The attacks on the validity of establishment economics are being stepped up. Galbraith accuses this scholarship of being unconcerned with proposals for practical action. Others, looking farther afield, are disturbed by the narrowness of the base of current theorizing and its scholastic formalism. Their studies, less concerned with immediate so? cial reform and more with its guiding foundations, have already identi? fied some of the shortcomings of current economic theory and are pointing more explicitly to the next great tasks for innovating thinkers. Mrs. Joan Robinson in addressing the 1971 meeting of the Amer? ican Economic Association spoke of the second crisis of economic theory.1 It emerges, she said, as did the first one, because of a neglect to include historical time in analysis. She insists that evolution and not equilibrium should be the basic concept of economic theory. Keynes, whose work resolved the first crisis, showed that contrary to the then prevailing laissez-faire orthodoxy, an increase of debt financed invest? ment would increase consumption and saving. This autonomy is not contained in a general equilibrium net. The Neo-Keynesian Orthodoxy, however, fell back again into the equilibrium mold of classical analysis and failed to change the questions from how much to invest to where to invest. Mrs. Robinson sees the study of the evolution of profit and income distribution, rather than mechanistic allocation, as the central task of human economics.
Read full abstract