SECTION F.— ECONOMIC SCIENCE AND STATISTICS. 



ECONOMIC RESEARCH AND 

 INDUSTRIAL POLICY 



ADDRESS BY 



PROF. P. SARGANT FLORENCE, 



PRESIDENT OF THE SECTION. 



§ I. Categories of Policy. 



This Section of the British Association bears the title Economic Science 

 and Statistics. I need not, therefore, apologise for confining the 

 term economic research to inquiries that follow the ordinary scientific 

 practice of generalising from observed facts, measured and summarised 

 in the form of statistics. Such enquiries are often known as realistic, 

 thereby casting, perhaps, undeserved aspersions on purely deductive 

 theory. Be that as it may, my object in this paper is to review the con- 

 clusions reached by so-called realistic economists in recent years on the 

 problems of practical industrial policy facing private business organisa- 

 tions as well as the State. These problems of industrial policy have 

 become prominent first under the caption of ' rationalisation,' later under 

 that of ' planning.' To-day, instead of being taken for granted or dis- 

 cussed behind the closed doors of Cabinet or Board Room, industrial 

 policies are publicly reviewed and reconsidered in the heat of argument and 

 often in the dangerous twilight of a little knowledge. Can economists 

 not add to this knowledge and direct the argument less hotly perhaps 

 but more to practical purposes } 



The main purpose of industrial policy is, we assume, to promote 

 economic efhciency,,that is, to increase income, output or satisfaction at 

 the least cost, monetary, physical or real.^ If this is not so, the non- 

 economic purpose must be explicitly stated and not just assumed. What 

 economists, as such, are interested in is not the purposes or ends but the 

 means or policy. Of the policies advocated as a means to maximum 

 efficiency, some are alternatives within the same category ; others are 

 in different, but supplementary, categories. 



As I see it the main categories of industrial policy consist in problems 

 of industrial structure ; problems of industrial functioning or adminis- 

 tration ; and problems of industrial or economic technique such as 

 price fixing or output restriction. These three sets of problems form 



* For elaboration of these three levels, to which the fundamental economic 

 terms may be referred, see Florence, Economics and Human Behaviour, pp. 90-93. 



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