There is not just one economic theory but a number of
competing theories. The dominant theory is the neoclassical theory. This theory
describes the economic system as a self-regulating system, with a unique and
stable equilibrium characterised by full employment, the absence of crisis and
uncertainty, and with an objective and fair distribution of income. To cope
with the evidence to the contrary, the neoclassical theory built up a highly
sophisticated protective belt of auxiliary hypotheses. There is, however, no
change in the economic policy recipe: laissez faire!
Even before the neoclassical theory came into being,
Ricardo and Marx showed that the economic or rather capitalist system is
instead characterised by distributive conflict and that crises are the norm
within it. Moreover, the critiques developed by Keynes and Sraffa during the
twentieth century have shown that the world we live in is fraught with
uncertainty, that the neoclassical theory is vitiated by irreparable logical
flaws, and that if economic theory is to arrive at relevant conclusions, the
importance of the political and ideological dimension – of history – must be
recognised.
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