Economic Policy

ECONOMIC POLICY. - It represents perhaps the most important sector today, and the most sought-after task of practical politics; its purpose is to give a coordinated direction to the spontaneous rhythm of economic activities, in order to prevent and remedy the harm that may result from it for the less well-off classes, for certain branches of industry, for commerce, or for the national economy in general. Today these purposes are merged and organically summarized in planning, whether total or partial, systematic or directional.

To fulfill this task, political governments have at their disposal only anti-economic weapons, which take shape essentially in the fiscal and customs regimes, in the policy of commercial treaties with foreign countries, in the control of prices, of industrial financing, of banks, of production, of trade and of consumption, and finally in the manipulation of certain special financial devices: the discount rate, the management of monetary circulation and the like, reaching their most acute expressions with forced saving and the compulsion of capital. The sum of these expedients (for that is what it ultimately amounts to, even if consecrated by centuries of use) and the related complex maneuvers over time, in the various sectors of the economy and in international relations, constitute economic policy: often confused by many, through affinity of subject matter or assonance of terms, with political economy as taught in schools as economic science. In reality it happens that, whether because of the growing gravity and complexity of problems, or because of the seductive ease of maneuver for whoever holds political power, or because of the relative promptness of results and the always great and urgent financial needs of governments, economic policy is clearly overwhelming political economy, which is left humiliated by it as a science and discredited as a hope for a rational economic order. Thus economic policy has won for itself the rank and prestige of a science at the expense of economic science properly so called: and it is toward it that the expectations and demands of individuals, classes, businesses and peoples are mainly directed, rather than toward scientific and moral progress; by a tacit involution, political economy concerns itself predominantly with economic policy, and advocates its further strengthening, suggesting that the solutions to economic problems be sought from it (v. KEYNES). With this, economics is heading toward being recognized in practice as an ordinary function of national policies: which evidently destroys the concept of science.

This situation is full of dangers: both because it leads away from the main road, placing empiricism before rationality; and because the various national economic policies, necessarily different and often conflicting, do not favor a rational ordering of the economy, which is a worldwide and unitary phenomenon; and because the economy in the hands of politics, and of a democracy that bends to less wise counsels, represents a dangerous instrument of domination and of apprehension, as well as of enmity between States; and it invites every kind of experiment on the part of governments expressed by parties skilled and reckless in the manipulation of expedients, but ever less prepared and willing to govern according to the natural laws of the economy.

The limits of a sound economic policy are marked by the right and the duty that the State has to support, coordinate and discipline individual economic activities, replacing the self-government that is still far from the economy and restraining errors and excesses; always with the aim not of correcting the natural laws, but of ensuring their free play, avoiding only excessive clashes and taking due account of real situations. Only an advanced economic science, flanked by a valid applied science, in a climate of improved morality and culture, will be able to keep economic policy within its proper limits: enhancing its precious intervention in economic activities as an expression of wisdom and not as systematic violence against an economic truth in whose clarity it takes no interest.

Mario Barone