Politics and philosophy of economics: Marxians, Keynesians and Austrians

About a hundred years ago 'Political Economy' became 'Economics'. This happened at a phase (briefly described in chapter 2) when the interconnections and inter dependencies of economics and politics were at an all-time low-though still, it could be argued, of fundamental importance. The role of government in the economy was minute compared with today, just beginning its long, vast expansion. The political and social framework of the economy (as well as the monetary framework) seemed comparatively stable, though, with hindsight, the initial moves in a long revolution are discernible. During this period it was natural for economists to focus their interests, in theory and policy, primarily on what has come to be called 'microeconomics', that is, on processes and policies small enough to be examined on the assumption that their effects on the political and social order would be negligible.
Today, with such an extended role for government the outlook is very different. The political and social order is far from 'given' or stable. 'Macro' policies and theories dominate economic analysis. The interconnections and inter dependencies between economics and politics are much more important and complex. But the subject is still called 'Economics', and in textbooks and academic depart ments, it is still presented as separate from 'Politics'. Nor, in these highly specialized times, can it be expected that people will emerge who can combine the treatment of economics with that of political theory and processes in the manner of such past masters as Hume, Smith, Mill and Sidgwick. Consequently, politics have come back into economics to a major extent, both normatively in respect of values and objectives, and positively regarding processes and institutions: but often inexplicitly or naively or crudely. Moreover, political issues are often vitally, if latently, involved in methodological debates, as we show in chapters 1, 7 and 9.