The Social Significance of Recent Trends in Economic Theory

Extract

The story of the relation between political philosophy and economics records many curious twists and turns, anachronistic survivals, and striking anticipations. But nothing is more astonishing than the contrast between the current preoccupations of economists and their tacit methodological beliefs. During the last war and today economic enquiry has inevitably been harnessed to problems of government. But even during the two decades of armistice the bulk of the work of economists has been intimately related to policy. Not only has activity in the empirical and applied fields increased greatly, but purely theoretical analysis, too, has had a strong practical bias. Probably the three outstanding topics in theoretical discussion during the last few years have related to the problems of crises, monopoly, and planning. All three, even when debated in the most abstract terms, have an obvious “tendency to use,” in the sense that they envisage the application of measures of control by government or other social agencies.

Thus, judged by their choice of topics, economists seem to have given up any implicit unquestioning belief in the virtues of laissez-faire, and, to some extent, even in the capitalist system. Yet there seems still to be lurking in their minds an inherited regard, if not for the Smithian “hidden land,” at least for the so-called economic case for laissez-faire as expounded by such members of the first generation of modern economics as William Stanley Jevons, Philip Wicksteed, and J. B. Clark. There are left, it is true, only a few citadels which would put up a full-bodied defence of this case. But a great many of the less intransigent economists still appear to subscribe to it when they are asked explicitly to discuss it.