ECONOMIC COOPERATION AND THE OECD GROWTH TARGET Abstract As the overriding necessity for developing new instruments of economic policy coordination between the major Atlantic Powers came to be understood--in part as a result of the continued pressure on the dollar through 1950s and 1960s--statesmen began to cast about for new approaches.  The conflict between the Six and the Seven was in process of threatening to split Europe into two competitive economic camps; and the problems of aid coordination and cooperative growth policies accentuated this need.  Furthermore, some means of bridging the gap between Europe and North America was becoming manifest.  The Convention establishing the Organization for Economic Cooperation and Development was signed on December 14, 1960. Shortly thereafter the Organization adopted a target of fifty per cent growth for member states for the decade 1950-1970. The words committing the OECD to this Growth Target read as follows: . . . a major requirement for the West is an effective growth policy.  Only if we have mastered the secret of rapidly steady growth will be have the resources to meet social needs at home and defense and foreign aid in their widest ramifications abroad.  Perhaps equally important, we need an effective growth policy to demonstrate to the envious that we are creators and not mere inheritors of wealth, that our prosperity in doing rather than in already having, and that our more useful asset--our knowledge of how to produce more--is not something that can be expropriated, but is something we will be glad to share. (Benoit, 1961, p. 243) BACKGROUND As the overriding necessity for developing new instruments of economic policy coordination between the major Atlantic Powers came to be understood--in part as a result of the continued pressure on the dollar through 1950s and 1960s--statesmen began to cast about for new approaches.  The conflict between the Six and the Seven was in process of threatening to split Europe into two competitive economic camps; and the problems of aid coordination and cooperative growth policies accentuated this need.  Furthermore, some means of bridging the gap between Europe and North America was becoming manifest.  The obvious solution was for some broadly based institution embracing both European camps plus the United States and Canada.  As an outcome of the high level talks directed towards resolving these issues, and in response to the report of the "Wise-Men" group established to examine possible measures which might be taken, the Convention establishing the Organization for Economic Cooperation and Development was signed on December 14, 1960.  The stated aims of the Organization were to promote policies designed: 1. to achieve the highest substainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the work economy; 2. to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and 3. to contribute to the expansion of world trade on a multi-lateral, non-discriminatory basis in accordance with international obligations. (OECD Convention, 1960) In the simplest terms, the chief objective of the OECD is to optimize the growth of its members while giving appropriate consideration to domestic employment and stability and yielding due regard to the legitimate interests of the outside world. The Convention was ratified by the requisite number of signatories during 1961.  The date for the Organization's first Ministerial Meeting was set for mid-November.  And the task now being to search for methods to implement the idealistic resolutions set forth in the Convention, it was widely recognized that the theme for this meeting must be one which would galvanize attention and commit Members to a program of genuinely meaningful cooperation in the realm of international economic relations. The specific idea of adopting a joint OECD growth target as the focus for the first Ministerial Meeting seems to have originated with the Belgians who felt this would provide a riposte to the economic program announced at the then recently concluded Soviet Party Conference as well as crystalizing the intentions of the Ministers and giving the new organization a whacking send-off. WELFARE NORMS AND THE GROWTH TARGET The dilemma of the "welfare function" or the ethics of income distribution, has been widely treated in recent years by many writers.  The problem increasingly appears to be irresolvable in its essential contradictions.  Basically the issue reduces to the impossibility of comparing utility performances.  Pareto and Jevons objected to attempts to ignore this difficulty, arguing that both needs and tastes so differ that marginal values may taper off at entirely different rates for different people. (Pigou, 1948, Chapters VII and VIII) Later attempts at resolving this conflict suggested solutions in which the group as a whole is better off, while no individual is worse off, as a result of actual or theoretical transfers.  This approach seeks to evade the issue of comparability.  But, as numerous writers have observed, such a solution would at best be of limited practical apolicability were the attempt made to implement such a program, since there are few situations in real life to which such a solution could be applied.  Indeed, one of the most difficult of all areas in which the devise methods of applying such a solution is precisely in the realm of "growth economics."  