Economics in Perspective
Modern economics is lamentably bifurcated into microeconomics (in which classical market theory is assumed) and macroeconomics (in which governments or central banks manage demand to achieve increasing employment and price stability). This development, in John Kenneth Galbraith’s dismal tale, has blessed increasing numbers of academic economists with well-paying jobs that are no earthly good.
Economic theory (the pairing of market and morality in the Middle Ages; the rise of the capitalist voice in Adam Smith; the dark visions of David Ricardo, Thomas Malthus, and Karl Marx; the role of government in John Maynard Keynes) always arises out of a sociopolitical context, and, sadly, too often becomes eunuch to the prevailing political philosophy. Jean Baptiste Say, during the Industrial Revolution, propounded his law of markets: In a given society, the sum total of goods produced, paid for in wages, interest, profit, or rents, always effectively stimulates a total demand equaling the amount of goods produced. In the expanding market Say witnessed, it seemed there could be neither long-term overproduction nor an inability to purchase what was produced. The devastating reality of the Great Depression, and the necessity of government intervention in the economy, refuted Say’s law. Galbraith’s point is that economic theory is moribund, unable to provide insights sufficient to meet changing conditions (such as the modern-day decline of the West’s older...
(The entire section is 275 words.)
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