Theory: Petty to Keynes

Abstract

Why study theories of unemployment, you may ask, when none of them has produced a formula to end it? Or, if it has, it is a cure unacceptable to governments and electorates, or perhaps neutralised by counter-cures propounded by other theorists. But despite the fact that there is none that we can point to and say, ‘This is demonstrably true’, the theories must still be studied. From them we derive the vocabulary and systems of classification that are necessary preliminaries to thinking about the subject. To a critical mind they offer warnings, too, of the fallibility of the human mind and its susceptibility to theoretic blight (Walker, 1943) in its enthusiasm to escape, as Adam Smith put it, the jarring and discordant appearances of unexplained phenomena. Since the theories conflict, they challenge our critical faculties to distinguish between truth and error, and so construct a higher synthesis. I devote this chapter to propounding the basic theories, the next to presenting their modern counterparts, and Chapter 5 to bringing them to judgment.