Classical theory explained
I’ll be in Canberra for the first three days of next week for the meeting of the History of Economic Society of Australia where I will be giving a presentation on the actual meaning and significance of “classical” economic theory. I am therefore putting up a post from way back in history that I did in 2011, so ancient that Maurice Newman was the Chairman of the ABC and I was still being published at The Drum. The rest of this post is what I said then. But before I get to that, I will put up this quote from a brief article on me [my name even comes first in the article’s title!] which you may find in the latest edition of the Journal of the History of Economic Thought:Kates is a bit controversial, I think I saw one Australian refer to him as a 'Neanderthal', but interesting nonetheless.
“Steven Kates is probably the best-known present-day proponent of the old ‘classical’ macroeconomics of Jean-Baptiste Say, James Mill, David Ricardo, and John Stuart Mill.”But as I say in the heading in the slide, I am probably the “best-known” because I am probably the only one in existence. It was also, let me assure you, not intended as a compliment. Anyway, here is what I wrote back then.
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I have an article up at The ABC’s Drum website where I again look at the statement by the ABC’s Chairman, Maurice Newman, on the value of classical economic theory in comparison with the modern. Here was the full quote from his speech:
We may think we are all Keynesians now, but perhaps contemporary teachings of Keynes are not faithful to the original doctrine, or, maybe, Keynes is now a defunct economist. Perhaps post modernist economics has so captivated our journalists that they have suspended the spirit of enquiry, open-mindedness and scrutiny that an informed democracy so desperately needs.The point that Maurice Newman was making was that journalist really ought to take a look at the economic ideas of the classical economists, which using the modern Keynesian definition incorporate every economist before Keynes himself, with the exception of Malthus, Hobson, Major Douglas and Gesell (who these last three are you might very well ask, but this is Keynes’s very own and very short list). As for the rest, they were consigned by Keynes to the dustbin of history, whose theories are only kept alive by a very small band of economists scattered across the world.
Under relentless pressure, classical economics has become all but a relic of a bygone era. Yet the work of classical economists most likely holds the solution to today’s economic ills.
In the article, I quote Alfred Marshall, arguably the greatest economist to emerge from the nineteenth century. As I wrote on The Drum, Marshall “was very specific about not mistaking an economic recession for a failure to spend and he very much thought of himself as following in the tradition of the classical economists....MORE
