Commenting on the proceedings of the 1977 convention of the American Economic Association, an editorial in The New York Times lamented the fact that "today's economists seem mere dabblers in the sweep of intellectual history. They may be richly rewarded by business for their stabs at forecasting and their analyses of government regulation or floating exchange rates. But where are the attacks on the biggest problem of our time: achieving growth without spiralling inflation?... Most economists were dismal scientists when they arrived. Despite the drinks and the chats, they were unchanged when they left three days later."
The economists are in a dismal state precisely because they look upon their discipline as a science whereas it is actually no more than a sophisticated apology for the social and economic status quo They evidently do not perceive the real nature of their profession and thus are deeply disturbed by the growing discrepancy between their theories and reality. Because the "economic weather" had favored them for such a long time, they may have really imagined that the mathematization of economics had turned their pre-occupations with price and market relations into a positive science. As Thomas Balogh remarked in a paper delivered in 1975 at University College, London, "there were as many equations as there were unknowns, and these it was claimed could capture reality and enable objective and positive advice to be given to political leaders. Inequality would be diminished and individuals protected against exceptional hardship. Economics would, moreover, produce testable theses, and enable the production of 'policy menus,' which would provide us with a solid basis for scientific decision-making and quantified 'trade-offs,' i.e., in plain English, 'choices.' The consumption function, the accelerator, Okun's 'law' of the relation of income to employment, the Phillips curve linking wages to unemployment, linear programming, etc. now all shown up for the nonsense that they were - would at last have raised the economist to the level of physicist. How long ago this all seems now.
Economics is no longer seen as an exact science. As an "inexact" one its predictive powers are highly questionable, thus disqualifying the "stabs at forecasting" that were to justify its existence. Predictions are "probability statements" that commit the forecaster to nothing at all. His guess is as good as any other, for no one knows how the dice will fall. Economics is back at its starting point - submission to Adam Smith's "invisible hand" -without the consoling illusion of its beneficiary results. However, the dilemma of economics is still not traced to the economic system itself but to the incompleteness of the science of economics, which has not as yet found ways and means to make the demonstrably unworkable economy workable.
The current, more direct concern of economics is the combination of economic stagnation with inflation, which destroyed both Keynesian theory and the neo-Keynesian synthesis that had passed as the standard theory of economics. It is to this aspect of the matter that the following collection of articles devotes itself, taking the point of view of critical political economy.
Although these articles must speak for themselves, it should be pointed out that they were written for different occasions and that they address different audiences. It was thus inevitable that they repeat some basic statements without which each item would in itself be less comprehensible. But this necessity may prove an asset rather than an annoyance, since it shows up the interconnections between the phenomenal world of capitalism and its underlying social production relations.
With the exception of one, all the articles relate to the main issues of today, namely, the role of government, or the state, in economic affairs with reference to both the so-called mixed economies and the state-capitalist systems. The exception deals with the Great Depression of 1929 and the New Deal, which initiated the era of large-scale governmental intervention in the economy of the United States.