PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA -
The earlier writers were aware of such complications, but
their first concern was to realise their vision of the economy
as a system, not to work out its operating characteristics.
MARSHALL said in 1896: « the nineteenth century has in great
measure achieved qualitative analysis in economics; but it has
not gone farther. It has felt the necessity for quantitative ana-
lysis, and has made some rough preliminary surveys of the
way in which it is to be achieved: but the achievement itself
stands over for you. »
During the last fifty years or so, the development hoped
for by MARSHALL has slowly gathered momentum and has been
accompanied by a great deal of useful theorising. Our first
task now is to perfect, in the light of the vast mass of quan-
titative information available, the relationships sketched out
by our predecessors: production functions, consumption func-
tions and so on. But just as the simplifying assumptions of the
earlier theorists restrict particular relationships to the point
where they cannot be applied, so also do they sometimes
restrict the field of phenomena that should be considered in an
economic model. Thus our second task is to formulate new
relationships wherever experience shows them to be needed.
An example of this is the distribution of skills which ac-
companies any technique of production. Labour is a factor
of production, and everybody recognises that there are many
different kinds of labour, which require different kinds of edu-
cation and training. Nevertheless, in production functions la-
bour is usually treated as homogeneous. This is acceptable as
a first approximation provided one it confident that in some
unspecified way the right kinds of skill will be produced and
flow to that part of the system where they are needed. But
will they? Granted that demand tends to create its own supply,
may we not find, in a period of rapid technical change, a
serious lag between the skills needed for the new techniques
and the skills in fact provided by the system of education and
training? The answer seems to be « ves ». in which case edu-
1] Stone - pag. 10
