The Crisis in Mainstream Economics

  • G. C. Harcourt


In preparing this chapter I have been greatly helped by hearing and then reading Bob Rowthorn’s speech to the King’s Economists on 17 April; Paul Omerod’s dissection of modern macroeconomics in the February 2010 issue of 21st Society, the Journal of the Academy of the Social Sciences; Heinz Kurz’s paper, “On the dismal state of a dismal what?”, on the deficiencies of mainly Lucasian theory in the light of the current prolonged crisis, together with his careful gathering together of Lucas’s more outlandish and extraordinary claims for his approach and contributions and those of his tribe of admiring followers, especially when Keynes’s contributions as they see them and which Keynes never claimed to have made, are used as his and their numeràire; Lance Taylor’s “tome for our times”, Maynard’s Revenge (2010), published by Harvard University Press; Robert Skidelsky’s, The Return of the Master (2009); Joe Stiglitz’s many criticisms of the extreme versions of modern theory which served to justify the Washington Consensus and its implications for universal policy proposals, see, for example, Freefall (2010); Ben Friedman’s review of recent books by John Cassidy and John Lancaster; Tony Judt’s article, “Ill fares the land”, in a recent issue of the New York Review of Books, April-May 2010; and John Quiggin’s Zombie Economics (2010). I would also like to mention a most effective critique-from-within by Ricardo Caballero (2010).


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Arestis, Philip, Michelle Baddeley and John S. L. McCombie (eds) (2007), Economic Growth. New Directions in Theory and Policy, Cheltenham, UK, Northhampton, USA: Edward Elgar.Google Scholar
  2. Buiter, W.H. (1980), “The macroeconomics of Dr Pangloss: A critical survey of the new classical macroeconomics”, Economic Journal, 90, 34–50.CrossRefGoogle Scholar
  3. Caballero, Ricardo J. (2010), “Macroeconomics after the crisis: Time to deal with the pretense-of-knowledge syndrome”, Journal of Economic Perspectives, 24, 85–102.CrossRefGoogle Scholar
  4. Cassidy, John (2009), How Markets Fail: The Logic of Economic Calamities, Farrar, Straus and Giraux.Google Scholar
  5. Dimand, Robert W., Robert A. Mundell and Alessandro Vercelli (eds) (2010), Keynes’s General Theory after Seventy Years, Houndmills, Hampshire: Palgrave Macmillan.Google Scholar
  6. Fiewel, G.R. (ed.) (1985), Issues in Contemporary Macroeconomics and Distribution, London: Macmillan.Google Scholar
  7. Friedman, Benjamin M. (2010) “Two roads to financial catastrophe”, New York Review of Books, LVII, April–May, 27–29.Google Scholar
  8. Godley, Wynne and Marc Lavoie (2007), Monetary Economics. An Integrated Approach to Credit, Money, Income, Production and Wealth, Houndmills, Basingstoke, Hants.: Palgrave Macmillan.Google Scholar
  9. Hahn, F.H. and R.M. Solow (1995), A Critical Essay on Modern Macroeconomic Theory, Oxford: Basil Blackwell.Google Scholar
  10. Harcourt, G.C. (1995), “Lorie Tarshis 1911–1993: An appreciation”, Economic Journal, 105, 1244–55.Google Scholar
  11. Harcourt, G.C. (2007), “The relevance of the Cambridge — Cambridge controversies in capital theory for econometric practice”, in Arestis, Baddeley and McCombie (eds) (2007), 117–35.Google Scholar
  12. Hicks, John (1974), The Crisis in Keynesian Economics, Oxford: Basil Blackwell.Google Scholar
  13. Judt, Tony (2010), “Ill fares the land”, New York Review of Books, LVII, April–May, 17–19.Google Scholar
  14. Kahn, R.F. (1954), “Some notes on liquidity preference”, Manchester School of Economic and Social Studies, 22, 229–57.CrossRefGoogle Scholar
  15. Keynes, Milo (ed.) (1975), Essays on John Maynard Keynes, Cambridge: Cambridge University Press.Google Scholar
  16. Kurz, Heinz (2010), “On the dismal state of a dismal what?”, mimeo, University of Graz, now published in Homo Oeconomicus, 27, 2010, 369–89.Google Scholar
  17. Lancaster, John (2009), I. O. U.: Why Everyone Owes Everyone and No One Can Pay, Simon and Schuster.Google Scholar
  18. Lucas, R.E. (1988), “On the mechanics of economic development”, Journal of Monetary Economics, 22, 3–42.CrossRefGoogle Scholar
  19. Meade, J.E. (1975), “The Keynesian revolution” in Milo Keynes (ed.) (1975), 82–88.Google Scholar
  20. Omerod, Paul (2010), “The current crisis and the culpability of macroeconomic theory”, 21st Society. Journal of the Academy of Social Sciences, 5, 5–18.Google Scholar
  21. Quiggin, John (2010), Zombie Economics. How Dead Ideas Still Walk Among Us. New Jersey, USA: Princeton University Press.Google Scholar
  22. Ramsey, F.P. (1928), “A mathematical theory of saving”, Economic Journal, 38, 543–59.CrossRefGoogle Scholar
  23. Robinson, Joan (1952), The Rate of Interest and Other Essays, London: Macmillan.Google Scholar
  24. Robinson, Joan (1964), “Pre-Keynesian theory after Keynes”, Australian Economic Papers, 3, 25–35.CrossRefGoogle Scholar
  25. Robinson, Joan (1966), “Comment on Samuelson and Modigliani”, Review of Economic Studies, 33, 307–8.CrossRefGoogle Scholar
  26. Robinson, Joan (1980, 1985), “Spring cleaning”, mimeo, Cambridge; published as “The theory of normal prices and the reconstruction of economic theory” in Fiewel (ed.) (1985), 157–65.Google Scholar
  27. Rogers, Colin (2006), “Doing without money: A critical assessment of Woodford’s analysis”, Cambridge Journal of Economics, 30, 293–306.CrossRefGoogle Scholar
  28. Rowthorn, R.E. (2010), “King’s Speech 17 April 2010”, mimeo, Cambridge.Google Scholar
  29. Skidelsky, Robert (2009), Keynes. The Return of the Master, London: Allen Lane.Google Scholar
  30. Stiglitz, Joseph E. (2010), Freefall. Free Markets and the Sinking of the Global Economy. USA: W.W. Norton and Co.; London: Allen Lane.Google Scholar
  31. Tarshis, Lorie (1947), The Elements of Economics. An Introduction to the Theory of Price and Employment, Boston: Houghton Mifflin, 2nd Edition, 1966.Google Scholar
  32. Taylor, Lance (2010), Maynard’s Revenge, Cambridge, Mass: Harvard University Press.Google Scholar

Copyright information

© Joseph Halevi, G. C. Harcourt, Peter Kriesler and J. W. Nevile 2016

Authors and Affiliations

  • G. C. Harcourt

There are no affiliations available

Personalised recommendations