A New Perspective
New Directions in Modern Economics series
Chapter 6: Conclusion: The Relevance of Microfoundations and Politics
This book traces its roots to my dissertation at the New School for Social Research completed just over a decade ago. The world was a very different place in those days. The global economy was booming and free market triumphalism proclaimed an indefinitely rosy future in which the rising global tide would lift all boats. At the time dissenting economists like myself, who were deeply skeptical of free market policies worldwide, were dismissed as nay-sayers. Flash forward a decade and the world has become a very different place, with a large section of humanity confronting the twin specters of mass unemployment and poverty in what is increasingly seen as a crisis that has the potential to parallel the Great Depression of the 1930s. This has been accompanied by growing political and social instability in many developing countries in particular as well the alarming growth of violent social movements.1 While it would be too much of a stretch to reduce all form of political/social instability to economic crises, it would be a serious mistake to ignore the corrosive effects that long-term unemployment have on societies. The optimist in me feels that the current crisis could potentially provide the context in which critical-minded scholars will raise basic questions again about economic theory, the mode of functioning of capitalism itself, and the nature of progressive economic policies in the context of capitalism.2 That is exactly what the Great Depression of the 1930s accomplished. One does not of course have to accept capitalism as...
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