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Nobody is smart enough to predict correctly all, or even most of the time, but it could be that a group of expert forecasters would give the capitalist economy valuable early warnings and prevent some unpleasant surprises. The deeper question is whether policy should be guided by the predictions of a national planning body or by the forecasts of tens of thousands of entrepreneurs and corporate managers in a free market. The planners, their supporters say, would consult with businessmen. Moreover they would merely aim to identify the industries that should expand fast in order to avert shortages, and determine what incentives could help to produce the necessary investment. But that, too, raises a problem: If their plans were followed, tax credits and other incentives would be given to some industries—at the expense of others.
Yet there is no escaping the fact that leaders of capitalist economies must use every available resource to figure out the amounts of vital commodities that their industries will need to sustain strong growth. They will have to calculate where the supplies are likely to come from, what exploration, research and development investments will be required to produce them, what conservation steps and recycling programs may be necessary to stretch supplies, and what materials might be used as substitutes in a pinch. The tough question: Just who is to decide?
The answer is that private businessmen must decide but Government can do more to help them. It should do so not by setting up rigid five-year plans, but by employing the best of its fallible methods to give early warnings of what raw materials and investments will be most needed.
The Inequality of Wealth
Vast disparities in income and wealth are the deepest philosophical and moral problems of capitalism. Adam Smith candidly acknowledged that "wherever there is great property, there is great inequality." And in his day, "for one very rich man, there must be at least 500 poor." He proposed to ameliorate that situation by having the economy produce enough wealth to make the poor less poor. Capitalism aims for—and accomplishes—infinitely more than that today. Great numbers of once-poor people rise to the middle class, or higher.
From 1960 through 1973, economic growth dramatically reduced the number of Americans living below the Government's officially defined poverty line, from 40 million out of 179 million to fewer than 23 million out of 211 million. But last year, according to Government estimates, 800,000 to 1.5 million slipped back into poverty because of the combination of recession and inflation. Though the slippage is doubtless temporary, it has led to great disillusionment among those left behind. Political Scientist Charles Lindblom of Yale asserts that capitalism in the past has depended on women, blacks and other groups to accept unthinkingly a disadvantaged role and a meager share of the system's rewards. Now they are pressing for full equality and, says Lindblom, "it's really touch and go" whether the system can satisfy them.
Expectations have been rising rapidly, largely because of two developments that Adam Smith did not foresee: universal suffrage and almost universal