First published in 1984, this book carefully dissects and convincingly demonstrates that conservative economics is incoherent in theory and disastrous in practice. The three main schools of thought supporting "free-market" policies – supply side economics, monetarism and rational expectations- are examined in turn and each is found defective. Three case studies of conservative policy in action follow: Reagan’s U.S., Thatcher’s U.K. and Pinochet’s Chile and their courses are charted in economic conservatism’s ideology and social policy, and the book concludes with an assessment of the political reasons for the theoretical incoherence and practical failure.
This is a careful and comprehensive look at this subject which tackles both the theory and the practice head-on. It will make useful and stimulating reading for students of economics and political economy on courses of economic policy and macro-economics and in addition will be of keen interest to all those involved in the debate about one of the major policy issues of our time.
1. Introduction - Capitalism as Gestalt: A contrast of visions Robert Heilbroner Part 1: Theory 2. Supply-side economics: Incentives and disasters Rosemary Rinder 3. Monetarism: Conservative policy and Monetary theory Edward Nell and Alex Azarchs I The Conservative Critique of Interventionist Policy II Wealth effects and the Government Budget constraint III The Real Balance Effect in Neoclassical Theory: Micro and Macro IV Milton Friedman’s Monetary Theory 4. Rational Expectations: Radical assumptions and conservative conclusions I Expectations and Rationality within a Capitalist Framework Jan Kregel II The Micro Foundations of the Short-Run Phillips Curve Bob Cherry, Pat Clawson and James Dean III Rational Expectations and Imperfect Knowledge Jagdish Handa 5. Social Policy: Private Reactions to Public Decisions Edward Nell Part 2: Practice 6. The Politics of Reaganomics Teresa Amott 7. Thatcherism: The miracle that never happened Geoff Hodgson 8. Supply-Side Economics in a small economy: The Chilean Case Antonio Schneider 9. Conclusions-Cowboy Capitalism: The Last Round-Up Edward Nell