CH. 22
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discovered, is that put forward by Mr. D. H. Robert-son, who assumes, in effect, that full employment is animpracticable ideal and that the best that we can hopefor is a level of employment much more stable than atpresent and averaging, perhaps, a little higher.
If we rule out major changes of policy affectingeither the control of investment or the propensity toconsume, and assume, broadly speaking, a continuanceof the existing state of affairs, it is, I think, arguablethat a more advantageous average state of expectationmight result from a banking policy which alwaysnipped in the bud an incipient boom by a rate of interesthigh enough to deter even the most misguided opti-mists. The disappointment of expectation, character-istic of the slump, may lead to so much loss and wastethat the average level of useful investment might behigher if a deterrent is applied. It is difficult to be surewhether or not this is correct on its own assumptions;it is a matter for practical judgment where detailedevidence is wanting. It may be that it overlooks thesocial advantage which accrues from the increased con-sumption which attends even on investment whichproves to have been totally misdirected, so that evensuch investment may be more beneficial than no invest-ment at all. Nevertheless, the most enlightened mone-tary control might find itself in difficulties, faced with aboom of the 1929 type in America , and armed with noother weapons than those possessed at that time by theFederal Reserve System ; and none of the alternativeswithin its power might make much difference to theresult. However this may be, such an outlook seemsto me to be dangerously and unnecessarily defeatist.It recommends, or at ieast assumes, for permanentacceptance too much that is defective in our existingeconomic scheme.
The austere view, which would employ a high rateof interest to check at once any tendency in the levelof employment to rise appreciably above the average