Which economics?

The variety of economics

There are, fortunately or unfortunately, a large number of schools within economics. Each school possesses its own particular theories, hence there is a great diversity of economic theories. They can be roughly classified into such schools as, for example, classical economics, neoclassical economics, Marxian economics, and Keynesian economics, but these can then be further classified into sub-schools such as the neo-Ricardian, neo-Marxist, neo-Keynesian and even neo-Austrian. On top of that we have institutional economics, the historical school as well as power school of economics.

There are, in effect, a galaxy of plausible theories, but they all aim to analyse and explain the capitalist economy, so very few economists indeed even think that these theories can be used to shed light on socialist economies. What is needed for this is a quite separate theory. Similarly, when considering a capitalist economy which incorporates a relatively high degree of planning the theory of competition used for the free enterprise system cannot possibly be applied without substantial modifications. It is taken as a matter of course that for analysing different systems different theories must be used.

This approach is regarded as the common sense one by economists of socialist countries. No one is likely to believe, for example, that the theory used in analysis of the Soviet Union will, just as it stands, be appropriate to Poland, Yugoslavia or China. Among economists in capitalist countries, however, you are unlikely to find many opportunists who make assertions along the lines of ‘Classical theory is the most valid for country A, Marxian theory for all capitalist countries: the United States, Britain, Japan and so forth.