ABSTRACT
Labour and capital are then retained in less profitable production, and long-term growth is retarded. It becomes more difficult in addition to maintain short-run equilibrium. A disastrous vicious circle of this kind can be broken through deliberate, long-term, and co-ordinated planning of intervention by the Government. Stabilization and structural weapons must be coordinated so that they supplement and support, instead of conflicting with, one another. Government action should be directed to removing the effects of those sluggish elements in the economy which impede or delay the adjustment of production to new circumstances. Non-commercial arguments have usually been prominent, such as emergency requirements, the wish to alleviate the employment situation in a particular sector where a surplus of labour exists, or to avoid the closing down of an enterprise. The Government can naturally participate in many forms. It may limit itself to accepting some of the non-commercial risks of export sales, or to the provision of credit guarantees for particular projects.
