ENTWICKLUNGSTENDENZEN DER MODERNEN ÖKONOMISCHEN THEORIE*

Abstract

SUMMARY Lines of Development of Modern Economic Theory. The economic happenings in human society are so complicated and manifold that it is not possible to establish a comprehensive theory. Theorists in economics have always been obliged, in the first place, to deduce simple processes from a few fundamental phenomena. They have to take progressively more and more phenomena into consideration in their models, if they want to provide practitioners—whether economic policy‐makers or enterprisers—with a set of instruments serving to explain the causal nexus underlying the economic phenomena of society. It is dangerous to set up a theoretical model—say, the traditional model of a market with perfect competition—as a goal for economic policy, if the said model is not accessible to genuine value judgements. Furthermore, a large group of models will not, without reservation, lend themselves to the drawing of inferences for economic policy, because, owing to the axioms upon which they are based, they are not able to show those connections in the development of the economic processus of society which are brought about by technical improvements, growth of population, changes in consumer habits, etc.While in the twenties and thirties a growing accumulation of factual material without any theoretical interpretation confronted an abundance of theoretical models without empirical substance, developments in economic theory—especially in macro‐economics—during the last fifteen years or so, and developments in practical research, as practised in, say, the U. S. A., the Netherlands and the Scandinavian countries, have been characterised by an effort to bridge this gap. Thus, modern theorists are trying to construct statistically testable models which will enable policy‐makers to gauge the effect of their measures with greater accuracy. National accounting and the models for analysing the interdependence of the processes of production and the connections between income, savings, consumption and investment represent attempts to fill up this gap which have, in some respects, scored a considerable success. We are by no means in sight of the end of developments in this branch of theory, especially as regards dynamic theory.The second important characteristic of the newer economic theory is the further development of market theory. Here, promising attempts are being made, through a conception of a systematic theory of economic behaviour with the aid of the theory of games, to lift economic subjects out of the state of quasi‐isolation which in traditional market theory exists, and to make it possible for morphology to be incorporated in economic theory.