The Need for a Nonlinear Theory of Economic Dynamics

Abstract

The inter-war years produced some of the richest theories in the history of economic thought and it was for this reason that Shackle (1967) entitled his now classical work on theoretical developments in that era “The Years of High Theory”. The period saw in particular the development of the theories of Hayek, Keynes, Harrod, Kalecki, The Stockholm School and Schumpeter which aimed at explaining various aspects of the dynamic evolution of the capitalist economy. The 1930s culminated with Samuelson’s “Foundations of Economic Analysis”, even though this work was not published until 1947. The original 1941 version carried the subtitle “The Operational Significance of Economic Theory”s and was a major landmark in theoretical economic analysis as it provided a framework in which the particular problems and viewpoints of the earlier mentioned theorists could be handled in a unified general way.