Summary Record of the Discussion — Session VII

Professor Fauvel, who opened the discussion on Mr. Laszlo’s paper, found considerable similarities between the Hungarian problems treated and those of Western European governments in seeking to influence agricultural production by price control. He felt that, whatever happened, some fluctuation between over-production and under-production of specific commodities was almost inescapable if reliance were placed entirely upon pricing. Over-production tended to emerge, because technical progress in farming advanced more rapidly than changes could be made in pricing policy. He took as an example the experience of the Third Plan in France: price relations had been changed to discourage wheat-growing and to favour meat, but the product-mix had not changed as intended. For his part, he found two explanations. The first was that the elasticity of supply had been too low for the changes to be effective: the French authorities believed that no change of more than 5 to 10 per cent could be made without the inflation they desired to avoid; the European Economic Commission in fact believed that even rises of up to 12 per cent would be ineffective on production. The second explanation was that French peasants had different attitudes to different products: the production of milk was seen as a regular, indeed a basic function, and, while the farmer might increase, he would not reduce, production. On the other hand, meat was thought of as a speculative product, and its output was highly responsive to price change.