Yet because of the fact that in advanced economics the national income "pie" has recently been doubling every 16 to 20 years, it is in this very area that the consideration of welfare norms in of prime significance. Among the more interesting explorations of the relationship of growth and welfare is that of Professor Arthur Lewis, who found the subject sufficiently complex that he chose to philosophize upon its implications in a separate appendix, rather than within the body of his more positively oriented text. (Lewis, 1955, p. 420) With notable freshness of approach, Lewis devoted eight pages to listing first the disadvantages of growth.  In his view, these drawbacks ranged all the way from such abstract moral considerations as the vices encountered under conditions of increased leisure and the possible immiseration of future generations, to more concrete evils such as the alleged increased opportunity for the rise of dictators and the danger of widespread controls on individual freedom induced by the necessarily hierarchial form required by big business and big government.  Lewis nevertheless opted in favor of growth--seemingly based on his own subjective judgment that whatever the purpose of life may be, it involves "greater control over environment," i.e., an "increased range of human choice." (Lewis, 1955, p. 420) While one feels intellectually compelled to yield to this conclusion, there remains a residual doubt whether others would always so easily do so under differing and readily conceivable cultural conditioning. One must therefore recognize that the viewpoint of Lewis, as well as that of the present writers, is itself culturally determined to a significant degree.  This being so, we are once more brought to consider whether the search for an absolute welfare norm to guide the quest for the optimal growth path is not, like the search for the Holy Grail, a noble but foredoomed quest. This common sense approach, in fact, seems adequately to reflect the attitude by the OECD itself; i.e., common measures for economic expansion at the highest sustainable rate compatible with financial stability and non-discriminatory trade, leaving the distribution of those gains to be determined according to individual constitutional prescriptions. However, unsystematic such an approach may appear, it draws moral and intellectual support from the thinking of Reinhold Niebuhr, who contributes the following wisdom from another discipline: Any modern community which establishes a tolerable justice is the beneficiary of the ironic triumph of the wisdom of common sense over the foolishness of its wise men who are inevitably tempted to follow either one or the other line of "rational" advance of which the bourgeois and the Marxist ideologies are perfect types.  The one form of thought regards all social and historical processes as self-regulating.  In this case, it is only required to eliminate the foolish restraints and controls which former generations have sought to place upon them. . ..  The alternative type of thought conceives a social or historical goal presumably desired by all humanity, and seeks to "plan" for its achievement. The triumph of the wisdom of common sense over these two types of wisdom is, therefore, primarily the wisdom of democracy itself, which prevents either strategy from being carried through to its logical conclusion.  There is an element of truth in each position which becomes falsehood, precisely when it is carried through too consistently.  The element of trust in each creed is required to do full justice to man's real situation.  For man transcends the social and historical process sufficiently to make it possible and necessary deliberately to contrive common ends of life. .  He cannot count on inadvertence and the coincidence of private desires alone to achieve common ends; on the other hand, man is too immersed in the welter of interest and passion in history and his survey over over the total process too short, rough, and limited to justify the endowment of any group or institutions of "planners" with complete power.  The "purity" of their idealism and the pretentions of their science must always be suspect.  Man simply has not "pure" reason in human affairs; and if such reason as he has is given complete power to attain its ends, the taint will become the more obvious. The controversy between those who would "plan" justice and order and those who trust in freedom to establish both is, therefore, an insoluable one.  Every healthy society will live in the tension of that controversy until the end of history; and will prove its health by preventing either side from gaining complete victory.  (Niebuhr, 1952, pp. 106-108) Thus, on the essentially pragmatic judgment that virtually everyone wants a higher living standard; and an acceptance of the view that the developed nations must contribute increasingly of their substance to the "have-nots"--if they are to keep what they have--the objective of a 50 percent growth in the collective incomes of the OECD countries by the end of this decade was accepted an an appropriate expression of the OECD group welfare function. A number of basically political considerations provided additional buttressing for this decision.  The Soviets had, as noted, just a fortnight before the first OECD Ministerial Meeting, concluded the 22nd Congress of the Communist Party of the Soviet Union which had served as a forum for disseminating anew the claims of superiority of the Communist system.  As will be recalled, this was done in the context of a widely publicized two-decade blueprint for overtaking and surpassing the advanced countries of the West, which Khrushchev had taken occasion to describe as stagnating, decadent, and torn by economic dissensions.  