A New Vision of Macroeconomic Policy

Abstract

Neoclassical economics demonstrated that there is significant room for welfare-enhancing government intervention, because the conditions under which government intervention is inefficient are so unusual and exceptional that they do not apply anywhere in this world. Neoclassical economics showed that in the real world (as opposed to a theoretical dream-world), free markets cannot possibly lead to a social optimum. This means that there is a sound case for developing countries to oppose unmitigated free trade, for implementing suitable industrial policy to enhance growth and welfare, for organizing economies in a more cooperative fashion, for successfully establishing a more inclusive form of capitalism that provides social welfare for all and treats all people as valuable human beings.