. AT THE WORLD-WIDE LEVEL NEW WAVES OF PRODUCTS AND PROCESSES SEEM INDEED TO BE CONSTANTLY FORTHCOMING . HOWEVER EUROPE IS LAGGING BEHIND IN SEVERAL FIELDS , DUE IN PART TO THE INSUFFICIENT UNITY OF THE LARGE EUROPEAN MARKET , AS WELL AS THE MAINTENANCE OF PROTECTIVE DEVICES AND SUBSIDIES AT THE NATIONAL LEVEL .
THE RISK OF STAGNATION HAS IN RECENT YEARS BEEN CHARACTERIZED BY GROWING RIGIDITIES AND GREATER DIFFICULTIES IN ADAPTING SUFFICIENTLY SYSTEMS OF AIDS TO THE ECONOMY AND OF SOCIAL PROTECTION , AND IN HALTING THE WEAKENING OF INVESTMENT AND PROFITABILITY . MANY COUNTRIES HAVE LOST CONTROL OF THEIR FINANCIAL POLICY , ALLOWING PUBLIC EXPENDITURE TO RISE , WITHOUT SHOWING ADEQUATE MASTERY OF TAXATION , DEFICITS AND MONETARY EXPANSION .
WHILE THERE IS RECOGNITION OF THE NEED TO FACE THESE STRUCTURAL MALAISES , THERE IS NO UNDISPUTED PREFERENCE FOR A PARTICULAR STRATEGY . AT PRESENT ONE CAN DISCERN THREE MAINSTREAM POSITIONS IN PUBLIC DEBATE :
- FIRST , THE VIEW THAT PROVIDED RIGOROUS FINANCIAL AND ADJUSTMENT POLICIES ARE PERSEVERED WITH , A SPONTANEOUS IMPROVEMENT IN REAL ECONOMIC PERFORMANCE WILL BE FORTHCOMING , ALTHOUGH THE TIME-LAGS ARE UNCERTAIN AND PROBABLY QUITE LONG ,
- SECONDLY , THE VIEW THAT , WHILE RIGOROUS FINANCIAL AND ADJUSTMENT POLICIES ARE NECESSARY TO AVOID RE-EXCITING INFLATIONARY EXPECTATIONS , THEY RISK BEING INSUFFICIENT TO INDUCE A SPONTANEOUS RECOVERY , AND THAT THEREFORE VIGOROUS POLICY ACTIONS SHOULD SUPPORT ECONOMIC ACTIVITY IN THE MACRO-ECONOMIC AND STRUCTURAL DOMAINS ,
- AND THIRDLY , THE VIEW THAT THE ECONOMY HAS ENTERED A PERIOD OF PROLONGED QUASI-STAGNATION IN OUTPUT , AND THAT AN ESSENTIAL POLICY TASK IS NOW TO ADAPT TO THIS REALITY IN ORDER TO REDUCE DISRUPTIONS AND INEQUALITIES DERIVING FROM IT .
NONE OF THESE APPROACHES - RELIANCE ON SPONTANEOUS RECOVERY , THE SUPPORT OF ACTIVITY BY MACRO-ECONOMIC AND STRUCTURAL MEASURES , AND MANAGED SLOW GROWTH - WILL ALONE BE SUFFICIENT TO OVERCOME THE CURRENT DIFFICULTIES . THE POLICY FRAMEWORK THAT IS SUGGESTED BELOW IS BASED ON THE IDEA THAT TO BRING ABOUT A LASTING IMPROVEMENT OF THE ECONOMIC SITUATION IN THE COMMUNITY , WHAT IS REQUIRED IS A DIVERSIFIED SET OF ACTIONS , THAT VARY NOT ONLY ACCORDING TO DIFFERENCES IN COUNTRY SITUATIONS , BUT ALSO DRAW ON ALL THE THREE APPROACHES .
3 . AN OUTLINE OF ECONOMIC POLICY FOR THE EUROPEAN ECONOMIC COMMUNITY
3.1 . MEDIUM-TERM POLICIES TO RESTRUCTURE THE EUROPEAN ECONOMY AND COUNTER THE UNEMPLOYMENT PROBLEM
THE FOLLOWING SECTIONS - ON PUBLIC FINANCE , INVESTMENT , LABOUR COSTS AND EMPLOYMENT - CONCERN THE MAIN COMPONENTS OF A STRATEGY TO REALLOCATE RESOURCES AND FINANCE TO THE ENDS OF HIGHER EMPLOYMENT AND PRODUCTION . THE OBJECTIVE IS TO INCREASE INVESTMENT , AND CONSEQUENTLY TO ASSURE A TRANSFER OF FINANCE AND RESOURCES IN FAVOUR OF REAL ACTIVITY . THIS REQUIRES A SIGNIFICANT ADAPTATION IN PUBLIC FINANCES AND COST TRENDS , PARTICULARLY WAGES . IN THIS CASE , THEREFORE , APPROPRIATE MECHANISMS SHOULD BE DEVISED TO ENSURE A MOBILIZATION OF PRODUCTIVE RESOURCES FOR INVESTMENT .
3.1.1