Friday, 30 January 2015

A paragraph to ponder from Schumpeter's review of Keynes

It is, however, vital to renounce communion with any attempt to revive
the Ricardian practice of offering, in the garb of general scientific truth, advice which - whether good or bad - carries meaning only with references to the practical exigencies of the unique historical situation of a given time and country. This sublimates practical issues into scientific ones, divides economists - as in fact we can see already from any discussion about this book - according to lines of political preference, produces popular successes at the moment, and reactions after - witness the fate of Ricardian economics - neither of which have anything to do with science. Economics will never have nor merit any authority until that unholy alliance is dissolved. There is happily some tendency towards such dissolution. But this book throws us back again. Once more, socialists as well as institutionalists are right in judging economic theory as they do.

Is he right? Hat tip to Alexia.