Important queries have opened up over the last few years in the entire western world, and in solidarity in the rest of the world, regarding the role of the State and the effectiveness of economic policy based on an excessively simplified version of the Keynesian pattern, that supports the idea of state public expenditure as an economic motor. Above all the legalising of economic planning has been prohibited in the state environment as well as in the managerial one. Open managerial spirit has also been darkened on occasions by bureaucratic mentality and promotion of some public and private executives with uncontrollable aspirations of job security and consumer pomp that are paralysed in rigid and homogeneous positions.

Faced with the political temptation, especially intense in times of tough economic crisis, of implementing and inclining towards possible pacts and tricks that seek to set in motion planning or Keynesian state or managerial policies, pivoting on public expenditure, it is good to remember some ideas of Shackle and some criticisms of the rational expectations school.

In Shackle's economic pattern of decision the only concern is the study of how men exploit that freedom that uncertainty confers on thought and imagination. Investment, that after all creates employment, is an action in search of utility. But that utility that stimulates investment is a mere product of intelligence and imagination and does not have anything to do with the accountant's utility that has been carried out and registered and is something that belongs to the past. "Investment is not undertaken to look for a past utility, but a future utility and this is, in the end, mere conjecture and hope, in spite of how carefully all the available evidence is joined together and sifted."

In the most habitual techniques of prediction, extrapolation takes place in a more or less determinist way, presupposing that the future will be a lineal continuation of the past to a great extent. Many structural models with those premises that forget the principal fact of original uncertainty and variability of millions of imaginative free decisions that are taken daily, cannot formulate future predictions different from the past. That type of method is valid only for those variables that present a fixed relationship (astronomical) between its past and future values, so that its application to the economic human framework is irrational as soon as it contradicts the real fact that the agents are natural optimisers in each moment, looking for the best for the future, using the minimum. It is irrational to reduce the intelligence, thought, information, aspirations and imagination of the human being to a mere lineal equation.

These semi-Keynesian bureaucratic focuses also have a problem of inconsistency as soon as a preponderance and special relevance is given to aggregate relationships, even giving them an independent existence to individual decisions. Since the aggregates are great sums of colourful individual decisions it is very dangerous for the predictions to embody that uncertain individual behaviour in abstract macroeconomic indexes.

Inconsistency can be generalized throughout the whole of a society when the measurement of the success of certain policies or outstanding people is introduced onto its values scale based on the values of those aggregates. According to the rational expectations school, these are ambiguous and deceiving, since they say nothing regarding the individual and the particular and concrete utility.

Because of all this, we should introduce easy and unilateral predictions a lot in economics and cast doubt on widespread determinist extrapolations. Many think that the government cannot improve the functioning of the age-old balancing mechanism of the market, which does not imply the elimination of its intervention, but limiting it to the creation and defence of the foreseeable, ethical and stable framework for the private sector.

Joseph John Franch Menéu
Gaceta de los Negocios, Tuesday 29th June 1993