This first Ministerial gathering of the newly created OECD, in addition to it primary purpose of furthering the intrinsically meritorious objectives of the Organization's basic program of increased international economic cooperation, afforded an attractive opportunity for launching a counter offensive which would broadcast the confidence of the West in its own ideals while simultaneously serving to galvanize the cooperative efforts of the Atlantic nations. GOVERNMENT ATTITUDES IN APPROACHING THE GROWTH TARGET Despite the considerations which eventually proved determining in the adoption of the Ministerial statement, governments initially differed widely in their attitudes towards adopting the "growth target."  There was, however, an appreciable obstacle to be overcome in the form of the opposition of the Secretary General of the OECD himself.  Thorkil Kristensen, former Professor at the Copenhagen School of Economics and one time Danish Minister of Finance, argued against adoption of the target on the basis that it would force continental Europe to accept significant increases in United States exports (in order to bring up the United States growth rate), and that the liberalization required on the part of Europe to effectuate this shift in trade would, in turn, induce large-scale increases in imports from low-wage countries.  Beyond this, Kristensen pointed to studies (Kristensen et al ., 1960, and Dawhurst, 1961) suggesting that the growth trend in Europe had been gradually declining since the height of the post-war boom, in part because of the comparatively low growth of its labor force.  He argued that the 4.6 percent average annual growth rate implicit in adopting a 50 percent target would necessitate European per worker productivity increases of nearly 4 percent per annum compared with 2 percent in the United States.  This he considered unrealistic. Reviewing the positions of the less industrialized Member governments, the Spanish, Portugese, Greeks, and Turks were all vigorous proponents of the growth objective as a means of narrowing the gap between them and the advanced OECD nations. Among the industrialized Members of secondary magnitude, Belgium, Italy, Canada, and Denmark all supported adoption of the proposal, believing it important as a means of enhancing the cooperative efforts necessary to stabilize international economic and monetary policy and bringing about the conditions necessary to optimize trade and internal growth. Here, in the first significant attempt at joint policy making in the OECD, one discerns how closely related national policy positions have proved to be in relation to existing national economic interests.  While this information is perhaps not startling to the individual acquainted with the history of international diplomacy, it is nevertheless enlightening in reviewing a new departure in economic policy such as the adoption of an internationally approved growth objective to observe that the noble concept of group cooperation to attain an otherwise unrealizable goal was from the beginning assessed by national policy makers from the narrow perspectives of the balance-of-payments outlook, short-term export products, and longer term industrial protectionism. This becomes even more evident in reviewing the positions taken by the larger nations.  The United Kingdom, under almost constant balance of payments pressure, since the end of World War II was, for example, searching desperately during this period for means to break the sterile "stop-and-go" cycles which beset her economy and which were widely held responsible for the lower growth rate in the U.K. relative to the rest of Europe. (Dow, 1964) Indeed, this issue had reached a climax that abandoning a centuries long tradition of isolation from the continent and, in the face of significant opposition both from within his own party as well as from the political opposition and his EFTA partners, Prime Minister Macmillan was shortly to authorize negotiations with the Common Market in the hope that membership in that organization would introduce the desired spirit of enterprise into the British economy.  In the meantime, and in the same spirit of attempting new avenues to overcome previous frustrations, the forces within the British government and the bureaucracy which were later to result in the creation of the National Economic Development Committee emerged victorious over the traditionalist elements who remained dubious concerning the balance-of-payments strains which any serious attempt to attain the growth objective would impose. Less can be said with regard to the stand of the Federal Republic of Germany, the explanation of whose position remained considerably more vague than that of the other countries throughout the debate.  Indeed, FRG spokesman of that time seldom took an active part in the OECD discussions.  This phenomenon, common during the first post-war years to German participation in all the international organizations of which she was a member, was widely believed to have resulted from official policy directive intended to avoid contributing substance to the feeling on the part of the considerable number of Europeans who remained doubtful concerning Germany's rehabilitation that a return to her pre-war over-assertiveness was only a matter of time.  