1966: Four Conferences

After the publication of the two competing reports in August 1964, a series of joint bureaucrat-academic conferences were held. The first was at Princeton in April 1966. Fellner (1966, 112, 122) presented a statement signed by an impressive array of economists including Friedman, Johnson, Meade, Hansen and Jan Tinbergen complaining (among other things) that exchange rate flexibility had ‘received little attention in official circles’.1 Haberler (1966, 128, 134) complained that those involved in ‘practical discussions’ often tacitly assumed that wages and prices were entirely flexible. In reality, wages were rigid downwards and contraction would violate ‘the modern view, to which almost everyone subscribes, that, in principle, unemployment must be avoided. To that extent everybody is a Keynesian now.’ Haberler pressed for exchange rate variations as ‘the only alternative to more and more controls’. Tibor Scitovsky (1966, 197) complained that exchange rate adjustment was regarded as ‘an extreme emergency measure’. This contrasted with the ‘greater faith — or hopes… of most of the academic specialists today — towards greater exchange rate flexibility’ as opposed to selective restrictions and controls which were ‘counsels of despair’ (Fellner, Machlup and Triffin 1966, 5–6). The choice was perceived to be between exchange rate or aggregate demand adjustment and direct controls.