The Crisis in Mainstream Economics

Abstract

In preparing this chapter I have been greatly helped by hearing and then reading Bob Rowthorn’s speech to the King’s Economists on 17 April; Paul Omerod’s dissection of modern macroeconomics in the February 2010 issue of 21st Society, the Journal of the Academy of the Social Sciences; Heinz Kurz’s paper, “On the dismal state of a dismal what?”, on the deficiencies of mainly Lucasian theory in the light of the current prolonged crisis, together with his careful gathering together of Lucas’s more outlandish and extraordinary claims for his approach and contributions and those of his tribe of admiring followers, especially when Keynes’s contributions as they see them and which Keynes never claimed to have made, are used as his and their numeràire; Lance Taylor’s “tome for our times”, Maynard’s Revenge (2010), published by Harvard University Press; Robert Skidelsky’s, The Return of the Master (2009); Joe Stiglitz’s many criticisms of the extreme versions of modern theory which served to justify the Washington Consensus and its implications for universal policy proposals, see, for example, Freefall (2010); Ben Friedman’s review of recent books by John Cassidy and John Lancaster; Tony Judt’s article, “Ill fares the land”, in a recent issue of the New York Review of Books, April-May 2010; and John Quiggin’s Zombie Economics (2010). I would also like to mention a most effective critique-from-within by Ricardo Caballero (2010).