As a manifestation of this same phenomenon, however, it can be asserted with some certainty that the Federal Republic's generally favorable attitude towards the growth target derived rather from political than economic considerations, being related to Chancellor Adenauer's known policy of supporting all cooperative efforts which would favor the adhesion of an eventually reunified Germany to a solidly unified Europe. France, a country which considers its post-war economic resurgence to have been due in large measure to the indicative planning machinery adopted during the Marshall Plan days, strongly favored the Growth Target as a means of inducing others to become acquainted with the benefits of conscious planning for economic expansion.  The French felt, and continue to feel, that only to the extent that its chief trading partners have reasonably settled ideas concerning import, export, and internal growth objectives can France itself rely with confidence on the projections by which it sets such great store.  France has for these reasons remained a vigorous and active participant in all OECD statistical programs including the GNP forecasting exercise (to be discussed later) and is behind President Mitterand's desire for a return to a more predictable foreign exchange regime.  So far as one is able to reconstruct events, France was one of the few countries in which no significant opposition to the growth target emerged an in which virtually all schools of thought were agreed that the national interests, both narrowly and more broadly conceived, could only be furthered by its adoption. For its own part, the United States had neither the basic interest in using the Growth Target as a vehicle to extend the concept of planning, which provided the chief French motivation, nor was the Growth Target thought of directly as an instrument for furthering European cooperation--though this was indeed a strong and undeniable consideration in the creation of the OECD itself.  United States interest in pressing for adoption of the Growth Target stemmed from rather more complex considerations. There was at the particular period in question (late 1960 and early 1961) a strong contemporary interest in "growth" as a topic of discussion in academic circles. Indeed, as it happened, both the desk officer in Washington responsible for OECD affairs and the officer in Paris dealing the OECD economic policy activities had just returned to duty following a period of on-campus residence intended to refresh their knowledge of current economic thinking.  Both shared the convert's enthusiasm for "growth" as a new field of economic interest.  This human factor undoubtedly stimulated and even facilitated the interest expressed by the United States in adoption of Growth Target as the first undertaking of the new OECD.  Nevertheless, this was not more than a contributory element in cranking up the high level U.S. government interest eventually generated in this particular exercise. (Personal interview) Other factors were more decisive.  The Development Advisory Group (DAG) which had begun operation outside the OECD and which was later to be incorporated into the new OECD as the Development Advisory Committee (DAC), had been placing considerable stress in its early efforts upon the attempt more equitably to share the "burden of aid" between the advanced economies. Headlines arising from these discussions made pleasant reading in the United States where Congressional and public concern over the level of aid outflows at a time of persistent U.S. balance-of-payments disequilibrium, high unemployment, and dragging growth and productivity.  But in Europe, political leaders were becoming wary that the OECD was on its way towards developing into an instrument for getting others to do more in order that America could do less. (DAC meetings) While some of these may, as individuals, have felt American efforts in this direction understandable after years of U.S. contributions to European recovery, few were brave enough as politicians to wish to identify themselves as favoring measures which could only result in raising the tax rates of their constituents. Mr. George Ball, then United States Under Secretary of State for Economic Affairs, assumed the role of mid-wife for the OECD--chiefly in consequence of his interest in furthering the development of a North Atlantic Community--asked Edward R. Murrow, Director of the United States Information Service, to help him improve the public image of the organization-to-be.  Murrow quickly convinced him that "burden sharing" was poor press material.  And it was very probably in casting about for a theme that would capture the public's imagination while launching the OECD in a manner promising the successful achievement of the organization's broader objectives, that circumstances, i.e., current world-wide economic interest in "growth," a growing pressure upon the United States to extend the economic base underlying its vast world commitments, the high personal interest of individual State Department officers and the Murrow search for means to project a "go-ahead" image for the OECD, converged to center attention on the "Growth Target" as a vehicle for simultaneously satisfying these desires. (Conversation with desk officer) In short, a proposition initially put forward by the Belgians, apparently in the hope of focusing domestic attention on their own lagging growth performance and which has originally been opposed by both the Secretary General and one the chief member countries (the United Kingdom), came to enjoy, in addition to the early support it drew from the smaller countries already enumerated, the enthusiastic approval of the United States for reasons based on a conjuncture of personal balance of payments and propagandistic considerations.  