments.1 Typical objectives were full employment, growth, price stability, equilibrium of the foreign balance. The most frequently discussed instruments were fiscal policy, taxation, monetary policy, exchange rates, incomes policy. There are also forbidden instruments, black magic (import or exchange control.) The number of instruments, we were told, has to equal the number of objectives.