The Critique of Neoclassical Macroeconomics Summarised

Abstract

The purpose of this book has been to analyse critically neoclassical macroeconomics as it is taught. The presentation has gone into considerable detail, and the reader might have lost track of the basic purpose of the critique. The basic purpose has been to refute the fundamental macroeconomic ‘parables’ of neoclassical theory: (1) other things equal, more employment requires a lower ‘real wage’ (commodity wage); and (2) other things equal, increases in the price level are proportional to increases in the money supply. Each parable can be restated in the more journalistic and ideological form in which one frequently encounters them: (1) cutting wages will bring full employment; and (2) inflation is the result of increases in the money supply.