Economic Policy and the Demands of Labor

A generation has elapsed without a general depression in the United States. For six years the economy has not even experienced a recession. Most economists are now quite ready to admit that our kind of economy can avoid depressions permanently and a number are even willing to argue—in spite of an impending downturn—that recessions are neither inherent nor inevitable in a mixed, though essentially capitalist, economy.

Nothing, however, has happened in the postwar period to indicate that capitalist economies, even in modified form, have the capacity not just to avoid economic downturns but to bring actual output up to potential output, to keep it there, and to achieve, at the same time, a generally acceptable degree of price sta...