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CHARTER II

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extemal balances becaae everywhere the prlaary target of ■acroeconoiic policy.

At the saie tlae, the control of uneaployaent practlcally disappeared froa the set of aacroeconoaic targets; even though aany experta would not agree about the latter stateaent, sińce the offlcial arguaent was that aore uneaployaent in the short run constituted the strategy, and at the saae tlae was the cost, to obtaln aore eaployaent in the long run.

Hlthout enterlng, ln thls chapter,’ Into a crltlcal evaluatlon of the arguaents and the theorles .whlch stay behlnd such attltudes and behavlours, the sltuatlon descrlbed above aanifests two paradoxes. As we saw, the drlve towards a.strong search for International coapetltlveness was generated by the worsenlng of the teras of •. trade .between lndustrlal Ized cpuntrles and prlaary goods and raw aaterlals producers. But, once the gaae of aggresslve coapetltlon had been put lnto aotlon, the gaae contlnued to sustaln Itself even when the teras of trade were re- equilibrated.

The second paradom Is glven by the arguaent of 'less eaployaent today for aore eaployaent toaorrow*. The underlylng thesis 18 that the country, lncreaslng its coapetItlveness, could galn wlder shares of the world aarket; less eaployaent today would lncrease productlvlty and allow the galn. The obvlous point Is that what ls laportant lsrelatlve, and nor abaolute, coapet1tlveness. Since all countrles are playlng the saae gaae, the relatlve coapet1tlveness ln the long run cannot be stable, and the only galns could be ln the short run (whlch i8 the very saae short run durlng whlch less eaployaent ls the aean to obtaln higher coapetltlveness), and not ln the long run, as It ls Instead clalaed.

6 • Soae...sy81ealc_negatiye f eedfeacks

As we saw earller, restrlctlve aacro pollcles resulted to be effectlve aalnly ln the flscal and aonetary sphere (apart froa the regulatory actlons aiaed at aoderatlng wagę dynaalcs), auch less ln the sphere of publlc expendlture. In the latter one, however, the clalas that publlc expendlture should be reduced contlnued to be conveyed as a slgnal to the econoalc agents, desplte the dlfflcultles to lapleaent the &8serted lntentlons.

All of the fbove actlons were interpreted by flras as an unaablguous slgnal that the lntentlon of the governaents was not to allow elther high rates of growth or long-lasting expanslve cycles. As a conseąuence, the expectatlons were such as to lead flras not to enlarge, and posslbly restrlct, their productive capaclty. Investaents were thus concentrated on Increaslng the level of productlvity and on substituting labour, rather than on the widenlng of capaclty.

Thls produced further negatlve feedbacks. On the one hand flras were not Interested in creating the conditions for