A Critical History Of Economics

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John Mills provides a critical survey of the way economics has developed. He argues that the main goal of economics ought to be to show how to achieve a combination of economic growth, full employment, low inflation, avoidance of extreme poverty, and sustainability. That it has failed to do so is neither inevitable nor accidental. It has failed because of a combination of intellectual error and the effects of social and political pressure, which Mills claims could and should have been avoided.

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A Critical History of Economics John Mills A Critical History of Economics Also by John Mills America’s Soluble Problems Europe’s Economic Dilemma Growth and Welfare: A New Policy for Britain Managing the World Economy Monetarism or Prosperity? (with Bryan Gould and Shaun Stewart) Tackling Britain’s False Economy A Critical History of Economics John Mills © John Mills 2002 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2002 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world. PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 0–333–97130–2 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. A catalogue record for this book is available from the Library of Congress Library of Congress Cataloging-in-Publication Data Mills, John, 1938– A critical history of economics/John Mills. p. cm. Includes bibliographical references and index. ISBN 0–333–97130–2 1. Economics–History. 2. Economic history. I. Title. HB75 .M535 2002 330’.01–dc21 2002074994 10 9 8 7 6 5 4 3 2 1 11 10 09 08 07 06 05 04 03 02 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham, and Eastbourne Contents Preface vii 1. Introduction Lost Opportunities 1 7 2. Economic Theory Economic Growth Full Employment Inflation The Relief of Poverty Sustainability 13 14 23 26 32 36 3. The Pre-Industrial World The Ancient World The Medieval Church Mercantilism The Physiocrats 40 42 47 51 55 4. Classical Economics The Reaction against Mercantilism Adam Smith Say, Malthus and Ricardo Classical Economics in Transition The Classical Economic Tradition 59 60 63 69 76 80 5. Dissent Early Socialist Thought Karl Marx Lenin, Imperialism and Revolution Welfare Reform The Contribution of the Left to Economics 83 86 90 94 100 106 6. Technical Development The Marginal Revolution Mainstream Neo-Classicism Dissident Voices Developing Techniques 109 110 115 121 125 7. The Keynesian Revolution Precursors to Keynes John Maynard Keynes Spreading the Word The Keynesian Legacy 132 133 137 143 147 v vi Contents