This United States support proved sufficient to turn the tide, providing in the presence of doing so an initial example of the close interrelationship of political and economic matters in the newly launched OECD. Consideration of further issues which have come before the OECD, indicates that this relationship is characteristic of the employment of the consultation instrument and already presages the validation of our earlier tentative observation that political, or value-oriented, bargaining is in fact at the level of reality here employed a valid economic process which is virtually always present in international economic affairs, though generally cloaked from view in the traditional close-up view of isolated commercial transactions which concentrates on the abstraction of supply/demand elasticities. IMPLICATIONS AND INTERIM DEVELOPMENTS Before reviewing progress towards the attainment of the growth target, however, or undertaking to assure why such an exercise may or may not have been a suitable objective for an international economic organization, we should perhaps attempt to review some of the intermediate developments and implications of the OECD member nation decision to adopt such a joint undertaking.  Viewed cynically, adoption of the Target committed nations only in a most platitudinously general manner to implement cooperative efforts they had already agreed to accept in ratifying the OECD Convention itself.  While committing themselves to a "great general principle," Member governments had, in fact, tied themselves to not substantive undertakings and retained full freedom of dissent with respect to each specific policy coordination to implement achievement of the Target. It is, however, of interest to observe that the doubts expressed by the British Treasury regarding the possible balance-of-payments effects of international monetary and economic policy coordination were in retrospect shortly to be echoed by American Economist Walter Salant in a study prepared by the Brookings Institute for the Council of Economic Advisers and which was not without effect on contemporary United States thinking.  Salant said that as international cooperation increases and trade freedom expands there exists a distinct possibility . . . that in future annual (balance-of-payments) imbalance will be larger, relative to total international transactions, than they have been in the past, and that they will also be more persistent.  As a result, cumulative imbalances will tend to be larger relative to total international transactions. (Salant et al., 1963, pp. 237-238) If this argument is accepted--and subsequent developments of the 1970s and 80s appear to have validated it--this inevitably means increased competition for reserves, a development directly contrary to the intention of national authorities in seeking closer harmonization of their policies.  This would, of course, also have been in direct conflict with achievement of the Growth Target, with its implicit subordination of payments balance to growth considerations during the remainder of the "growth decade."  Indeed it is now commonly maintained that it was Britain's incautious concentration on pursuing more rapid growth without first overcoming its hazardously limited reserve position which led directly to the critical state of its economy throughout the 1950s and 60s.  Nor are European voices lacking to express the view that the United States balance-of-payments deficit during the 60s and 70s--indeed to date--is traceable to a preoccupation with maintaining an enviously long sustained growth record at the expense of other policy objectives. This conflict of views reveals the dilemma which is posed as nations abandon economic autarky for economic cooperation.  For the very attempt to coordinate and harmonize growth rates sets in motion forces which create the need for ever more extensive coordination to avoid the instability created by the international flow of capital under conditions in which business recessions and unemployment had come into discard as mechanisms in the adjustment process. Their success in attaining the growth target required increased cooperation in the payments field.  And Working Party-3 of the Economic Policy Committee (of which more is said later) came to develop increasingly detailed methods of "multilateral balance-of-payments surveillance."  While it would perhaps be going to far to insist that these developments spring solely and directly from the acceptance of an explicit growth objective, they were nevertheless implicit in the attempt to give priority to growth above other equally valid policy objectives.  And it is considered that for a time certain OECD members did, if not because of the growth target, at least for the reasons associatedwith its adoption, give undue prominence to "growth" in isolation from other policy objectives. (Dow, 1964) This is not to advocate unemployment as a desirable economic regulator nor stagnation as preferable to growth.  When, after the collapse of the virtually free world economy of the 1920s, nations turned towards economic nationalism--reducing trade to the levels necessary to pay for needed raw material imports--the results were deplorable.  Indeed the evils of the economic stagnation which persisted throughout the 1930s were such that support from the attempt to develop instruments conducive to continuous stable growth, whatever obstacles remain to be overcome in this connection, is today virtually universal.  