A Critical Essay on Modern Macroeconomic Theory.

• Author: Clower, Robert W.

In their preface, Hahn and Solow write: "We decided on this joint venture when we found that we shared the same unease with the "New Classical Economics" that was just then becoming dominant. [. . .] . . . we both regarded ourselves as neoclassical economists in the sense that we required theories of the economy to be firmly based on the rationality of agents and on decentralized modes of economic communication among them. Indeed, it was this general approach that led us to the view that the new macroeconomists were claiming much more than could be deduced from fundamental neoclassical principles. We thus set out to show this." The same rationale for writing the book is elaborated in the introductory chapter [pp. 1-7]. At no place in the volume, however, do Hahn and Solow cite specific examples of logically offensive "claims" or furnish material for critical assessment of the nonpolemical merit of their few substantive arguments; for practical purposes, therefore, readers are left to speculate as to the intended target(s) of Hahn and Solow's critique.

My personal conjecture, based on repeated reading of the volume, is that the operative "target" of the book is not a definable body of "new Classical" economics at all, but consists instead of the amorphous, ideologically driven, literature favoring non-interventionist economic policies that accompanied the inauguration of such policies by numerous governments during and after the "Thatcher/Reagan" era of the 1980s. To suppose that contemporary non-interventionist writers - new classical or otherwise - derive inspiration from or owe anything directly to the writings of any "macroeconomist" born later than Adam Smith is arguable and, in my view, preposterous. If any "modern macroeconomist" has proffered explicit non-interventionist views on the basis of "new...