Abstract

LEIJONHUFVUD, Axel. Nature of an economy. Inv. Econ [online]. 2011, vol.70, n.277, pp.15-36. ISSN 0185-1667.

The financial crisis and the ensuing recession have prompted reappraisals of the state of macroeconomic theory. The image of capitalist economy as a stable general equilibrium system somewhat hampered in its functioning by "frictions" is, I believe, an inadequate guide to the realities we have to cope with. The paper stresses that we have to think of an economy as an "open system" in the ontological sense of Tony Lawson. This will require us to adapt our methods to the nature of an economy -to change how we do economics. It is also argued that the economy is not globally stable but harbours instabilities. The crisis should have cured us of the "pretence of knowledge" (Caballero 2010) -of the illusion that we understood problems of macroeconomic instability very well nd had solved them all to general satisfaction. Once cured of this pretence -which is to say, once cognizant of our ignorance- we can see that macroeconomics poses a freat many important questions to which my generation did not provide good answers.

Keywords : general equilibrium and desequilibrium; information and uncertainty; macroeconomics and monetary economics; money and interest rates; monetary policy; central banking; the supply of money and credit.

        · abstract in Spanish     · text in Spanish     · Spanish ( pdf )