Since prior to the ending of the second world war, the path nations chose to follow has been leading to the gradual recreation--at least among the advanced economies--of substantially freer trade and freer movement of capital with the objective of higher growth and improved world living standards through cooperation for efficient production.  All one thus intends to assert here is that current experience seems to be confirming, as was feared in some British circles and by the Secretary General, and as Salant precited, that cooperation creates its own problems and paradoxes and that economic stability is becoming increasingly difficult to maintain.  As new economic wages and prices sufficient to upset the competitive position of several countries and to throw into disequilibrium their balance of payments.  Furthermore, even the more successful "incomes policies" adopted to counteract this tendency (e.g., that of the Netherlands), have shown themselves subject to limitation due to emigration of labor or capital to more rapidly developing contiguous areas. ("The Netherlands," OECD, 1964)  Thus, the attempt simultaneously to maintain optimum growth under conditions of full employment and balance-of- payments equilibrium, it is coming to be seen, demands coordination of national economic policies virtually across the board. Viner has recognized this phenomenon in the more classic guise of the direct controls of previous eras.  He has written: Market forces constantly operate to erode or neutralize direct controls, and the controllers must constantly extend the area under control if they are to hold their own. The contagious character of. . . controls, moreover, is not confined to the national territory.  So. . . to many countries, the only way they can assure themselves that they will not be exploited by the direct controls over their foreign trade by other countries is to set up their own direct controls. (Viner, 1952, p. 98) The problem is equally present with respect to more subtle economic incentives and disincentives.  If anything, the more marginal nature of the those controls renders the situation less susceptible to simple, short-range solutions.  Indeed, the dilemma seems to be that liberalization requires restraints just as effective, if not more so, than those of a controlled economy. The scope of these problems and the implications which lie beyond were not, it must be admitted, seen clearly at the time the "Growth Target" was adopted.  The outlines were already becoming visible, however, and the direction, if not the speed, of developments was understood; though the objective of adopting a target of 50 percent growth in a decade was, as noted, essentially to propaganize and galvanize the action necessary to bring into being this type of harmony while enlarging our physical capacities for furthering the way of life we were seeking so to protect. Having adopted the growth target, the Ministers provided the newly established Economic Policy Committee (EPC) with the necessary mandate to supervise its achievement; while the EPC in turn created a sub-committee--known formally as the Working Party on Policies for the Promotion of Economic Growth (but which is informally called "WP-2") to police performance on the growth target.  WP-2, in carrying out its responsibilities, took the initial step of surveying existing views on the determinants of growth for the purpose of winning agreement among member governments with respect to what the components of a growth policy might be.  The group's findings were published in November, 1962, in an unexciting but sound volume of 45 pages, Policies for Economic Growth . (OECD, 1962) While this volume was unanimously endorsed by the OECD Member countries, a number of Members harbored the feeling that the report unduly emphasized the necessity for wage restraint in seeking a stable basis for growth at the expense of non-wage inflationary pressure.  A second study was thus undertaken paralleling the easier work but analyzing the role of profile and other non-wage incomes in relation to national growth policies. (Policies for Prices. . . , OECD, 1964) A third study, based on an essentially institutional approach, undertook to analyze the practical approach to growth which had been adopted by a number of European countries with acknowledged "growth policies."  The objective was to identify what arrangements these nations had adopted in common, in a purely pragmatic attempt to see what lessons might be drawn for those wishing to institutionalize their approach to growth.  The results of the study are, however, so diverse that no simple conclusions could be drawn.  The lesson seemed to be that there are as many ways to grow and to supervise growth as there are to traverse the Atlantic, while the formula chosen on the economic front seems to depend primarily upon the domestic social and political framework.  Since this is neither new or exciting information and has little propaganda value, this study was not published, even though its preparation was not without negative instructional value. A further study relating agriculture and economic growth, after several frustrating half starts, was entrusted to a group of independent experts appointed by the Secretary General of the OECD in the hope that well-known academic experts would be able to say what should be said regarding the need for agricultural rationalization to enhance economic growth in a way which governments can approve for publication (after they had shown themselves unwilling to say the same things individually or through the OECD international secretariat). Somewhat later, WP-2 embarked on a Mid-Decade Report of growth experience.  