Macroeconomic Thinking and the Market Economy

INTRODUCTION

In our day the market economy is under relentless and heavy criticism. Some of these criticisms are due to ignorance. Some show a remarkably high degree of skill and sophistication. This Paper is devoted to a critical evaluation of some of the more sophisticated ideas deployed in this debate.

' A multitude of perspectives'

Nobody can claim, of course, that the market economy can be viewed only in one kind of perspective superior to all others, that it requires for its full understanding an analytical scheme of its own, or that any particular body of thought can be said to 'represent' it. In the study of the social world there is a good deal to be said for a multitude of perspectives and styles of thought, each of them illuminating one aspect of the problem under investigation. It remains true none the less that some of these perspectives are apt to blur essential features of the object of study and to distort our vision. In such cases we are entitled to state that some styles of thought are inadequate to their subject matter. In what follows we shall endeavour to show that such inadequate styles of thought are prominent in a contemporary debate among economists in which the nature of the market economy, the way it works and the results it achieves, are at issue.

THE GRAND DEBATE

For almost two decades now a controversy has raged on the higher levels of economic theory, particularly in capital and growth theory, which concerns some essential features of the market economy, but in which those human actions which give rise and lend meaning to these features are ignored. From time to time the contestants will address to one another requests to 'state your assumptions clearly', but these injunctions always seem to apply to macro-economic variables, such as incomes, output or investment, used here as instruments of combat; they never extend to the types of action, the plans of millions of consumers and producers, the mostly unintended results of which these variables are meant to symbolise download