"Lay all the economists end to end around the world and you still won't reach a conclusion." --Anonymous
One Washington economist, Ronald E. Muller, says that all lines of recent economic discovery point to a single conclusion -- the existence of an interdependent of "stagflation."
Muller, who teaches at American University, has written a new book, "Revitalizing America -- Politics for Prosperity" (Simon & Schuster, 1980 $13.95, 352 pp.), in which he expresses his diagnosis of the United States' economic malady of rapid inflation, high unemployment and sagging capital formation.
"In their drive to bypass, redress, or absorb obstacles in the classic marketplace of supply and demand, corporations and governments have unwittingly ushered in the age of the globally interdependent post-market world," he asserts.
Muller contends that in this post-market economy, the old classic laws of supply and demand no longer suffice.
"Replacing the competitive market economy in the United States is an economy in which the 400 top firms account for about 50 percent of the gross national product (total output of goods and services), while the government accounts for about another 25 percent," he states.
"We are at a critical juncture where we need global coordinated programs to help to instill investor confidence and stimulate the critical shortage of investment capital to fight stagflation," Muller adds.
Unlike many dismal science colleagues, Muller refuses simply to dismiss the patient as beyond hope. Both his book and conversation art filled with plausible alternatives to economic doom. Muller is quick to point out he spent the last five years "in the trenches," consulting political and corporate leaders which gave him some practical insights. He argues that these leaders have begun to realize the need for a "synthesis of economic thought."
Economic salvation, according to Muller, lies in forming a global political consensus where all countries see that their mutual interests of economic growth and stability are similiar. He advocates the need for cooperation between government, business and labor groups forging new partnerships both on the national level and at the grass-roots level.
Muller writes that political stalemate has contributed to the failure of the conventional economic remedies of demand management to work as they once did.
"Our politics must create more effective mechanisms to generate whatever consensus is possible in a vast, sprawling, heterogeneous land. Consensus mechanisms need to be built, not only in Washington, but at the grass roots of the economy, the corporation.
"We have seen economic pluralism grow over the last 30 years, there has been a profusion of economic stockholders. It has taken us a decade of stagflation to realize the need of mutual interest around the world for economic growth. Everyone now agrees that we might be approaching a global depression evidenced by the explosive debt of the Third World countries. All sectors now realize that they share the need for energy, minerals and food. These are areas of inefficient supply in which everyone is interested in -- and which investment in -- will bring payoff for all."
Muller advocates a global version of the Marshall Plan in which the industrial world creates new markets for its products by financing poorer nations' development needs. He feels cooperation is needed between multinationals, banks and international organizations such as the World Bank to target investment in developing areas of the world.
Targeted investment is a vital component in Muller's thesis and it is a here that he finds problems with President Reagan's "cowboy economics" of proposed across-the-board tax cuts.
I agree with the need of a heavy modification on the supply side, yet they must realize that only parts of the system respond to stimulation, other parts won't. We are not working in a pure market economy. Sometimes it takes a long time for the market to respond," he said.
Muller is equally concerned about the perspective the incoming administration has towards international economics.
"There seems to be some major blind spots in Reagan's economic policies. So far they haven't said anything about an economic foreign policy. There exists a possibility for a global depression and they don't address this. The Haig and Allen appointments represent how the new admilnistration's expertise is in the United States' East West relations rather than North South," Muller said.
According to Muller the time has come for the United States to realize that in the global economy it is first among equals.
"Trade-offs will have to be made. We have to learn to be pioneers -- again."