The main purpose was intended to propagandize the success achieved to date, to point up problems requiring solution during the remaining years of the growth exercise, and to recruit the organization's interest and attention for the final push during the latter half of the sixties.  Happily, the growth target was not only achieved, but substantially overachieved as Japan was accepted for membership, and its phenomenal growth experience was incorporated into aggregate OECD figures. On the positive side, it cannot be doubted that the target assisted in directing attention both towards the OECD and to the role of growth in the modern economy.  To this extent it achieved, at least in part, its propagandistic objective.  The preparation of the three reports (and the mid-decade report) also served to center the attention of bureaucrats, planners, and economic ministers on growth as a collective phenomenon.  All of this was positive gain. But it must be candidly admitted that relatively little of the concrete coordination which was both desired and needed to avoid the pitfalls enumerated above took place in the context of growth planning.  The discussion of the WP-2 reports, of course, provided occasion for the EPC--as the general policy organ of the Organization--periodically to touch upon these collective growth issues.  National GNP forecasters also met on several occasions for an informal exchange of outlooks--an affirmative step towards reconciling national forecasts.  This development eventually contributed usefully towards the evolution of a real means for coordinating growth policies.  Human error is, of course, inevitable--particularly in the realm of predicting future events, forecasting.  What concerns us here, however, is the likelihood that the economic forecasts made by the three or four largest trading nations exercise such a significant reflexive effect on those of the smaller economies (as well as on each other) that the possibility of collective error is correspondingly magnified.  Whether or not this concern of so many forecasters is indeed justified, one's dedication to the conviction that man can through conscious intellectual effort manipulate and master his environment to his advantage makes it reasonable to defend such an attempt to ameliorate forecasting accuracy through efforts at comparison and coordination--at least until such time as it may be unmistakably shown that efforts in a given direction are counterproductive.  Furthermore, as McMahon has incisively remarked, "The important question is not whether forecasts are always right, or even whether they are right more often than they are wrong, but whether there is a better alternative to framing economic policy on the basis of quantitative national income forecasts." (McMahon, 1965, p. 29) Both in terms of its success and its present and potential importance, the earlier OECD Forecasting exercise clearly deserves place as one of the examples providing guidance regarding the nature and limits of international policy coordination as a policy instrument.  Beyond this, the value of the OECD Forecasting effort is, perhaps, primarily to be found in the positive lessons it has to teach us regarding the importance of avoiding overly ambitious projects (e.g., burden-sharing--with respect to which existing economic theory and techniques are at best shadowy) in favor of less controversial, functionally useful, and theoretically and technically manipulable exercises. Gentler forms of persuasion were also used to induce Members to keep the Growth Objective in mind in formulating policies.  The EPC meets quarterly and the WPs more frequently.  Delegates (who are normally policy makers of the level equivalent to Under Secretary of the Treasury or Chairman of the Council of Economic Advisors are examined regularly concerning national performance, and, if nothing else, it is embarrassing to be consistently among the laggards. Certainly it cannot be maintained that it was the OECD or the Growth Target alone which induced the United Kingdom to adopt its objective of a 4 percent annual rate of growth after years of relative stagnation.  But the Organization and the quarterly interrogation played a role. (Lord Hankey, December 2, 1964) Moreover, the publicity attending the adoption of the target was not a inconsequential feature in preparing American public opinion for the more sanguine attitude towards United States growth possibilities which characterized the Kennedy Administration. Similar modest, though effective, results could be observed in looking at other countries such as Spain, Portugal, Belgium, Ireland, Iceland, and Norway. (OECD Press Office) These are, after all, real if small gains.  