Government Spending and Economic Expansion

Government Spending and Economic Expansion

Government Spending and Economic Expansion

Government Spending and Economic Expansion

Excerpt

Government spending on the vastly increased scale of recent years is unquestionably the outstanding feature in the growing importance of government in economic affairs. Large- scale spending is one manifestation of a fundamental shift in the dynamic forces in the economic system: a shift in initiative and enterprise from private to public hands. It is true, as everyone says, that we live in a rapidly changing social order. Government spending is one of the policies which reflects this change. To appraise this policy, to place it in correct perspective, it is necessary to understand the nature of the social and economic changes underlying it. The authors believe that the fundamental change is to be found in the spirit of enterprise; and this in turn is largely the consequence of changing opportunities and shifting objectives.

The opportunities for economic expansion have not, indeed, petered out; only the traditional type of opportunity, well suited to the traditional enterprising spirit of private business, has receded in importance. This eclipse may be traced to many causes. Physical factors, such as a declining rate of population growth, the failure of revolutionary technological changes to appear, and the absence of an expanding geographical frontier play a significant role. Changed social and political objectives--economic security, protection of hitherto exploited economic groups, and the requirements of foreign policy in a world at war--account for part of the decline of the traditional opportunities for expansion. Business itself, dominated by corporate bureaucracy and an excessive caution dedicated to the preservation of existing capital values, has lost initiative and often foregoes the opportunities for expansion. For whatever reasons, evidence of a weakened spirit of enterprise is manifest; and with this, public initiative and enterprise have assumed a growing importance.

The transfer of sources of economic expansion from private enterprise to public enterprise is not in any significant sense a part of "progress," or "the growth of social control," nor is it yet a consciously guided movement. It has several facets, some of them not clearly related to the others. One of these is the gradual extension of government controls over economic activity, a phenomenon which has developed over the course of several . . .

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