THE WORSE the economy, the more economic writing flourishes. According to a recent edition of the Statistical Abstract, books on "sociology and economics" have increased nearly 10-fold since 1960, while all new books have barely tripled.
These two small volumes are a part of this explosion. Both ought to satisfy, in different ways and to varying degrees, the reader who wonders about what makes the American economy tick. Neither book presents a single theme or story from beginning to end. The Heilbroner-Thurow volume is a popular primer on headline economics, from inflation to energy. Drucker's is a collection of 12 essays, written since 1972, on subjects as varied as Japan's economic success and the relationship between science and business.
You could not ask for a more lucid, even-handed textbook than the one Heilbroner and Thurow have written. But recognize that it is just that -- a textbook, which is both its virtue and its vice. Although the authors say, at the very end, that they prefer policies that favor lower unemployment over lower inflation and income redistribution over economic growth -- if it comes to that -- only the most picky or paronoiac reader will detect their bias in the main analysis. They're not selling solutions, but understanding.
They do not believe that any rule as simple as reducing growth of the money supply will painlessly reduce inflation, but neither do most "monetarists," the economists who swear by the money supply. Virtually all economists now agree that a money squeeze initially results in lower economic growth and, probably, higher unemployment; the open questions are how much lower, how much higher and how long.
Heilbroner and Thurow argue (and it is difficult to dissent) that inflation has become embedded in our institutions and expectations: cost-of-living adjustment clauses; indexed federal programs, such as Social Security, and anticipatory spending by consumers. How fast will institutions and expectations adjust to a persistent money squeeze? That is the critical question of Reagan economics. No one really knows the answer.
It's easy to recommend this volume to the curious reader who wants to go a step beyond the newspaper headlines with a minimal investment of time. Even a slowpoke can get through these pages in three to six hours with much profit. But precisely because it goes down so smoothly and swiftly, it needs to be read with caution.
My main gripe is that the book's fundamental premise is wrong. "Like great threatening clouds, five economic challenges -- inflation, recession, big government, the falling dollar, the energy crisis -- hover over our lives." Plausible, but I think wrong. These are not the five great economic challenges of the day.
Take energy. We have come a long way since 1973. In 1980, the economy's output was 12 percent higher than in 1973, but total energy use was up only 2.2 percent and oil use was actually down about 2 percent. It will almost certainly go lower. Only during the last two or three years have most drivers bought truly fuel-efficient cars. Higher prices do work; the economy can adjust to less energy and function very well.
Or consider recession. Not only are periodic slowdowns inevitable, but they are probably not as evil as is commonly supposed. There are bound to be industries that overexpand, speculations that get out of hand; recessions tend to purge the economy of these excesses. No one can favor the higher unemployment that results, but the social problem of unemployment does not involve the temporary increases that result from recession. The real problem is the enduring joblessness of those who don't have work during prosperity or only occasional work: large numbers of black men, people in depressed localities, older workers whose industries are dying. But Thurow and Heilbroner, though they surely know better, talk about all unemployment as if it were the same.
Their economic "challenges" are too compartmentalized, and even if they don't offer "solutions," they present too antiseptic a view of how the economy works and the problems it faces. If forced to select five economic challenges, I might suggest: inflation, unemployment, global economic interdependence (not only are we dependent on imported energy, but labor, goods and money are now moving across national borders as never before), aging (how do we cope with a work force that is gradually getting older and a retirement population that is gradually getting bigger?), and confusion about the roles of the public and private sectors.
Those who want more insights and less information might prefer Peter Drucker's Toward the Next Economics and Other Essays. He's a hard man to describe. Though he's earned his reputation as a student of management, he's also part sociologist, part historian and part economist. These essays reflect all those interests.
Perhaps because he is one, he disparages "experts." He reminds us that after World War II, the experts predicted that "the private plane, owner-piloted, would become as common . . . as the Model T automobile had become around World War I" -- and that, therefore, New York City didn't have to build a second tube for the Lincoln Tunnel or a second level for the George Washington bridge.
He is especially insightful about Japan, the subject of two of these essays. He debunks the myth that Japan has always been a harmonious, unified nation. "Adversary relations in Japan have been fiercer, fought more violently and with less forgiveness or compassion than in the West. The popular movie Shogun does not exaggerate the violence of Japanese history." But the humiliation of World War II, Drucker believes, so stunned the Japanese that they concluded that they must mute traditional adversarial conflicts in order to survive.
The most interesting essays struck me as those on Frederick Winslow Taylor (the inventor of "scientific management") and the discussion of retirement ages. But there are others that, normally, I wouldn't touch with a 10-foot pole, such as "What Results Should You Expect? A User's Guide to MBO (Management by Objective)." Drucker writes well, but at times his paragraphs say less than they seem to.
Above all, these two volumes are for earnest people, who take their public affairs seriously; they're not books to be taken on vacation. Maybe they're for people who don't take vacations.