If too much was expected, it is perhaps to be concluded that those who entertained visions of great new departures and far-reaching progress towards coordinating international policies in a manner which would significantly enhance the collective growth rate were suffering under that Gardner called in his book, "the illusion of economism"--the simplistic misconception that solutions to the problems of trade and international finance are so possible without taking account of accompanying political complexities. (Gardner, 1956)  It might thus be wise, in evaluating the contributions of the OECD, to adopt the sophisticated attitude of Boulding that economic planning is largely a matter of social considerations rather than technical engineering and that the planner must take the social framework as his strongest determinant. (Boulding, 1962)  This would lead us to temper our optimism in forecasting the longer-term prospects for OECD activities while permitting us to believe that real and noticeable improvements in international economic performance may yet take place and that the efforts expended by the EPC and its working parties will in the end show a net profit. REFERENCES 1. Benoit, Emile (1961), Europe at Sixes and Sevens (New York:  Columbia University Press:  243).  In discussing this overriding issue, Benoit further observes that "while the layman, alerted to the pitfalls of 'growthmanship'. . . may not sense the significance of a couple of percent a year more production, the cumulative affect of rapid growth--or the lack of it--is hard to exaggerate.  The fact that industrial production in the Six was two-thirds higher during the '60s than it was a decade earlier or now (while ours in the United States was only a tenth higher)--though we're currently doing much better--makes more practical difference than can be easily imagined.  When the average industrial worker sees five units of output where he recently saw three, and when he knows that his work is needed and that he is benefitting and will benefit from production increases, then his attitudes are enormously better than when he knows the plant dare not produce up to its capabilities without spoiling the market.  It is difficult for the layman to appreciate how attitudes formed at work pervade the whole society, transforming people's appraisals of themselves and their enthusiasm, and vitality--despite the ominous international environment in which we all live--that is worlds apart from the atmosphere of the interwar years during which production and income stagnated."  We are, in fact, experiencing some of this enthusiasm as we experience the extraordinary growth and productivity arising from the managerial and labor discipline learned during the 1981-83 recession. 2. Boulding, Kenneth (1962), Conflict and Defense (New York: Harper and Brothers). 3. Convention on the Organization for Economic Cooperation and Development, Paris, 14th of December, 1960. 4. Conversation with desk officer whose reconstruction of events was based on a subsequent exchange of views between Ball, Murrow, and OECD Secretary General designate Thorkill Kristensen on February 24, 1961. 5. DAC meetings, statements by various national spokesmen. 6. Dow, J. (1964), Management of the British Economy 1945-60 (Cambridge:  Cambridge University Press). Mr. Dow was Assistant Secretary General of the OECD, responsible among other things for the preparation of the Mid-Term Report on Progress Towards the Growth Target. 7. Gardner, Richard N. (1956), Sterling-Dollar Diplomacy (London: Oxford University Press). 8. Lord Hankey, then U.K. Ambassador to the OECD, numerous statements before the Economic Policy Committee and Economic Development and Review Committee and reiterated by The Right Honorable Anthony Crossland, Secretary of State for Education and Science at OECD Ministerial Meeting, Paris, December 2, 1964. 9. Judgment based upon discussions with EDRC Delegates, U.S. Embassy Economic Officers in relevant capitals, and press clippings maintained by OECD Press Office. 10. Kristensen, Thorkil et al. (1960), The Economic World Balance (Copenhagen:  Monskgaard).  Kristensen also drew upon the findings of Dawhurst, J. Frederick (1961), Europe's Needs and Resources (Twentieth Century Fund), to support his views. 11. Lewis, Arthur (1955), The Theory of Economic Growth (Richard D. Irwin, Inc.:  Homewood, Illinois:  420, ff). 12. McMahon, C. W. (1965), Techniques of Economic Forecasting (Paris: OECD Publications Office:  29). 13. Niebuhr, Reinhold (1952), The Irony of American History (New York:  Scribner's:  106-108). 14. OECD (1962), Policies for Economic Growth (Paris:  The Organization for Economic Cooperation and Development). 15. OECD (1964), "The Netherlands," Economic Surveys by the OECD (Paris:  The Organization for Economic Cooperation and Development, May, 1964). 16. OECD (1964), Policies for Prices, Profits, and Other Non-Wage Incomes (Paris:  The Organization for Economic Cooperation and Development). 17. Personal interviews with participants by the authors. 18. Pigou (1948), The Economics of Welfare (4th ed.; London:  Macmillan and Co., Ltd., Part I, Chapters VII and VIII).  A convenient summary of the evolution of welfare economics (with some new insights on the subject remarkably similar to those of the present authors as set forth in Chapter II, above) is to be found in the Economic Journal.  See Nath, S. X. (LXXIV) "Are Formal Welfare Criteria Required?" The Economic Journal (September, 1964:  548). 19. Salant, Walter S., et al. (1963), The United States Balance of Payments, 1968 (Washington, D.C.:  The Brookings Institute:  237-238).  For a contrary opinion, see Brown, Weir M. (1964), The External Liquidity of an Advanced Country (Princeton:  Princeton University Press:  28, 31). 20. Viner, Jacob (1952), International Trade and Economic Development (Glencoe, Illinois:  The Free Press: 98).  A similar view was expressed by former Secretary of the Treasury Robert V. Roosa at an OECD Economic Policy Committee meeting in Paris on November 5, 1964, in cautioning other delegations about the potential dangers of overreacting to recent British trade strictures.