The American Economy — by Alvin H. Hansen. McGraw-Hill Book Company, 1957, New York. 199 pp.

This short treatise adds still cinother volume to Prof. Hansen's long list of publications relating to business cycles and economic instability. In this book, which is an outgrowth of a series of lectures given in 1956 at the University of Chicago, the author focuses attention upon the improved techniques of economic planning and the vastly enlarged role of democratic governments in attempting to maintain full employment. Against a. background of American economic experiences during the last quarter-century, Prof. Hansen appraises the effectiveness of what he calls a „mixed public-private economy" in which the powerful fiscal and monetary operations of an alert and informed government are playing a stabilizing and sustaining role. A large section of the book is devoted to the Employment Act of 1946 and an examination of the roles of the Counsil of Economic Advisers and the Joint Commitee on the Economic Report under the Truman and Eisenhower administrations. The central theme is that the role of the economist has profoundly changed. No longer able to rely on the assumptions of 19th century economics regarding the automatic market mechanism and selfadjusting character of laisezfaire capitalism, the modern professional economist must be prepared to make social-value judgements and to offer practical advice in developing policy decisions. In Hansen's view, the society is committed to the welfare state and to full employment. This position is consistent with Keynisian thinking and the reader is again reminded of the influece of Keynes upon current American policy in its shift to „high pressure, full-employment economics."

Prof. Hansen points with satisfaction to the „fact" that the American economy has operated since 1938 without any seriousdownturn and that „we have had virtually full employment and booming prosperity for sixteen years". The implicationisthat this unparalleled period of economic growth and stability (except for the minor recessions of 1949 and 1954) is, at least in part, the result of business confidencebolstered by active government policy. No longer is private enterprise „left to shift as best it can in the storms of a fluctuating and inadequate market". However, the author's recital of the role of monetary policy and the practical operationof the government machinery under the Employment Act of 1946 fails to reassure the reader. Throughout these chapters one is impressed with the economicindecision, the political conflict and the emergency nature of war needs which characterized these governmental controls.When good points were scored they were as much the result of happy

accident as of wise planning. In the author's own words: „the task of guiding a dynamic and rapidly changing economy is immensurcably difficult."

One of the most challenging chapters in the opinion of this reviewer is that entitled: „Standards and Values in a Rich Society", which presents a critical appraisal of the high living standards and gains of productivity in the United States, :>ikl the sharp contrasts still prevailing between extremes of wealth and poverty. A concluding statement of the goals of modern society is disappointingly brief. Included as an appendix is a short lecture on Woodrow Wilson as an economic reformer, in which the former president is credited with laying the foundations of later New Deal fiscal policies and paving the way for the welfare state.