Fritz Machlup · 1930
Fritz Machlup’s review of Martha Stephanie Braun’s 1929 book presents a methodological renewal of economic policy: the replacement of catalogues of government interventions with theoretical analysis of their effects. His praise concerns above all Braun’s integration of policy into economics, rather than her command of factual material. The review moves from a critique of conventional policy writing through Braun’s classification of interventions to the relationship between causal analysis and political goals, before emphasizing her treatment of unemployment.
Machlup argues that traditional economic-policy literature classified measures by their objects—agriculture, industry, trade, or social policy—without adequately explaining their consequences or relating them to coherent ends. Its recipe-book character made its low standing among theoretically minded economists understandable. Braun’s alternative exposes demands whose effects conflict: cheap credit and cheap goods, tariff protection and prohibitions on cartels, or higher minimum wages and reduced unemployment. Policy analysis must therefore examine how interventions alter exchange relationships.
Eine sinnvolle Systematik wird diese Maßnahmen nach der Art der Einwirkung auf die Tauschkonstellationen ordnen.
English translation: A meaningful systematisation will order these measures according to the manner of their effect upon the exchange constellations.
This principle organizes Braun’s second part around influences on demand, influences on supply, and direct interventions in prices. Machlup generally approves the resulting classification while distinguishing conceptual ingenuity from convincing placement. Classifying social insurance as a compulsory use of income becomes intelligible once explained; placing forestry policy under demand rather than supply remains less persuasive. The taxonomy matters because it directs attention from administrative sectors to economic mechanisms, but the central task remains the explanation of effects.
Die theoretische Untersuchung hat die Auswirkungen der Maßnahmen festzustellen, ohne damit Werturteile zu verbinden. Dagegen ist die Wertbeziehung, das Verhältnis der Maßnahmen, ihrer Wirkungen und Nebenwirkungen zu den angestrebten oder anerkannten Zielen, ein Teil der Untersuchung.
English translation: The theoretical investigation has to establish the effects of the measures without connecting value judgements with them. The value relation, on the other hand — the relation of the measures, of their effects and side effects, to the aims pursued or acknowledged — is a part of the investigation.
Machlup’s crucial distinction is between making value judgments and examining means in relation to given ends. Economic theory need not endorse political objectives to determine whether measures advance or frustrate them. His favorable assessment of Braun rests on this conception of policy science: theoretical knowledge makes it possible to connect intended purposes with effects and side effects, rather than treating intentions as evidence of success.
Es gibt wenig wirtschaftspolitische Maßnahmen, die in der Richtung der Absichten ihrer Initiatoren wirken!
English translation: There are few measures of economic policy that work in the direction of the intentions of their initiators!
This pointed claim gives the review its critical political force. Machlup finds Braun’s discussions of unemployment support and employment-creation relief especially timely. He endorses her argument that the latter can obstruct workers’ movement toward the most profitable workplaces and perpetuate economic disproportions. His extended quotation from Braun also presents continuing unemployment benefits as sustaining union wage rates above the level at which all workers could find employment. These are the review’s selected applications of causal analysis, not merely illustrations of administrative categories: measures intended to alleviate unemployment are assessed as potentially maintaining its causes.
The closing paragraph returns to the book’s structure. Before the applied analysis of forms of intervention, Braun examines the principal problems of economic policy, including attempts to establish its objectives. Machlup regards this opening discussion as particularly rewarding for theorists and ranks its treatment of policy goals among the most interesting recent contributions to economics. The review’s significance lies in this conjunction of methodological praise and substantive endorsement: policy becomes intellectually serious when it explains market consequences, tests the compatibility of demands, and evaluates instruments against specified ends without confusing that evaluation with the choice of ends itself.
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