The Age of Symbolic Economic Policies?

Abstract

This paper offers a few remarks on the so-called heterodoxy commentaries of recent times. It will be highlighted that, in accordance with the growing popularity of non-usual economic policy actions, a set of “tools” is emerging that aims to exert its effects breaking with usual, common, instrumental actions. Outlining a framework of the history of economic thoughts and treating fiscal and monetary policy separately, it will be argued that economic policy only gradually has become capable of applying this system. The point is that though the economic effects of expectations (on output, unemployment, cycles, etc.) were highlighted in the theory of Keynes (and even in those of Marx and Mises), the models vulgarizing the theory of Keynes completely have forgotten about it. Moreover, some modern theories have regarded public beliefs (in other words, expectations) as a power that deprives economic policy of its instruments, causing further delays in making deliberate efforts by economic policy to influence these public beliefs. In our view, both the emergence of symbolic economic policies mentioned above and the rise of heterodoxy are on the same level, since certain governments, not having much leeway, can only operate through giving signals to markets. Although it is not the time to formulate ultimate and eternal generalised statements, it may perhaps be stated that symbolic economic policies, as part of the intersection of heterodox and unorthodox interventions, cut away from instrumental policies, can make some room for manoeuvring available as a last resort for economic policies. Our theoretical framework will be filled with some episodes from the last few years of the economic policy of Hungary. Of course, it is not suggested that the Hungarian case analysed here is the only example of symbolic economic policies. The possibility of symbolic economic policies follows from the theoretical foundations of new classical macroeconomics (as it will be detailed below), however, it cannot be judged at this point how widely this set of tools will be utilized later – the set of tools that is suggested here on theoretical grounds only as a mere option.