Definition & Reality in the General Theory of Political EconomyCool, Thomas (Thomas Herman Anthonius Maria)
Science
Definition & Reality in the General Theory of Political Economy
Cool, Thomas (Thomas Herman Anthonius Maria)
Economics; Political science
The basic argument is the following. Governments already have economic
planning bureau’s - the US for example have the Council of Economic
Advisers to the President. [6] Current forecasts are conditional on the
assumption that the government will do as planned and promised. Such
forecasts often fail, and can be forecasted to fail if one takes an
independent position. Proper forecasting requires that the economic
adviser not only has a scientific attitude, but also a scientific
position, and is able to tell and indeed tells the public that plans or
promises will fail if there is scientific reason for thinking so. Given
the experience of the 20th century, it appears that strong
constitutional safeguards are required to provide for this public
function. Hence an Economic Supreme Court.
Keynes (1936) already formulated a ‘general theory’ for political
economy. Keynes subsumed the ‘classical’ approach as a special case.
[7]
Keynes’s theory is rich in many respects and poor in other. On the poor
side: Keynes’s book is not exact on many issues, and proper models like
the IS-LM model were only developed by Hicks, Meade and others.
Samuelson (1947) presented the first integration of both the
competitive model and the utility maximising calculus, only then giving
body to the notion of ‘classical’. [8] However, on the rich side:
Keynes’s book was and still is a source of inspiration for new research
angles. Note that Samuelson coined the phrase ‘neoclassical synthesis’
for ‘his’ conceptual integration of classical processes at the micro
level and Keynesian processes at the macro level. This synthesis
endures till today, as e.g. Colignatus (1990a), Blanchard (1999) and
Krugman (1999) acknowledge. It is important to note, though, that
Samuelson’s phrase is a bit awkward, since Keynes himself already
proposed such synthesis - he namely did not abandon micro-economics. It
would be wrong to associate Keynes only with the macro-economic leg of
the synthesis. Thus the neoclassical synthesis is actually the
Keynesian synthesis itself. But we may as well use the phrase
‘neoclassical synthesis’, if only to acknowledge the role of others.
[9]
Public-domain text, read in full here on John Shaqi.
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