Abstract
It considers three views. One is the view of J. N. Keynes andLionel Robbins, who argue that pure economic theory has little or noth-ing to say about policy, but that a separate branch of economics existsthat should consider such policy issues.A second view is that ofAlfredMarshallandA.C.Pigou,whoarguethata“realistic”theorycanbeusedto guide judgments on policy. The third view, which is most closely re-lated to an “economics of control” view set out by Abba Lerner, con-nects pure theory, policy, and the role of government in the economy ina more direct way, drawing implications about policy and the role of thestate from pure theory.Thisessaydiscussestheevolutionofthesethreeviewsandarguesthatthe first two are actually much more compatible than they at first seem.They both can be seen as a “muddling through” approach to policy, inwhich pure economic theory does not give much guidance for policy.The third view, in which pure theory gives direct guidance for policy, isincompatiblewiththeothertwo.Theessayconcludesbyarguingthatthecurrent textbook presentation of policy follows the third view and that,
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