Principles of economics

The fact that textbooks in economics have to be revised from time to time is evidence that our understanding of economic phenomena grows with the years. Usually this growth takes place by gradual evolution, but occasionally it seems to proceed by mutations. The step-by-step elaboration and refinement of value theory from the time of Adam Smith to the present is an illustration of the first, and the upsurging of Keynesian macro-economics is a good example of the second. Those who are short-sighted are so overwhelmed by each striking development of the latter kind that they hail it as a revolution, and naively suppose that here is a new economics. that supplants the old; but those with a longer range of vision recognize that these spectacular changes, in the end, turn out to be merely parts of an evolutionary pattern in which something new is built upon the old, without destroying the foundations. These two attitudes are reflected in introductory economics textbooks. This is especially true of those works that have appeared since the publication of Keynes's General Theory. A number of these have given such an exaggerated emphasis to macro-economics that they have seriously neglected the important and illuminating principles embodied in neo-classical teachings.