Unit 4 Theory.pdf - Table of contents Overview...

Table of contents
Overview
Introduction
Unit Theme Song
Discussion Poll
Neoclassical Theory
Radical Economic Theory
Reflection
Reflection
Reflection
Assignment 5

Economics/Labour Studies 330
Unit 4: Theory
Overview
Why is there more than one way of looking at the economy?
“The Federal Budget is Like Your Family’s Budget!” © Barry Deutsch . Reproduced with permission.

Learning Objectives
After finishing this unit, you should be able to
explain the key arguments made by neoclassical and radical economists, respectively;
judge the empirical relevance of these different theories;
distinguish between liberal and libertarian views as the two main branches of neoclassical theory; and
recognize the significance of unemployment, state intervention, monopolies, and crises for capitalist
development.

Economics/Labour Studies 330
Unit 4: Theory
Introduction
The market of economic ideas is very clearly divided between theories that either support or criticize
capitalism. Media reports, economic policy statements, course offerings, and research are clearly dominated by
procapitalist theories. They are the mainstream of economics, whereas critical theories only lead a shadowy
existence. In times of crisis, though, Karl Marx, the godfather of critical theories about capitalism, makes the
front pages. Here are a few examples: Foreign Policy , which, by all standards, is a magazine of the capitalist
establishment, ran a story called “ Thoroughly Modern Marx ” in 2009, in the midst of a world economic crisis.
In 2013 the same magazine praised the “ Hipster Global Economy of Karl Marx ” and concluded a year later
that “ Marx Is Back .” Time boldly reiterated Marx’s famous proposition that all existing history is the history of
class struggle by describing “ Marx’s Revenge: How Class Struggle Is Shaping the World .” In case this crisis-
triggered stardom needed confirmation, Rolling Stone , one of the mainstays of popular culture, delivered it
with the simple statement that “ Marx Was Right ” in 2014; the Wall Street Journal , the backbone of the world’s
propertied classes, had reached the same conclusion three years earlier.
To be sure, making the front pages is very different from wielding power. The capitalist critic Marx might
make front-page news in times of crisis, but it is still mainstream economists with their procapitalist views who
teach most of the economics courses and tell politicians that belt-tightening for workers, no matter whether
they are employed, unemployed, retired, or going to college, is the order of the day.
So what is the significance of media-run stories about a radical thinker and activist whose ideas and legacy the
media otherwise prefers to keep under the rug? It could indicate the shattered confidence of those who
normally take their power and privilege for granted and act accordingly. Karl Marx seems to represent the bad
conscience of the propertied classes. Economic crises pose the question whether he and his followers were not
right when they said that crises are part of the capitalist system rather than caused by some external factors.